From the Washington Post:
The Fed’s Damage to the Housing Market May Last Years
With interest rates now hovering around 5%, existing-home sales are down more than 14% from last year. Some potential buyers are sitting on the sidelines until rates or prices or both decline, while sellers are hoping the market picks up again so they can get a higher price.
But don’t count on rates falling to those pandemic lows. They were the result of extraordinary market manipulation from the Fed. And unless this becomes a regular feature of monetary policy, rates are not going back to what they used to be.
The real estate market has been on a wild ride. House prices, measured by the Case-Schiller index, increased 30% between March 2020 and December 2021, a steeper rise than the lead-up to end the housing bubble in 2008. This was in part because many people moved during the pandemic, but also because the 30-year mortgage rate was only 2.65% in spring of 2021.
The impact of the Fed’s interference may be felt for years. In the spring of 2020, the Fed was desperate to avoid economic collapse, so it reverted to its 2008 playbook. It cut rates to zero and brought back quantitative easing, buying long-dated government bonds and mortgage-backed securities (MBS). Most residential mortgages are securitized by Fannie Mae or Freddie Mac, and resold in what is known as an agency MBS.
In 2020, the mortgage-backed security market was in trouble, and the Fed was even more aggressive than it was in 2008. It effectively became the only ultimate buyer of these securities: Its holdings of agency MBS increased by $1.3 trillion between 2020 and 2022, while the market for agency mortgage-backed securities grew by $1.5 trillion. The Federal Reserve now holds more than 40% of the total outstanding amount of agency MBS, or nearly half the market.
These actions were one big reason rates fell so low. Your mortgage rate is based on the 10-year bond rate, plus a premium for the extra risk involved. The size of that risk premium is largely determined in the MBS market, based on the liquidity and rate risk the investor takes on. The figure below shows the Bloomberg US MBS index minus the yield on 10-year bonds.
I still don’t see a lot of inventory east of of I-287 and north of I-78. Or, even more, I don’t see price drops anywhere. This is just from an observation point of view. If sales are down 14% YOY, then I’ll believe it. Prices thought, are ridiculous. A piece of shit 3bd/1bth in the mid 400s is absurd on top of property taxes. That’s what kills it. 12K in property taxes and you want me to pay 400-something for a starter that has walnut paneling and a pink bathroom.
On the other side, a trip to Shop Rite yesterday for a few items resulted in a $150 trip. A few items. Anything that’s processed, cereals, snacks, boxed stuff has a $4 plus tag on it. Inflation Reduction Act? LOLOL!
And I read this morning that 80% of those targeted for audit by the new 87,000 IRS Gestapo agents are people earning less than 200K. Let them eat cake. Pull the lever for another dem dud, you deserve it.
From the article:
But don’t count on rates falling to those pandemic lows. They were the result of extraordinary market manipulation from the Fed.
And that my friends is the answer to the crazy increases in real estate, many people will pay for this for the next 15 or so years. The government made tons of bucks , but of course they will spend all of it…the American way!
Real Estate may even collapse only time will tell.
I listed my six unit 4 months before the Pandemic , in PA for $375,000, best offer I got was $200,000, most offers were $175,000 to 190,000. Waited for a year, re-listed ( $384,900 within 2 weeks it sold, four full price offers one( which I took) all cash. Same house , people climbing all over each other to buy it. All because Fed was basically giving $$$ away, will not end well if interest rates go to 7-9%.
Here is the proof:
https://www.zillow.com/homes/235-Market-St-Bangor,-PA-18013_rb/10090070_zpid/
9:39 I think you might be missing something.
Like a frontal lobe. The legislation hasn’t even been
signed yet. Somehow you expect a magical reduction
in your grocery bill. You really would fit in great in
Arkansas.
10:34
You really would fit in great in Arkansas.
Anywhere away from you people and your type would be a relief. The left’s ideology is nauseating and sad. It’s exasperating. Everything the dems and progressives propose ends in a diminished way of life for everyone. It muddies the water, creates a society of blandness, lack of creativity, fatigue and hopelessness. Your side is forever in crisis, forever pessimistic, forever pointing fingers and forever harboring resentment. Any magic fix for the left’s fabricated emergencies always comes at the expense of someone else’s sacrifice. Your side is mess… their messages are a mare’s nest of wreckage and stench. In a few months let’s hope the House is in the “right” hands. It’s one step in stopping the left from wounding the country any further.
Gary,
Inflation does not use Food or Energy in the calculation. That’s CPI.
So NJ gas with a 3 handle is not an Inflation talking point.
Jim: Same madness in Canada, prices went through the roof, demand, blah , blah, blah, rates go up, the market is collapsing, and some say prices could drop in Canada by 25 percent or more. It was a bubble, nothing more.
Why do you folks persist in arguing with Eddie, Small Gov and GOAT? Their brains are clearly crippled. Their ramblings are no more insane than believing in immaculate conception. Surely you tolerate those people and don’t argue about their beliefs. Find a little kindness in your hearts for their disabilities.
Ed,
You can blame capitalism, nothing more. Your point is taken on food increases though. I went to ShopRite for first time in 3 weeks and prices are up again. The beverage companies are becoming biggest shysters. Do you think we don’t notice 8 pack instead of usual 12 pack. Seltzer cans (can Dry) was 8.50. They have lost their mind
Fast
Don’t eat processed and baked foods. I hear they make you fat, bitter, and paranoid.
Beer,
Typing from phone… I hardly eat processed, noticed the insane prices.
If rates are to blame for high home prices…why is rent sky rocketing? You don’t need a loan to rent.
Fast
Cereal is now rich people food. Soon to se sold only in NYC and it’s bedroom communities.
National data show what would seem at first
glance to be conflicting trends: Home sales
are down while home prices are up. Sales of
existing homes in June were down 5.4% from
May and 14.2% from a year prior, according to
data from the National Association of Realtors
(NAR). The same report found the median
sales price for an existing home was $416,000
– a record high and an increase of 13.4% from
a year prior. According to the mortgage data
and technology firm Black Knight, the rate at
which prices are growing dropped by almost
two percentage points in June, the biggest
single-month slowdown since the early 1970s.
From annual price growth of nearly 15%,
“slowing” could mean price growth of 5%, says
Jacob Channel, senior economist at
LendingTree.
“People who are expecting home prices to
suddenly start plummeting or to come down
are probably in for a rude awakening,” Channel
says.
https://pbs.twimg.com/media/FaED2QeWYAARnC2?format=jpg&name=large
The narrative is collapsing. The desperation on the left is painfully embarrassing now.
^^delusional^^
GOP narrative: pssssst there’s a pedophile pizza ring operating
in the basement of a pizza parlor….pass it on….
No need for a war of words you know in your heart you will not rest until you see trump in front of of firing squad. What does that say about the person you are. You are emotionally invested in this and as such you can’t think rationally.
Can;t speak for ex, but I sure don’t want to see Trump in front of a firng squad.
I would be much happier if he plead to a minor misdemenor, then got sentenced to a couple hundred hours of community service. :)
Dems and Repubs are both bad. Sooner Americans realize that, the better. Stay home on Election Day, your choices suck moose co@k as we used to say in high school.
I’n other news at the Kenny Chesney convert as our wives love him. 40 bucks for parking!!
This is a large reason why Nassau county’s prop taxes are the highest in the nation. A scam system that’s overly reliant on assessments. Law firms then fight to get yours lowered for half the amount of prop tax deduction. If you don’t fight you pay for everybody that does.
They tried to resolve this by updating assessments but then the taxes started balancing out (increasing taxes on people that weren’t paying a fair share) and now we have a republican who’s handing out lower assessments like candy to anybody that fights. newsday.com/long-island/po… /2
And these law firms get rich while people are unable to afford to live. They have a PAC and are contributing to dems and republicans. How are we supposed to fight systems like this? /3
Asking $555,000 for this box. The kids are trying to clean up it seems. It’s 150K over-priced:
https://www.njmls.com/listings/index.cfm?action=dsp.info&mlsnum=22025585&openhouse=true&dayssince=15&countysearch=false
Although this one needs some updating, look at the difference at 675K. The one above is smoking horse shit. This one might be worth a look-see:
https://www.njmls.com/listings/index.cfm?action=dsp.info&mlsnum=22028891&openhouse=true&dayssince=15&countysearch=false
https://www.google.com/maps/place/51+Coopers+Ln,+River+Vale,+NJ+07675/@40.9891567,-73.995438,3a,75y,35.43h,83.01t/data=!3m7!1e1!3m5!1sY3NHLs9Ryi4tH50Vo67X3w!2e0!6shttps:%2F%2Fstreetviewpixels-pa.googleapis.com%2Fv1%2Fthumbnail%3Fpanoid%3DY3NHLs9Ryi4tH50Vo67X3w%26cb_client%3Dsearch.gws-prod.gps%26w%3D86%26h%3D86%26yaw%3D310.78073%26pitch%3D0%26thumbfov%3D100!7i16384!8i8192!4m5!3m4!1s0x89c2efa611b6b21f:0x971b1ac0405b7368!8m2!3d40.9893255!4d-73.9956975
Asking $800,000 for this one. Sorry, we’ll pass.
https://www.njmls.com/listings/index.cfm?action=dsp.info&mlsnum=22029630&openhouse=true&dayssince=15&countysearch=false
3b,
It is outrageous. VIP at Sofi in LA last week was $80. We paid $55 at UBS Arena for Roger waters last night. Hard to complain though as this was our view on floor. I watched him sing Wish You Were Here and Sheep literally in front of me.
https://ibb.co/tzm7NjC
Bystander: Great picture! Expensive!! But, to get that close was worth it, like a personal concert.
By,
Saw Waters in the Arena at the meadowlands a few years ago… was one of the best shows I ever saw. I won’t ask how much you paid for those tickets.
Bystander
Great picture and a great deal on those tickets.
$225 per..and worth every penny. We had no idea until they raised the screens from stage and saw mic stand in front of us. Insane luck. He also walked right past us to start second set in his usual crossed-hammer suit.
Social security..pure theft.
“WSJ discussing a 10% COLA increase for Social Security for 2023.
A 10% increase for all US Entitlements (SSA & HHS, not just SSA) combined w/just a plain vanilla recession decline in tax receipts (down 20%) would leave Entitlements representing ~90% of US tax receipts. 😳”
The Great Pumpkin says:
August 14, 2022 at 12:53 pm
Social security..pure theft.
“WSJ discussing a 10% COLA increase for Social Security for 2023.
Except that is all my money that we put in, unlike NJ teachers pension that is funded by taxpayers and teachers. Maybe you should complain about that pumpkin.
You should be real happy that feds will drive rates into 7-9%. That WILL control inflation.
Wonder how much to get Bad Bunny tickets front row like that.
Jim,
What’s your angst with teachers? Why don’t they deserve a pension? You act like teachers are overcompensated or something. You act like they are bad people. Most teachers are good people, wby pick on them?
Social security is theft by your generation. You think that’s going to be available for my generation? Yet here you are crying about my pension that was also robbed by your generation.
“Social security is theft by your generation. You think that’s going to be available for my generation? Yet here you are crying about my pension that was also robbed by your generation.”
Worst case (no changes to current law) scenario for SS is a 25% cut in benefits across the board.
So, yes, it will be available for your generation (albeit probably at a lower level).
But your generation also has more savings vehicles available and much lower investment fees.
“But your generation also has more savings vehicles available and much lower investment fees.”
Like houses and real estate?
Haha. What a joke.
Worst case (no changes to current law) scenario for SS is a 25% cut in benefits across the board.
So ten percent raise to current while hitting future with 25 percent cut?
Thanks, Boomer.
Love this girl. Looks Satan Boomer in the face directly.
https://youtu.be/9LtF34MrsfI
https://www.zillow.com/homedetails/167-S-Tennessee-Ave-Atlantic-City-NJ-08401/2085065563_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare
Beach Block Multi Family Property in the middle of the Orange Loop Project and located within the NJ Opportunity Zone!! Previously used as a Rooming / Guest House with 18 Rooms and a ground floor commercial space just steps from the Beach and Boardwalk! Would make a great AirBnB Hotel. Purchase this home for a few bitcoins. Private hard money may be available to qualified investors with 20% down at 12% interest.
Truth right here. Criminal. One of the best posts of the year.
Phoenix says:
August 14, 2022 at 5:31 pm
Worst case (no changes to current law) scenario for SS is a 25% cut in benefits across the board.
So ten percent raise to current while hitting future with 25 percent cut?
Thanks, Boomer.
You have been warned. Yet, people are their own worst enemy.
“As mangers learn how to supervise remote workers we will see many high paying jobs move off shore to much lower wage workers — or be automated
We are seeing it all over the place: SDRs, customer support, video editing, coding, design
Salaries will drift to a global average
Many WFH jobs are at risk because once a manager learns remote work techniques they will eventually see a $5-15 an hour person in Manila do the work of a $30 an hour American on the same Slack instance and they go “oh, wow!””
https://twitter.com/jason/status/1558572868417425409?s=21&t=c44NahZNoyVX2cHWN9X82Q
Brrrrrr. Who shut off the sun? Going down to 65 F tonight…might have to turn on the pool heater to extend summer…I was hoping October close on my pool…
Phoenix re: Worst case..
lol it’s been print and forget for decades now. I remember when it was only 5 Trillion 20 years ago…
https://www.usdebtclock.org/
Ex – Not far from the Atlantic city property is this for a low low 1.4 Million
https://www.zillow.com/homedetails/5-Ocean-Dr-W-Brigantine-NJ-08203/37781315_zpid/
7 trillion under Trump’s watch…imagine if a democrat did that.
Juice Box says:
August 14, 2022 at 8:47 pm
Phoenix re: Worst case..
lol it’s been print and forget for decades now. I remember when it was only 5 Trillion 20 years ago…
Pardon me, should round up. 8 trillion under trump. Guy is a joke.
Pumps – Obama nearly 9 trillion not to shabby…Notice I did not mention which party passed the spending bills…As it stands if the Dems get their way it will be another 10 trillion on top of the 30 trillion that won’t be paid before you or me die…Boomers will keep getting 10% COLA while your salary languishes? Time to put a pillow over their heads (as told to me by my high school science teacher).
Juice,
It’s complete joke. You guys are all older than me…is there anything in life that does not let you down? Don’t mean to be negative, but it’s complete joke. At my age, I do not trust anyone anymore. If you do, you are a sucker.
Bystander, this you?
“National and swing elections are won in the suburbs. White-collar are already feeling it from layoffs, offshoring, WFH, and productivity squeezes.
Stable markets are the only things that will hold the system up.
Labor mkt is strong among less-skilled workers too
$SPY goes up”
re: “is there anything in life that does not let you down”
Pumps you almost always misread my tea leaves and my signs as I write here. I spent the weekend with family and friends chillin and grillin plus swimming in my backyard oasis. For me it will be this way until the fall, lots of fun and sun and enjoying life. I am not sitting online and gnashing my teeth. I am also not negative about investing, my point about inflation is pretty simple it’s an unsustainable and really an unsolvable equation. Time is really the only input that matters. Longer we push it into the future then we who are living and breathing don’t have to pay. Look I am not against the benefits per say, social security etc…5.9% COLA this year and another 10% next year? Nobody else is getting that…I can criticize the current bunch running the country now, it’s easy they are only in it now for the shits and giggles five years time and most will be taking a dirt nap.
Juice,
Didn’t mean to depict you as negative. You have been a jolly individual on this blog. I was just asking a serious question. How do people like Jim bust my balls for a pension when the national debt has gone up over 20 trillion on his generation’s watch? I’m the one that is going to have to live through that pain, yet here he is bashing me for being a teacher.
Depeche Mode will Never Let You Down Again
The Great Pumpkin says:
August 14, 2022 at 9:11 pm
Juice,
It’s complete joke. You guys are all older than me…is there anything in life that does not let you down?
Got stuck in a jam outside six flags tonight taking my kids home. Somebody got hit on 195. Saw the sneaker in the road and the tarp out covering the victim,
I’m taking a ride with my best friend:
https://youtu.be/Xq428DZI-eg
The Great Pumpkin says:
August 14, 2022 at 3:48 pm
Jim,
What’s your angst with teachers? Why don’t they deserve a pension? You act like teachers are overcompensated or something. You act like they are bad people. Most teachers are good people, wby pick on them?
Social security is theft by your generation. You think that’s going to be available for my generation? Yet here you are crying about my pension that was also robbed by your generation.
Cry me a river , or better yet get a better job. You won’t find one that pays as well or has a pension that will choke a horse. You are such a snowflake, your generation has been overcompensated BECAUSE of my generation . Get a clue Humpy.
What are you talking about Blumpy?