A topsy-turvy bond market may mean higher costs for home buyers

The Detriot News reports:

The bond market turned upside down this week in a move that may end up costing many people more to buy a home.

The phenomenon is called an inverted yield curve — when short term interest rates rise above long term rates — and it hasn't happened for five years. What it could mean is increased monthly costs for borrowers using ARMs, whose popularity, especially among first-time home buyers, has helped fuel the real estate boom.

“It forces first-time buyers into taking down the expectations for the price of the home they can afford,” said Dave Jenks, realtor with Keller Williams Realty International in Austin, Texas.

Jenks warned that “for sale” signs will hang for more days and sellers will have to be careful not to aggressively price properties.

Here's Friday yield curve.With the 30 year treasury bond coming back in the first quarter of 2006,we wonder how long the inversion will last since the dealers are going to push the long end of the curve down to get people to buy the 30 year.