Is Foreign Investment Responsible for the Housing Bubble?

This editorial (free) in yesterday's Wall Street Journal seems to think so. What he says makes a lot of sense. The premise of his argument is that if mortgage rates are tied to the 10-year treasury, and demand for 10-year treasuries is high, then the price of the treasuries will rise and the yield will decrease (inverse relationship), thereby keeping mortgage rates low. Low mortgage rates mean cheaper financing, which means increased demand for housing, which means higher housing prices. It all makes perfect sense when you think about it, unless I'm wrong.

What do you think?

Tags: Housing Bubble, Mortgage Rates, Treasury Yields

Milan Tomic

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