Amir Sufi of the University of Chicago‘s Booth School of Business agrues that a key way housing stimulates growth — the so-called “wealth effect” in which people spend more because they feel richer as the value of their home increases — is likely to be muted because many of the borrowers who spent most liberally during the housing boom aren’t getting mortgages today, writes The Wall Street Journal. (Mr. Sufi’s argument is a variant on a theme offered by Credit Suisse economists Neal Soss and Henry Mo earlier this year).
Housing may not actually save the economy
Most Popular Articles
Latest Articles
Rates at 7% attract different types of borrowers, forcing lenders to rethink profit strategies
The Federal Reserve’s recent moves have supported average mortgage rates at the mid-7% level