My intuitive sense is that the unprecedented spike in interest rates will take the wind out of the housing market. A pity for sellers, as all the stars were aligned this year for selling as they have not been since 2005. But good for buyers if it lasts. Better to spend less for a house at higher interest than have hyperlow interest rates turn you into a mortgage slave.
According to Mark Hanson, the "mortgage rate surge" has made houses 20 percent more expensive in a single month. Sellers will resist this, but if the rates stay high, buyers will not be willing to pay the same prices they were paying just two months ago. I expect houses to sit longer on the market as a result, with sellers holding out for a higher price and buyers unwilling to pay so much. The real estate market will go into the doldrums for the rest of the year, I think, if interest rates remain at their current level. Northampton as always may be the outlier here, as buyer demand there is so intense. But I expect to see some cooling there as well.
Bernanke will try to minimize the damage, but I sense that the die is cast. I think this is the end of the faux housing recovery.