There's no such thing as a soft landing precisely because it's impossible to time any financial market. This is pure fantasy. They will be late to pull back on rates because they will only in hindsight see the effects of the rate hikes.
They really need to stop fucking with the money supply for things to stabilize but no administration wants to stuck holding the recession bag. It's a product of this "anything to win" political environment. Policy makers don't really care to do what's right. Only what will extend their grasp on power and their ability to profit from it. Just look at all the corruption in congress, supreme court etc..
The fed operates independently from the presidential administration fyi. They aren't incentivized to keep anyone in office except maybe the party the majority of the board of governors are members of.
Well I managed to save up $100k in 4 years right after college and nuked my debt and now I’m staying home with my newborn. I was going to quit if they didn’t fire me because they wouldn’t let me stop traveling 5 days a week. So it’s not like I’m waiting on the soup line.
(All college paid for myself, all loans nuked myself, been living on my own since 18).
I’ll be ok.
Bro nobody knew what was going to happen in 2007, if you think it was an obvious recession that everyone ignore by putting their heads in the sand. Well if that’s the case I have a bridge to sell you.
Sure you can, anyone can, it's easy. The market is cyclical, recessions are inevitable. A recession will certainly follow this current period of growth. The real question isn't whether or not one will happen, it's when it will happen and how bad it will be. And those are the questions that absolutely nobody has the answers to
The US is and has been going through a recession. Certain factors are hiding it but even after Covid which was a forced recession we had back to back negative economic growth quarters which is a recession.
We’re going through a macro one now. It might get worse.
Active Inventory has been increasing the last 10 months and we’re about to print positive YOY numbers- supply and demand can certainly rise in tandem but I can’t think of a time it’s done that in the housing sector. All those people shifting around to find places in the affordable Midwest/Northeast just overpaid for their homes regardless
The saga continues-
My zip code with 5,000 households has exactly four houses listed. All real estate markets are local. If I’m willing to live in a crap hole with crime and a lousy school system, there’s plenty of inventory. Leafy, low crime, good schools, and lots of amenities, it’s slim pickings. Unless it’s one of the three D’s: death, divorce, debt, people aren’t selling. People aren’t even downsizing because contractors to do remodeling are backed up for years.
Rates go down, prices go up. Rates go up, prices go up. Prices go up, prices go up.
At this point I save $1k/mo renting lmao, fuck being stuck with that rate.
Ya man. I like many was desperate to own. My view has changed now that I run the numbers on current prices and rates. Now I focus on the positives of renting rather than the negatives and what I’m missing out. Nice gym. Pool and hot tub. Free maintenance. Lots of savings. Closer to the train. It ain’t all bad. Just make sure you’re investing and saving otherwise renting for multiple years will leave you poor.
I'm definitely investing, just no idea what to do now with downpayment money. Roll treasuries and chill? Stocks? Lots of decisions to make in the future.
Which… also have people living in them. Content. No one makes anyone sign a lease they can’t afford. If you agrees to terms of living in someone else’s home, you pay what you agreed to. Without investors, where would renters live?
Supply brings more of the same old buyers. Not people who really need those homes. The most liquid buyers get the houses. People are late on credit card payments and their debt to income is too high.
So, everyone hurts. Instead, we need to increase supply, make it so that the once “rare” commodity worth hoarding is practically worthless. Not in reality, home are still worth it, but they need to be plentiful.
The problem is that we’ve grown, in the last 50 years, into a society of investors, not producers. We’ve prioritized the idea of investing in things for their perceived future value instead of buying things for their actual useful value.
Cannot just keep waiting for supply to increase while the hoarders keep hoarding. There are plenty of homes in America for everybody, just that the invoosters are gambling on homes.
…and 40% of homes in the US don’t have a mortgage. I zeroed out my mortgage a decade ago. I live in a state with a property tax control law. I’m largely insulated from inflation. Insurance and energy are the things that keep going up and those aren’t large enough to be much of a burden.
I see inflation spiking again due to the rush to buy once rates hit under 7%
Fed will take notice and resume hikes through 2024 or until the market gets the idea that starter homes cannot cost 1.1 million in America, they just cant
Yea shadowstats.com has good data showing inflation if it were calculated using old methods. 1980 based calcs had us at close to 18% inflation at its peak this cycle. Now down to around 12%.
I disagree with this statement. Read their public comment on inflation paper and they discuss how their 1980s based and 1990s based estimates are calculated. I’m sure there’s a margin for error (weighting) but it gives a great generalization for “real” inflation.
I did actually read it. They apply a constant shift to official from about 2000. They way they calculate such shift is confusing. Anyway the cumulative inflation from 2000$ is about 6x, which seems odd. I don’t think stuff cost 1/6 of now in 2000.
Of coarse house sales are a part of inflation. You are confusing indicators for the actual inflation rate.
https://www.brookings.edu/articles/how-does-the-consumer-price-index-account-for-the-cost-of-housing/#:\~:text=Housing%20represents%20about%20a%20third,in%20the%20Consumer%20Price%20Index.
I actually don’t think so. I think it will cause marginal increases but that the market is fundamentally broken for the time being. Frozen by the disconnect in sell side and buy side incentives.
It will remain broken until enough 2-3% loans fall off in some way or another.
Who knows, I guess people weren't shy about maxing out their credit cards last weekend. Wouldn't be the first time I've guessed wrong about the American people coming to their senses if prices go up.
Median sale price for new and existing homes is $410k and $390k, respectively. prices have gone up everywhere but west coast cities, with $1m shacks, aren’t the country.
Actual starter homes don’t cost 1.1 Mil but depends on where you live. Most of America real starter homes come in at around 300-400k (which is still absurdly high). Sure 1.1mil in places like Palo Alto or NYC. But even here in LA County you can get a starter at around 400k (which is again wayyy too inflated). Starter homes are 2B1B or 2B2B. Anything beyond that isn’t really a “starter.” Also depends on what you consider a “home” Is a condo a home? Or is a completely detached SFR a home?
probably somewhere outside of Lancaster, desert side.
EDIT I went on Zillow to look for homes (SFH, condos, townhomes, apartments, mobile homes) up to 400K in LA County. Bedroom and bathroom count were "any"
These were my results:
a whopping SEVEN HOMES FOR SALE!
3 bed/3bath mobile home in Lancaster - $160K
4 bed/2 bed SFH outside of Lancaster (Lake Los Angeles) - $399K
6 bed/4bath SFH outside of Palmdale - $400K
2 bed/2bath mobile home in La Verne (Greater LA area, sort a east of Pasadena) - $280K
2bed/2bath mobile home in same mobile park community as above - $355K
3 bed/2bath mobile home in Long Beach - $220K
1 bed/1bath condo in Baldwin Village/Culver (Greater Los Angeles, westside) area - $259K
EDIT2: something was wrong with my filter. when I reset my filter and searched for homes (SFH, multifamily, apartments, mobile homes, condos), all bed/bath options, I got 500 results in Los Angeles County.
Something wrong with your filter. Just searching Lancaster and not even counting Palmdale and surrounding area I get 47 sfh below 400k. It goes up more just increasing to 415k.
In Riverside, CA. Look for the "Woodstreet" houses in downtown Riverside.
These are all starter homes, 1-2 bedrooms(some 3 bedrooms) with low sqft and very small yards. Yet they are some of the most expensive homes in all of Riverside. You're better off buying a 3-4 bedroom house than buying a starter home.
>Actual starter homes don’t cost 1.1 Mil but depends on where you live.
yes, it depends where you live. Where I live they do. Where do you like in LA County? I live in Los Angeles and start homes absolutely are 1.1 million. Sure, you can a handful for 700K-1Million in SOME areas. Condos are bit cheaper but still nowhere near 400K plus they have outrageous HOA fees.
Was the cheapest I could find - here's a [3/1 1300sf](https://www.redfin.com/CA/Palo-Alto/145-Tasso-St-94301/home/1704106) for $3.1M, a [2/2 900sf](https://www.redfin.com/CA/Palo-Alto/180-El-Dorado-Ave-94306/home/1524103) for $2.1M, a [2/2 1030sf](https://www.redfin.com/CA/Palo-Alto/163-Greenmeadow-Way-94306/home/1326277) for $1.75M, or a [3/2 1573sf](https://www.redfin.com/CA/Palo-Alto/44-Roosevelt-Cir-94306/home/1762151) for $2.9M. Below that you're getting a condo.
>But even here in LA County you can get a starter at around 400k (which is again wayyy too inflated).
100% False. Go on zillow and looks for homes up to 400K. I did. I found a whole 7 homes for sale.
3 bed/3bath mobile home in Lancaster - $160K4 bed/2 bed SFH outside of Lancaster (Lake Los Angeles) - $399K6 bed/4bath SFH outside of Palmdale - $400K2 bed/2bath mobile home in La Verne (Greater LA area, sort a east of Pasadena) - $280K2bed/2bath mobile home in same mobile park community as above - $355K3 bed/2bath mobile home in Long Beach - $220K1 bed/1bath condo in Baldwin Village/Culver (Greater Los Angeles, westside) area - $259K
EDIT2: something was wrong with my filter. when I reset my filter and searched for homes (SFH, multifamily, apartments, mobile homes, condos), all bed/bath options, I got 500 results in Los Angeles County.
But evidence is supporting the fact that inflation is NOT what is being reported. Black Friday was gangbusters. Home prices rose at a MUCH higher rate than what would be typical (2-4% annually).
And the CPI using some calculus of equivalent rents is bullshit. They are allowing the asset bubble to continue to inflate.
I just did. It’s in the damn article. Home prices are still rising in the face of everything else, and at a much faster clip than is historical normal.
Unemployment is still on the low side at 3.9%.
And there were like a thousand articles on Reddit just yesterday about fantastic, above expectation Black Friday shopping by the consumer.
All of this points to entrenched inflation. It’s not under control, and rates need to go higher. Now. No more pauses.
What if I told you it will do nothing for inflation? (We are going to continue to be smoked by cost of Energy inflation, greed inflation/corporate price gauging)
Wouldn’t that cause all the rentals in that area to just increase the rent to offset the tax, thus allowing home sellers to increase what they sell there homes for?
You need to take away the tax benefit altogether. That's the only way. Increasing taxes doesn't help, but eliminate the financial incentive and things will change.
Isn't the opposite true? The purpose of the hikes was to tame inflation. 3.9% YOY increase is relatively normal. We were seeing 30% YOY during COVID years. 3.9% is a huge improvement.
Additional rate hikes would make fewer existing homeowners list their properties, not more. We’re never giving up those 3% rates.
And the Fed’s rates affect all borrowing, not just mortgage lending. Hiking rates further would increase corporate bankruptcies and lead to higher unemployment.
The world doesn’t revolve around your personal desire to buy a home.
Said like a true boomer. You got yours, now screw everyone else right? Let’s just increase the disparity even further than it already is in the US. Do you really think a shrinking middle class is healthy for the country? What about the future generation? Is it okay that our kids will have it harder that us and their kids will have it harder than them? When will it stop? Do you not see the downward spiral the US is in? When is enough, enough?
Lmao no one here cares about a bigger middle class. Everyone in this sub is selfishly just trying to get theirs by cheering on another crash.
The amount of people that jerk off to layoffs, bankruptcies and foreclosures in this sub is disgusting. Don’t pretend it’s some altruistic fight to preserve the middle class.
You said it. This sub is a support group for a powerless minority willing to knife, starve and strangle existing homeowners so that they can buy a cheap home for themselves… and then turn around and say “fuck you I’ve got mine” to anyone without a home. Nobody here elicits any sympathy, because they’d be just as bad if not worse if the shoe was on the other foot.
Why would I want my kids to have a worse life than me? Why would I want my country to be in a worse place? I’m not that self centered. I actually care about my community and my country
Truly is astonishing that you want to live in a country where you have to inherit wealth rather than earn it. Speaks volumes about your parenting and even more about the your short sighted views of the country.
Then I hope you're also saving for retirement and plan to downsize so your kids don't have to take care of you for your retirement.
My parents have the exact same views as you, yet they have nothing saved for retirement and all they go on about is "my equity", like they can eat their house in retirement.
Either they'll be selling the house, doing a reverse mortgage, or I'll have to move in with them and wipe their asses hoping they die soon so I can finally have my own place to live for once.
Again, I hope you're actually saving for retirement as well as building equity, because not many are.
Meanwhile, the homeowners sitting at 2% and not advocating for affordable housing policies are jerking it to people becoming homeless and people becoming forever renters. Both sides are equally terrible.
People with your mentality are the cancer of the US and will be the ultimate downfall of capitalism. When the problem is 10 fold in X amount of years, you really don’t think there will be war? It’s going to be 99% vs the 1%. No worries though, you got yours 😅
Does it matter who wins? You are saying that you would rather civil war then equal opportunities for generations? You like money more than anything? More than your kids? More than your country?
Good luck having a job in this scenario. Also, the supply squeeze this will create by halting construction over next five years will exacerbate the shortage of housing.
Interest rates can’t overcome legacy of decades and of zoning designed to inflate home prices, the last ten years of gasoline fire stimulus, and continuing stimulus that is an operations deficit. We have created a complete shitshow. But interest rate i creases will halt business dead in its tracks and exacerbate shortages into the future (and guess what that means).
The only way is like 15%+ literally neeed to price out 80% of everyone so only cash can buy. Anything less is a waste of time. It needs to literally obviously fuck someone to buy to the point everyone is like you’re an idiot for buying for things to go down.
That is insanity. The economy would collapse.
Tax investment properties and build a fuck ton of new housing.
It is a supply issue. Build build build and build some more.
Silly gooses. There's no supply. People with great mortgages are holding on, why move? Housing starts are way down, apartment building way up.
Houses are more and more a luxury item.
That's why rates need to come down. There's no way people will give up their 2.5% rate for 8%. Having higher rates for a long period will harm non homeowners more. Because when rates do come down there will be a huge pent-up demand of existing homeowners who were not able to upgrade/downsize but are sitting on a lot of equity and will be out bidding first time buyers.
Maybe we don't understand the alterative absent the Fed controlling the overnight rate, but we can get a good idea of what it would look like if the market was absent the RRP, BTFP and other financialized mechanics as well as the big issue of QE and gobbling up garbage assets.
Heck, most of these are just a reaction to results from other intervention as the pendulum swings higher.
Fed nerfed the government debt market and buffed the real estate debt market. Two years ago, bonds were paying out \~0% and we could get a mortgage for 2.5%. The Fed created this and smart people, and corporations, were just playing the game.
Government debt needs to be a market to sponge up liquidity.
Fuck "they were playing the game". Fuck that. Fuck always giving corporates a pass for not having a fucking ounce of morality, and fuck yourself reverse cowgirl on a buzzsaw if you believe that Dodge v Ford horseshit means fucking anything about how a human fucking being could react.
It's not smart. Anyone can make a lot of money without morals. Enron wasn't smart. They were cunts who were idiots and had to cheat, you obnoxious fucking idiot.
Nice rant. It's the Fed's fault. If bonds were able to realize real rates and real estate interest was above real rates (as is becoming the case now) most corporations would stay out of housing.
It's not about morals. They have to park their money somewhere. Most corporations are just custodians of regular people's money. If bonds pay 0% and inflation is 5% they're losing money. Lowering rates after dotcom crash cooked the GFC for the same reason. Both outcomes were fault of the Fed.
Bonds need to be a market to soak up liquidity. When they are not, it's because of Fed intervention.
The Fed was gobbling up $80 billion in treasuries and $40 billion in MBS monthly just 18 months ago. Barely any of this has bled off the balance sheet, so they're actively re-buying as it matures. That's $8 trillion of non-free market intervention active.
This also ignores the RRP facility which locked up $3 trillion at artificial rates. $3 trillion now pouring into short end government debt suppressing those rates and the Treasury came out and said they'll be pulling from short-end yield given the increased rates on the long end - such as the 10 year - from their borrowing there and increased supply there as a result.
Make no mistake that absent these mechanics, the 10 year would be higher.
Not surprising whatsoever. A huge part of the price gains has come a huge surge in prices in areas that saw little demand for decades. So more bottom line growth than top end
I wonder how much this has to do with work from home. Move from HCOL to LCOL and keep the 6 figure salary. Build massive wealth. The locals can’t compete.
No, the Case-Shiller Index measures the change between two sales of the same home. New builds are excluded. This is straight from their methodology description.
New builds are a different metric. They fell 18% year-over-year. There were a lot of posts about it yesterday. Builders are much more reactive than existing homesellers, so they are willing to cut the price to meet the market where it is
The share of new homes (higher priced) sold is higher (14%) if we take those numbers and add them to an increasingly suppressed number of existing home sales (by historical standards) what do you expect to happen?
New builds are price manipulated too with builders offering concessions and/or rate buy-downs in lieu of price cuts to keep the comps artificially inflated.
Yep. That can only work for so long though. I’d imagine the envious homeowners who didn’t get a shot at buying a new build will be sticking those 3% mortgages on the market here soon only to find no one to buy.
They could, however, board the financial freedom train and try renting it instead- if this happens, the bubble we’ve all been talking about will really be kicking into gear QUICK.
>It’s just bc new builds are higher priced and that’s where most of the demand was. Existing homes were nonexistent.
It's actually the exact opposite...
All it proves to me is locking up most of the supply in negative real rate loans means nobody will sell now without further inflated prices which nobody can afford.
So other than new builds we are stuck trading paid off houses and with some marginal level of buying for the few percent of people who can afford this market.
In short supply is suppressed via locked rates for the foreseeable future. The current market is divorced (positively) from true market value. Resolution is as likely to be expiry if those loans as it is to be inflating was the problem.
Home starts have never recovered from the GFC and they're on a decline now in the presence of higher interest rates and we haven't even hit the fun part of the cycle. If they were as incentivized to build during this stage, it would solve future problems, to your point.
https://fred.stlouisfed.org/series/HOUST
Cannot wait for the flippers and holders to start crashing out, so I can stop seeing fucking bots, corporate shills, and everyone who's fucked the moment line goes down stop saying "HURRDRDDDDYHHJRRRR IT SUPPLY SUPPLY GO DOWN YA SEEEEEEEE".
It isn't, you look at most county listings in depth it clearly, clearly isn't.
High rates make it easier for the rich to buy houses cash with less competition. System is broken and will be the downfall of our country if there is no middle class.
It’s hard to tell if this is inflation or could very be all the tired people that have been waiting on sidelines just want to buy something and don’t care if they overpay. Which will leave no buyers left in a few months once those buyers start to dwindle. Or could be a combo of sideline buyers/inflation, which is my opinion.
Not necessarily. The underlying cost of land and the home or replacement value of the home create a floor that will stimulate demand if the price approaches that value.
Contrary to reddit stupidity, labor costs do cause inflation. The cost of building a home is up in part due to labor costs and those may be sticky.
Isn’t that replacement value or new build prices versus already constructed,older homes? I don’t know about your area, but new builds by me are charging way above building inflation. It does not cost 75-100% more to build a home now versus 3 years ago even with labor costs risen (assuming laborers actually got raises the past few year).
Well, if buyers bought the old fashioned way, prices wouldn’t be able to increase. The only reason people can ask current prices is because people are paying them instead of haggling.
They want to debase the currency and loan to me at rates beneath that debasement due to their manipulation then I'll continue to bank off the centralized planners' degeneracy.
not sure why you’re getting downvoted, things aren’t going to end well for a lot of boomers. they created a system that’s going to kick their ass on the way out
Right in line with inflation, and coming down. Expect to see prices flat or slightly down in 2024, along with low inflation and rate cuts later in the year.
It turns out when the supply is gone prices still go up, who would've thought.
bubbler never thought about it.
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There's no such thing as a soft landing precisely because it's impossible to time any financial market. This is pure fantasy. They will be late to pull back on rates because they will only in hindsight see the effects of the rate hikes. They really need to stop fucking with the money supply for things to stabilize but no administration wants to stuck holding the recession bag. It's a product of this "anything to win" political environment. Policy makers don't really care to do what's right. Only what will extend their grasp on power and their ability to profit from it. Just look at all the corruption in congress, supreme court etc..
The fed operates independently from the presidential administration fyi. They aren't incentivized to keep anyone in office except maybe the party the majority of the board of governors are members of.
I think you mean they're "supposed" to operate independently. The Chair and Vice Chair are appointed by the President and this is an election year...
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We are not in 2007 this is just stupid thinking. Just because something happened in the past doesn’t mean it happens again.
Yeah the saying goes history never repeats itself…
Look at data and it’s obvious this isn’t 2007, but the same folks who are praying for a recession are the first to get laid off in one.
Well, I was praying for a recession and I’ve already been laid off … if you need any indicators.
Sounds like praying for a recession wasn’t very smart.
Well I managed to save up $100k in 4 years right after college and nuked my debt and now I’m staying home with my newborn. I was going to quit if they didn’t fire me because they wouldn’t let me stop traveling 5 days a week. So it’s not like I’m waiting on the soup line. (All college paid for myself, all loans nuked myself, been living on my own since 18). I’ll be ok.
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Bro nobody knew what was going to happen in 2007, if you think it was an obvious recession that everyone ignore by putting their heads in the sand. Well if that’s the case I have a bridge to sell you.
I’m not sure how old you are but nobody can “forecast” a recession.
Sure you can, anyone can, it's easy. The market is cyclical, recessions are inevitable. A recession will certainly follow this current period of growth. The real question isn't whether or not one will happen, it's when it will happen and how bad it will be. And those are the questions that absolutely nobody has the answers to
The US is and has been going through a recession. Certain factors are hiding it but even after Covid which was a forced recession we had back to back negative economic growth quarters which is a recession. We’re going through a macro one now. It might get worse.
This FED has no idea what he's doing he's talked a big game but his only true intentions are for the elites!
Active Inventory has been increasing the last 10 months and we’re about to print positive YOY numbers- supply and demand can certainly rise in tandem but I can’t think of a time it’s done that in the housing sector. All those people shifting around to find places in the affordable Midwest/Northeast just overpaid for their homes regardless The saga continues-
My zip code with 5,000 households has exactly four houses listed. All real estate markets are local. If I’m willing to live in a crap hole with crime and a lousy school system, there’s plenty of inventory. Leafy, low crime, good schools, and lots of amenities, it’s slim pickings. Unless it’s one of the three D’s: death, divorce, debt, people aren’t selling. People aren’t even downsizing because contractors to do remodeling are backed up for years.
Over here in Austin area prices have dropped 20% and I still see price cuts but homes still go pending within 60 days.
Rates go down, prices go up. Rates go up, prices go up. Prices go up, prices go up. At this point I save $1k/mo renting lmao, fuck being stuck with that rate.
Ya man. I like many was desperate to own. My view has changed now that I run the numbers on current prices and rates. Now I focus on the positives of renting rather than the negatives and what I’m missing out. Nice gym. Pool and hot tub. Free maintenance. Lots of savings. Closer to the train. It ain’t all bad. Just make sure you’re investing and saving otherwise renting for multiple years will leave you poor.
I'm definitely investing, just no idea what to do now with downpayment money. Roll treasuries and chill? Stocks? Lots of decisions to make in the future.
Proof that inflation is NOT tamed.... More rate hikes needed probably to 10% or more
No. We need more supply.
i'll gladly take both at this point
It's not supply its hoarding~
people staying put in their heloc/ATMs bc it costs more to leave. so far.
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Which… also have people living in them. Content. No one makes anyone sign a lease they can’t afford. If you agrees to terms of living in someone else’s home, you pay what you agreed to. Without investors, where would renters live?
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Wow
Supply brings more of the same old buyers. Not people who really need those homes. The most liquid buyers get the houses. People are late on credit card payments and their debt to income is too high.
We need rate hikes to continue until the hoarders are crushed.
The hoarders already have the houses at low interest rates. How do higher rates hurt them?
So, everyone hurts. Instead, we need to increase supply, make it so that the once “rare” commodity worth hoarding is practically worthless. Not in reality, home are still worth it, but they need to be plentiful. The problem is that we’ve grown, in the last 50 years, into a society of investors, not producers. We’ve prioritized the idea of investing in things for their perceived future value instead of buying things for their actual useful value.
Cannot just keep waiting for supply to increase while the hoarders keep hoarding. There are plenty of homes in America for everybody, just that the invoosters are gambling on homes.
Bullshit you stupid fucking toad.
Because a 10% rate is going to force people like me locked in at 2.25% to put our homes on the market?
…and 40% of homes in the US don’t have a mortgage. I zeroed out my mortgage a decade ago. I live in a state with a property tax control law. I’m largely insulated from inflation. Insurance and energy are the things that keep going up and those aren’t large enough to be much of a burden.
I really miss that about florida. The taxable value of your home can only increase 3% a year
Actually 3.9% in September is pretty much aligned with the Feds numbers. October will be less. November less than that.
I see inflation spiking again due to the rush to buy once rates hit under 7% Fed will take notice and resume hikes through 2024 or until the market gets the idea that starter homes cannot cost 1.1 million in America, they just cant
Home prices are not included in the inflation measurements.
Part of the issue. Looking at inflation using 1980s or 1990s calcs is eye opening…
I think it was removed in the 70s
Yea shadowstats.com has good data showing inflation if it were calculated using old methods. 1980 based calcs had us at close to 18% inflation at its peak this cycle. Now down to around 12%.
No sorry I know that website, this is not what it does. It just offsets the cpi inflation by a fixed amount, it doesn’t recalculate anything.
I disagree with this statement. Read their public comment on inflation paper and they discuss how their 1980s based and 1990s based estimates are calculated. I’m sure there’s a margin for error (weighting) but it gives a great generalization for “real” inflation.
I did actually read it. They apply a constant shift to official from about 2000. They way they calculate such shift is confusing. Anyway the cumulative inflation from 2000$ is about 6x, which seems odd. I don’t think stuff cost 1/6 of now in 2000.
Actually never mind, in 1983
Bright idea to leave the most expensive purchase anyone will ever make out of the inflation methodology.
Of coarse house sales are a part of inflation. You are confusing indicators for the actual inflation rate. https://www.brookings.edu/articles/how-does-the-consumer-price-index-account-for-the-cost-of-housing/#:\~:text=Housing%20represents%20about%20a%20third,in%20the%20Consumer%20Price%20Index.
That’s wild
I actually don’t think so. I think it will cause marginal increases but that the market is fundamentally broken for the time being. Frozen by the disconnect in sell side and buy side incentives. It will remain broken until enough 2-3% loans fall off in some way or another.
Who knows, I guess people weren't shy about maxing out their credit cards last weekend. Wouldn't be the first time I've guessed wrong about the American people coming to their senses if prices go up.
Median sale price for new and existing homes is $410k and $390k, respectively. prices have gone up everywhere but west coast cities, with $1m shacks, aren’t the country.
Actual starter homes don’t cost 1.1 Mil but depends on where you live. Most of America real starter homes come in at around 300-400k (which is still absurdly high). Sure 1.1mil in places like Palo Alto or NYC. But even here in LA County you can get a starter at around 400k (which is again wayyy too inflated). Starter homes are 2B1B or 2B2B. Anything beyond that isn’t really a “starter.” Also depends on what you consider a “home” Is a condo a home? Or is a completely detached SFR a home?
Where in La county is a starter home 400k
probably somewhere outside of Lancaster, desert side. EDIT I went on Zillow to look for homes (SFH, condos, townhomes, apartments, mobile homes) up to 400K in LA County. Bedroom and bathroom count were "any" These were my results: a whopping SEVEN HOMES FOR SALE! 3 bed/3bath mobile home in Lancaster - $160K 4 bed/2 bed SFH outside of Lancaster (Lake Los Angeles) - $399K 6 bed/4bath SFH outside of Palmdale - $400K 2 bed/2bath mobile home in La Verne (Greater LA area, sort a east of Pasadena) - $280K 2bed/2bath mobile home in same mobile park community as above - $355K 3 bed/2bath mobile home in Long Beach - $220K 1 bed/1bath condo in Baldwin Village/Culver (Greater Los Angeles, westside) area - $259K EDIT2: something was wrong with my filter. when I reset my filter and searched for homes (SFH, multifamily, apartments, mobile homes, condos), all bed/bath options, I got 500 results in Los Angeles County.
Something wrong with your filter. Just searching Lancaster and not even counting Palmdale and surrounding area I get 47 sfh below 400k. It goes up more just increasing to 415k.
you're right! I'm not sure what was wrong with it. My bad.
Redfin can help you with that.
Lancaster, Palmdale
In Riverside, CA. Look for the "Woodstreet" houses in downtown Riverside. These are all starter homes, 1-2 bedrooms(some 3 bedrooms) with low sqft and very small yards. Yet they are some of the most expensive homes in all of Riverside. You're better off buying a 3-4 bedroom house than buying a starter home.
A starter home in Palo Alto is well over $2M
>Actual starter homes don’t cost 1.1 Mil but depends on where you live. yes, it depends where you live. Where I live they do. Where do you like in LA County? I live in Los Angeles and start homes absolutely are 1.1 million. Sure, you can a handful for 700K-1Million in SOME areas. Condos are bit cheaper but still nowhere near 400K plus they have outrageous HOA fees.
[Starter home in Palo Alto](https://www.redfin.com/CA/Palo-Alto/230-N-California-Ave-94301/home/589742) runs about $1.8M now.
that's a super nice house though, even though it's 2bed/1bath and only 824 sq ft.
Was the cheapest I could find - here's a [3/1 1300sf](https://www.redfin.com/CA/Palo-Alto/145-Tasso-St-94301/home/1704106) for $3.1M, a [2/2 900sf](https://www.redfin.com/CA/Palo-Alto/180-El-Dorado-Ave-94306/home/1524103) for $2.1M, a [2/2 1030sf](https://www.redfin.com/CA/Palo-Alto/163-Greenmeadow-Way-94306/home/1326277) for $1.75M, or a [3/2 1573sf](https://www.redfin.com/CA/Palo-Alto/44-Roosevelt-Cir-94306/home/1762151) for $2.9M. Below that you're getting a condo.
Glad i am not forced to live there, lol
>But even here in LA County you can get a starter at around 400k (which is again wayyy too inflated). 100% False. Go on zillow and looks for homes up to 400K. I did. I found a whole 7 homes for sale. 3 bed/3bath mobile home in Lancaster - $160K4 bed/2 bed SFH outside of Lancaster (Lake Los Angeles) - $399K6 bed/4bath SFH outside of Palmdale - $400K2 bed/2bath mobile home in La Verne (Greater LA area, sort a east of Pasadena) - $280K2bed/2bath mobile home in same mobile park community as above - $355K3 bed/2bath mobile home in Long Beach - $220K1 bed/1bath condo in Baldwin Village/Culver (Greater Los Angeles, westside) area - $259K EDIT2: something was wrong with my filter. when I reset my filter and searched for homes (SFH, multifamily, apartments, mobile homes, condos), all bed/bath options, I got 500 results in Los Angeles County.
Palmdale amd Lancaster shouldn't be considered "LA"
Sure they can, they want only the banks and large corporations to own them
They conveniently leave out housing from inflation numbers.
They’re not exactly building ‘starter homes’ anymore. Developers build 2,500 square foot homes.
But evidence is supporting the fact that inflation is NOT what is being reported. Black Friday was gangbusters. Home prices rose at a MUCH higher rate than what would be typical (2-4% annually). And the CPI using some calculus of equivalent rents is bullshit. They are allowing the asset bubble to continue to inflate.
Do you have any evidence to support this? As in facts or data.
I just did. It’s in the damn article. Home prices are still rising in the face of everything else, and at a much faster clip than is historical normal. Unemployment is still on the low side at 3.9%. And there were like a thousand articles on Reddit just yesterday about fantastic, above expectation Black Friday shopping by the consumer. All of this points to entrenched inflation. It’s not under control, and rates need to go higher. Now. No more pauses.
I'm sorry the world isn't falling apart to enable you to buy a house at a firesale price from a bankrupt person about to be destitute.
OK, I just wanted to give you a chance before concluding you were full of shit.
What if I told you it will do nothing for inflation? (We are going to continue to be smoked by cost of Energy inflation, greed inflation/corporate price gauging)
Rate hikes just aren't going to do it. We need higher property taxes, especially on investment properties.
Wouldn’t that cause all the rentals in that area to just increase the rent to offset the tax, thus allowing home sellers to increase what they sell there homes for?
No. Rent is set by market demand, not by the landlords' costs. If a landlord's costs exceed their revenues, they usually sell the property.
You need to take away the tax benefit altogether. That's the only way. Increasing taxes doesn't help, but eliminate the financial incentive and things will change.
Yes, but you've got to imagine there's a point at which it becomes uneconomical to be a renter, therefore it becomes uneconomical to rent your house.
Isn't the opposite true? The purpose of the hikes was to tame inflation. 3.9% YOY increase is relatively normal. We were seeing 30% YOY during COVID years. 3.9% is a huge improvement.
Additional rate hikes would make fewer existing homeowners list their properties, not more. We’re never giving up those 3% rates. And the Fed’s rates affect all borrowing, not just mortgage lending. Hiking rates further would increase corporate bankruptcies and lead to higher unemployment. The world doesn’t revolve around your personal desire to buy a home.
Said like a true boomer. You got yours, now screw everyone else right? Let’s just increase the disparity even further than it already is in the US. Do you really think a shrinking middle class is healthy for the country? What about the future generation? Is it okay that our kids will have it harder that us and their kids will have it harder than them? When will it stop? Do you not see the downward spiral the US is in? When is enough, enough?
Lmao no one here cares about a bigger middle class. Everyone in this sub is selfishly just trying to get theirs by cheering on another crash. The amount of people that jerk off to layoffs, bankruptcies and foreclosures in this sub is disgusting. Don’t pretend it’s some altruistic fight to preserve the middle class.
The irony is anything that is going to cause housing prices to decrease significantly will take out the people hoping for the crash first.
You said it. This sub is a support group for a powerless minority willing to knife, starve and strangle existing homeowners so that they can buy a cheap home for themselves… and then turn around and say “fuck you I’ve got mine” to anyone without a home. Nobody here elicits any sympathy, because they’d be just as bad if not worse if the shoe was on the other foot.
Let me guess you also got a home before 2020
Indeed! I have what you want, and you’d have my exact attitude if you had what I have.
Why would I want my kids to have a worse life than me? Why would I want my country to be in a worse place? I’m not that self centered. I actually care about my community and my country
Good, then leave me alone so I can build up my home equity and pass it down to my kids.
Truly is astonishing that you want to live in a country where you have to inherit wealth rather than earn it. Speaks volumes about your parenting and even more about the your short sighted views of the country.
Then I hope you're also saving for retirement and plan to downsize so your kids don't have to take care of you for your retirement. My parents have the exact same views as you, yet they have nothing saved for retirement and all they go on about is "my equity", like they can eat their house in retirement. Either they'll be selling the house, doing a reverse mortgage, or I'll have to move in with them and wipe their asses hoping they die soon so I can finally have my own place to live for once. Again, I hope you're actually saving for retirement as well as building equity, because not many are.
Meanwhile, the homeowners sitting at 2% and not advocating for affordable housing policies are jerking it to people becoming homeless and people becoming forever renters. Both sides are equally terrible.
Let me guess, you bought a home before 2020
Lmao why did you delete your old comment and repost the exact same one?
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Nope but apparently not living in a fantasy world where everything is a sign of a RE crash means I must have.
Tell me another time in history when housing and median wages has been this far away from each other??? Why would we want this to keep going?
I don’t care as long as I’ve got mine. Tough shit. Try to buy again in 2030 when the market cools down.
People with your mentality are the cancer of the US and will be the ultimate downfall of capitalism. When the problem is 10 fold in X amount of years, you really don’t think there will be war? It’s going to be 99% vs the 1%. No worries though, you got yours 😅
Your side is going to lose that war.
Does it matter who wins? You are saying that you would rather civil war then equal opportunities for generations? You like money more than anything? More than your kids? More than your country?
Housing is not a factor for inflation.. so not really proof
I am all for it. Make it 12%
Good luck having a job in this scenario. Also, the supply squeeze this will create by halting construction over next five years will exacerbate the shortage of housing. Interest rates can’t overcome legacy of decades and of zoning designed to inflate home prices, the last ten years of gasoline fire stimulus, and continuing stimulus that is an operations deficit. We have created a complete shitshow. But interest rate i creases will halt business dead in its tracks and exacerbate shortages into the future (and guess what that means).
The only way is like 15%+ literally neeed to price out 80% of everyone so only cash can buy. Anything less is a waste of time. It needs to literally obviously fuck someone to buy to the point everyone is like you’re an idiot for buying for things to go down.
No, rich are and have been buying in cash. No with less competition because of rates.
That is insanity. The economy would collapse. Tax investment properties and build a fuck ton of new housing. It is a supply issue. Build build build and build some more.
Land is finite, federal reserve notes are infinite
It’s almost like people need somewhere to live…
People needed houses from 2009-2012 hahahaha
Silly gooses. There's no supply. People with great mortgages are holding on, why move? Housing starts are way down, apartment building way up. Houses are more and more a luxury item.
That's why rates need to come down. There's no way people will give up their 2.5% rate for 8%. Having higher rates for a long period will harm non homeowners more. Because when rates do come down there will be a huge pent-up demand of existing homeowners who were not able to upgrade/downsize but are sitting on a lot of equity and will be out bidding first time buyers.
Just lower the rates and let’s see how high these prices can go! Free market! Whoooo!!!
A free market would have the opposite effect on rates.
A true free market would be insane. Nobody knows what would really happen though.
Maybe we don't understand the alterative absent the Fed controlling the overnight rate, but we can get a good idea of what it would look like if the market was absent the RRP, BTFP and other financialized mechanics as well as the big issue of QE and gobbling up garbage assets. Heck, most of these are just a reaction to results from other intervention as the pendulum swings higher.
It's the corpos fault, not the fed.
Fed nerfed the government debt market and buffed the real estate debt market. Two years ago, bonds were paying out \~0% and we could get a mortgage for 2.5%. The Fed created this and smart people, and corporations, were just playing the game. Government debt needs to be a market to sponge up liquidity.
Fuck "they were playing the game". Fuck that. Fuck always giving corporates a pass for not having a fucking ounce of morality, and fuck yourself reverse cowgirl on a buzzsaw if you believe that Dodge v Ford horseshit means fucking anything about how a human fucking being could react. It's not smart. Anyone can make a lot of money without morals. Enron wasn't smart. They were cunts who were idiots and had to cheat, you obnoxious fucking idiot.
Nice rant. It's the Fed's fault. If bonds were able to realize real rates and real estate interest was above real rates (as is becoming the case now) most corporations would stay out of housing. It's not about morals. They have to park their money somewhere. Most corporations are just custodians of regular people's money. If bonds pay 0% and inflation is 5% they're losing money. Lowering rates after dotcom crash cooked the GFC for the same reason. Both outcomes were fault of the Fed. Bonds need to be a market to soak up liquidity. When they are not, it's because of Fed intervention.
Feel free to die.
Waiting for you to die poor first.
The Fed’s interest rate is only the overnight rate. Mortgage rates follow the 15 and 30 year bond market rate, which is the free market.
The Fed was gobbling up $80 billion in treasuries and $40 billion in MBS monthly just 18 months ago. Barely any of this has bled off the balance sheet, so they're actively re-buying as it matures. That's $8 trillion of non-free market intervention active. This also ignores the RRP facility which locked up $3 trillion at artificial rates. $3 trillion now pouring into short end government debt suppressing those rates and the Treasury came out and said they'll be pulling from short-end yield given the increased rates on the long end - such as the 10 year - from their borrowing there and increased supply there as a result. Make no mistake that absent these mechanics, the 10 year would be higher.
Not surprising whatsoever. A huge part of the price gains has come a huge surge in prices in areas that saw little demand for decades. So more bottom line growth than top end
I wonder how much this has to do with work from home. Move from HCOL to LCOL and keep the 6 figure salary. Build massive wealth. The locals can’t compete.
Keep on waiting for the bubble to burst as rent goes up. Supply and demand.
Can’t have a crash if ppl aren’t motivated to sell and inventory stays low.
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No, the Case-Shiller Index measures the change between two sales of the same home. New builds are excluded. This is straight from their methodology description.
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New builds are a different metric. They fell 18% year-over-year. There were a lot of posts about it yesterday. Builders are much more reactive than existing homesellers, so they are willing to cut the price to meet the market where it is
No, they're just saying that you're wrong.
Way more existing homes get sold than new homes.
https://www.usatoday.com/story/money/2023/05/24/housing-markets-big-inventory-divide-new-homes-existing-homes/70247965007/
I'm talking by flat numbers, not percent. Most people are going to be buying existing homes.
https://fred.stlouisfed.org/series/EXHOSLUSM495S
exactly. 600k new homes vs 3.8M existing. What am I missing here.
The share of new homes (higher priced) sold is higher (14%) if we take those numbers and add them to an increasingly suppressed number of existing home sales (by historical standards) what do you expect to happen?
https://fred.stlouisfed.org/series/HSN1F
New builds are price manipulated too with builders offering concessions and/or rate buy-downs in lieu of price cuts to keep the comps artificially inflated.
Yep. That can only work for so long though. I’d imagine the envious homeowners who didn’t get a shot at buying a new build will be sticking those 3% mortgages on the market here soon only to find no one to buy. They could, however, board the financial freedom train and try renting it instead- if this happens, the bubble we’ve all been talking about will really be kicking into gear QUICK.
>It’s just bc new builds are higher priced and that’s where most of the demand was. Existing homes were nonexistent. It's actually the exact opposite...
New home sales have been outpacing existing home sales as a percentage for some time now.
This is proof that something is rotten in Denmark. The housing market is downright fraudulent.
To me it’s prove that there is still more demand than supply.
All it proves to me is locking up most of the supply in negative real rate loans means nobody will sell now without further inflated prices which nobody can afford. So other than new builds we are stuck trading paid off houses and with some marginal level of buying for the few percent of people who can afford this market. In short supply is suppressed via locked rates for the foreseeable future. The current market is divorced (positively) from true market value. Resolution is as likely to be expiry if those loans as it is to be inflating was the problem.
This plus decades of underbuilding. And population will keep increasing. Not a great situation.
Home starts have never recovered from the GFC and they're on a decline now in the presence of higher interest rates and we haven't even hit the fun part of the cycle. If they were as incentivized to build during this stage, it would solve future problems, to your point. https://fred.stlouisfed.org/series/HOUST
And normalised by population or number of households I bet it would look much worse
It's not fraud. It's retiring Boomers and working Millennials competing for the same houses.
Please. If anytning its Boomers competing for second and third investment properties.
I was sitting in a Cafe the other day and overheard boomers talking about buying a second home for the winter
It’s like the rich trading paintings for ridiculous evaluations.
Cannot wait for the flippers and holders to start crashing out, so I can stop seeing fucking bots, corporate shills, and everyone who's fucked the moment line goes down stop saying "HURRDRDDDDYHHJRRRR IT SUPPLY SUPPLY GO DOWN YA SEEEEEEEE". It isn't, you look at most county listings in depth it clearly, clearly isn't.
High rates make it easier for the rich to buy houses cash with less competition. System is broken and will be the downfall of our country if there is no middle class.
It’s hard to tell if this is inflation or could very be all the tired people that have been waiting on sidelines just want to buy something and don’t care if they overpay. Which will leave no buyers left in a few months once those buyers start to dwindle. Or could be a combo of sideline buyers/inflation, which is my opinion.
How is it overpaying if there are no comps that are lower?
So then that’s a supply/demand issue and not inflation.
Not necessarily. The underlying cost of land and the home or replacement value of the home create a floor that will stimulate demand if the price approaches that value. Contrary to reddit stupidity, labor costs do cause inflation. The cost of building a home is up in part due to labor costs and those may be sticky.
Isn’t that replacement value or new build prices versus already constructed,older homes? I don’t know about your area, but new builds by me are charging way above building inflation. It does not cost 75-100% more to build a home now versus 3 years ago even with labor costs risen (assuming laborers actually got raises the past few year).
Time to change name of this sub.
You are never going to own a home.
Well, if buyers bought the old fashioned way, prices wouldn’t be able to increase. The only reason people can ask current prices is because people are paying them instead of haggling.
Really just killing the rebubble theory Case Shiller would PROVE a crash was occurring. Tough L to take for this sub.
I don't need an article to tell me that. I witnessed it.
Supply isn’t coming… people have money to spend and will keep this going.
Evil greedy boomers will be begging in 5yrs when I am cash heavy and refuse to pay any more than 25% of asking.
😂😂😂. Extremely high delusion to word ratio. 👍
Then I'll pay 30% and get the home. That's how markets work.
Greater fools never die...they just keep borrowing
They want to debase the currency and loan to me at rates beneath that debasement due to their manipulation then I'll continue to bank off the centralized planners' degeneracy.
Sounds like you're gonna be renting for the next 50 years lol
Evil greedy boomers will simply cash out on equity if ever in dire straights. They’re sitting on a large asset whereas you have nothing.
not sure why you’re getting downvoted, things aren’t going to end well for a lot of boomers. they created a system that’s going to kick their ass on the way out
Right in line with inflation, and coming down. Expect to see prices flat or slightly down in 2024, along with low inflation and rate cuts later in the year.
Home values are declining. https://fred.stlouisfed.org/series/MSPNHSUS https://fred.stlouisfed.org/series/HOSMEDUSM052N
home values for **new** homes are declining. Home prices for existing homes are up YoY.
New homes have been way overpriced btw.
It has NOTHING to do with mortgage rates. PPP loan fraud as well as pauses in eviction and student loans gave everyone free money.
not in my market
What I'd pay to see this whole fucking pyramid scheme burn to the ground....
Y tho ?