Flight to Safety
No, I don’t think a nuclear conflagration would be good for the U.S. housing market (or anything else).
And, there’s no denying that ongoing North Korea – U.S. saber-rattling may have a chilling effect on nervous home Buyers.
But, in the meantime, one of the predictable side effects of major geopolitical uncertainty is a flight to safety in financial markets.
In turn, that means heightened demand for perceived safe harbors — none of which is safer, historically speaking, than U.S. Treasury debt.
Increase in Demand = Lower Rates
Econ 101 says more demand for the same supply increases prices, which is in fact exactly what happened last week.
So, the 10-year U.S. bond — a key peg for long-term mortgage rates — dropped closer to 2% last week (bond prices and interest rates move inversely).
That’s at least a partial salve for anxious home Buyers and Sellers right now . . .
