From the NYT:
The Fed Has Put Our Housing Market in Jeopardy
The Federal Reserve’s relentless attack on inflation is jeopardizing our housing market. The resulting damage is not only having an impact on a critical engine of economic growth but is also, ironically, undermining the war against inflation as well.
Resolving an unusual problem requires an unusual solution. The Fed should immediately reverse course and buy mortgage securities to help moderate consumer mortgage rates. It can keep selling Treasury bonds if it so chooses. This will allow the Fed to raise non-housing interest rates, if necessary, while also allowing the housing market to resume functioning normally again.
As fears of Covid waned and the engines of the economy restarted with a bang, concerns about runaway inflation prompted the Fed to embark on one of the most extreme changes in prevailing interest rates in history. The central bank raised its key federal funds policy interest rate to a level about 22 times what it was previously in less than 18 months. Only during the rapid inflation of the late 1970s, when the Fed under its chairman Paul Volcker raised the effective federal funds rate to nearly 20 percent in 1980, has an increase come even close. (And that Fed only roughly doubled rates, not increased them 22-fold.)
In normal times, higher Treasury rates, which make mortgages more expensive, divert household income to mortgage payments and away from other purchases, dampen home buyer demand and, ultimately, lower home prices. Lower home prices reduce homeowners’ wealth, further lowering their spending. And home purchases are such a powerful component of the overall economy — think of everything a new homeowner might need — that making it harder to buy homes helps cool off the rest of our $27.6 trillion economy.
The problem is, these aren’t normal times. Recently, the average interest cost on a 30-year, fixed-rate mortgage neared 8 percent.Less than two years ago, it was about 3 percent, and most homeowners refinanced then or at earlier lows around 2016. The jump in rates has been so unusually large and came on so unusually fast that many homeowners who may want to move suddenly cannot do so because even downsizing could result in a substantially higher monthly mortgage payment. As a result, the U.S. owner-occupied housing market is now experiencing both a mobility and an inventory crisis.
In September, the pace of existing-home sales fell below four million on an annualized basis to a level unseen since the early 1990s, other than during the Great Recession and the pandemic lockdowns. With so few homes being put on the market for sale, the normal effect of higher interest rates — a gradual reduction in home prices and dampening of associated inflation — is simply not able to happen.
There’s more: When owner-occupied homes aren’t made available for sale, and prices therefore can’t adjust downward, more people are forced to rent. And with more households dumped into the rental market, rental prices rise — which is what they have been doing in recent months, defeating the Fed’s effort to beat inflation.
With residential rent making up approximately 33 percent of total and 42 percent of core Consumer Price Index inflation, excluding volatile food and energy prices, the cost of housing has been driving inflation for nearly all of 2023 (and remains potent regardless of what Tuesday’s Consumer Price Index data for October may suggest). In September, if housing prices had not risen, core inflation for the month would have been zero.
It is an irony that the Fed’s effort to tamp down inflation is causing an increase in core inflation measures. And while the Fed is chasing its own tail, other avenues for controlling inflation have weakened considerably as a result of the unique circumstances surrounding the pandemic.
It’s early do you know where your first is?
Good piece from Ritholtz:
Revisiting Greedflation
Grimmy did you pay Elon for access to Grok?
How many new housing units were approved by zoning for the Cigna property in Franklin Lakes? 500?
Who says there isn’t enough land.
No grok, but I was trying to get down to Boca Chica with my daughter, but couldn’t find a decent flight. They pushed starship to Saturday, so maybe we’ll grab a flight down to Padre later tonight.
Grim – Met with our teams we are on basically on sprint zero for AI. They are focusing on how to integrate the commercial ones available.
I haven’t dropped the advice I got from you about that subject. We do want to be different as there are over two dozen other companies in our space rushing to deliver AI to their customers. I want to skip the entire generative AI gold rush and focus on Interactive AI, a home grown one.
I am on the team the influences these decisions, but since I just started I might have to draw up a whole new architecture and drop it into Confluence which is sure to start a war.
Awesome that you are taking your daughter to see Starship launch, their new water cooling system should prevent the raptor engine damage that occurred last time. There will be allot of excitement on the beach ion San Padre for sure.
I will be down in Maryland for a soccer tournament with my 14 year old. He tells me he will be scouted. They all want to be the next Messi.
Feel free to call me, I can brain dump and save you guys at least 2 months.
I will take you up on that in a week or so….TY
In September, if housing prices had not risen, core inflation for the month would have been zero.
I think my neighbor may have heard me laughing out loud. Golly, inflation reached an altitude of 80,000 feet and we’re supposed to rejoice. $5.99 for a pint of no sugar added ice cream is absurd, along with all the other $5.99, reduced ounce packages. The ‘standard-sized’ cereal boxes are starting to resemble those little multi-pack, one serving boxes. And how much thinner can they produce the cardboard package before it’s classified as 75 gram office paper? No, housing isn’t the only inflation factor, sorry.
And the FED should buy mortgage securities? LOL. Didn’t we go down this road before?
But, the consumer has it’s own solution in fighting runaway prices… it’s the magic of credit cards. The banks will gladly approve of $250,000 of credit for the most intellectually challenged muppet, keeping prices of everything at a premium.
Grok rules!!
Funny thing about Grok it was being developed while Elon along with many others signed a letter that was there should be a pause in AI Development. There was no pause it actually sped up.
I think Elon Musk has an island out in the Pacific and underneath that island is an enormous factory of semi-nefarious activity. I see 007 infiltrating to report back to MI6. Come on, the richest guy in the world is named Elon Musk. Is there a more perfect name for a nemesis?
So I guess we should have kept rates at 3:00 or below, and housing prices would have stayed lower, but inflation in everything else would have continued to rise, or not fall . But, no the Fed tightens to lower inflation, and interest rates rise making house prices even higher, but overall inflation lower. So if the Fed cuts rates, housing prices will stay the same, or will they go higher from where they are today, or will the market be flooded with homes, as people are no longer locked in to their low rate mortgages from a few years ago, thus flooding the market with more homes driving down prices plus the added benefit of lower rates. Do we need rates to go back to 3:00 or does 5:00 create this perfect environment? The article as written makes no sense to me.
3b – Remember there can be no asset price deflation in housing, it’s not allowed. The only thing we will see is disinflation. As soon as people realize prices are falling, they will postpone a home purchase as long as possible. That means a crash will occur. We cannot have the banks failing again so soon.
A supply-constrained market is actually a good thing, we all read about Grim’s last sale 70 offers for a POS 2 family Cape….This example and many other ‘ ‘immediate sales’ that have many offers means there is plenty of demand for the current level of housing supply, and more importantly people don’t think prices are going to fall anytime soon and delay their home purchase.
Ed, They took the top of the rocket off as soon as the launch was pushed, and it should be put back on today. He is more of an antihero than a villain.
https://twitter.com/nevernorminal/status/1725321451325018536
https://www.youtube.com/watch?v=mhJRzQsLZGg
It’s a lot of moving parts right now. Housing and commercial real estate in places like SF are doing awful with very low demand. NJ is currently insane because of the mass exodus occurring from NYC. Same goes for Philly suburbs. This is a national trend where people are moving out of the cities. So nearby suburbs are insane. Go further out the market is more normal.
The inflation is getting worse. My wife said a quick side meal for her and the kids, some fries, nuggets, and 2 drinks ran her $16. I stopped by Sahara in Manville yesterday for takeout. 4 dips and 2 soups. Fifty bucks. Probably the first time I’ve gotten food out in 2 months. Most places I’ve given up on because I can make the same thing better for 1/10th of the cost. Sahara’s dips/spreads are top notch, can’t make it as good as them.
I had cooked a leg of lamb the night before to go with it so it wasn’t even a true meal out. Had I tried to get meat, it’s a $80 takeout meal for 4.
“From the NYT: The Fed Has Put Our Housing Market in Jeopardy”
Correction: From the NYT: No One is Buying Bidenomics So Re-Open the Spigot for Team Blue Ahead of 2024 Please.
Re: Musk, I think he is an alien who so alienated his civilization they dumped him on a blue ball in an obscure corner of the universe to be rid of him. All this SpaceX and AI is simply cover for his futile attempt to get back home.
“The ‘standard-sized’ cereal boxes are starting to resemble those little multi-pack, one serving boxes. And how much thinner can they produce the cardboard package before it’s classified as 75 gram office paper?”
On inflation/shrinkflation while I’m not full on Lib cheapo I have mental parameters. I very rarely purchase regular consumables unless they are BOGO. For stuff like paper towels I check the total square footage and then usually a buck a roll is fine. So I open my latest brand name purchase there – Bounty I think – and the paper towel is so thin it resembles tissue. It’s not even properly perforated, if they did so it would have likely actually cut the roll it’s so thin…WTF, do I need to start shopping in 3D comparing how many microns thick shit is now? Really…
EM, phone home! Lol!
Juice: I don’t know, article still makes no sense to me. Chatter increasing out there about massive Fed rate cuts next year; others getting on the UBS bandwagon. I can’t imagine Powell is happy about those expectations.
left, you are wasting your time with that stuff. It’s all about what’s free. Today I got some ketchup packets for zero dollars.
Shopping without money is the newest trend. I see it almost daily now on the news outlets. Well, the regular news outlets. The progressive outlets talk about Trump 90% of the time. I watch hordes of riff raff flash-looting stores, hijacking Fedex and Amazon trucks and working diligently with sledge hammers in a classic smash and grab move. O’Bidenomics is truly ground-breaking!
I still swear by Walmart + for produce, frozen (not meat) and most dry goods. Restaurant Depot can’t be beat for quality meat, but you better have a basement freezer. I’ll run into Shoprite to buy a few things when they are priced well in the flyer. We rarely bring in anymore. Even the local Chinese takeouts have gotten outta control. If we do, it’s usually pizza and only when they are running their deals (usually Monday/Tuesday). In the last few days I have made Australian leg of lamb ($3.49 lb., it’s $14 a pound at ShopRite), porkchops with cabbage, cilantro and rice (wacky recipe that was fantastic). Grilled tilapia. Lots of boneless chicken thigh recipes do, like drunken noodles, stir fry, etc. I’m not finding grocery costs too bad lately. A lot of stuff is actually back to the old prices. Though, some things certainly aren’t. Laundry detergent, soda, cereal (when not on sale), frozen/processed prepared are all way up. But produce, eggs, milk, cheese, cold cuts and most meats besides the high end cuts of beef, seafood, are back where they used to be for the most part.
It’s funny, it’s the corporate food (the processed crap, whether frozen or refrigerated) that seems to have gotten out of control price wise. This also might explain why restaurants have gotten so expensive because most of them (chains) are serving a lot of processed food. As I’ve gotten older, I realized that besides eating at the fancy (expensive) mom & pops, I can make it much better myself at home. I just wish I had a sous chef. I’m sick of chopping!
We have a country of book burning. A country where two female politicians want to have global surveillance on you. One that wants to take away your right to bear arms. One that is increasingly fine with censorship.
Baseball, Trevor Bauer, forced out of America by a lying woman.
Apple Pie: China produces the world’s largest number of apples, followed by the United States,
Chevrolet: Well for the time being, still in America for most of them and their parts. A glimmer of fading light. What is a Tahoe now going to cost, 100k?
Just keep waving that flag. I guess believing in America and it’s constitution is better than believing in a man in the sky you cannot see. You will know things are real when your rights are taken from you.
“A wealthy Los Angeles father who pulled a gun on masked intruders as they tried to break into his luxury home while his five-month-old baby was inside has been stripped of his firearm permit. In a video for the National Rifle Association Vince Ricci revealed that his concealed carry permit was ‘revoked’ despite him saying he was confronted by two men ‘pointing guns at my chest.’ ‘After successfully defending my home and my family and my five-month-old child, California has now decided to suspend my Second Amendment [rights],’ Ricci said.”
Drunken Noodles: A condition affecting the male species by drastically reducing the ability to perform due to an overabundance of alcohol consumption.
All this talk about expensive food won’t make an American lose an ounce of weight.
They need an injectable drug @ 900 per month just to lose a pound. Charged to your insurance or Medicare, but never out of pocket.
The “sexy” neck fat y’all were talking about, your rulers get that from lathering on steroid gel.
Planet fitness is only ten dollars a month vs 900 for Ozempic.
Fast: We used to call that Whiskey Dick, back in my college days.
FE
Jersey Drunken Noodle:
https://youtu.be/r_8XJtX9-IA?t=236
Did some more ST harvesting Lib. Out of ZBH (6%, 10 days) and NDAQ.
RSP, MS, AXP still biggies….deeply profitable with assured returns down 10-20% from spot and breakeven lower….
Let’s see what the market says to do next week….
Re-upped some cheap hedges through next Wed….not as cheap as the ones I had on but still a good payday for a 1% down from here.
Eddie,
Listen to what is said at this time stamp:
https://youtu.be/r_8XJtX9-IA?t=900
It’s funny, it’s the corporate food (the processed crap, whether frozen or refrigerated) that seems to have gotten out of control price wise.
Thus, deeply indebted chubby muppets mingle among us. Who wants carrots when deep fried Oreos in rainbow frosting is available?
“From the NYT: The Fed Has Put Our Housing Market in Jeopardy”
I can’t take seriously anyone who complains about the housing market without stating the obvious- we need to build more housing.
Mortgage rates were as high or higher than todays rates in the 70’s, 80’s, 90’s and early 2000’s, and the housing market worked just fine. It’s only post financial crisis that we’ve had those super low mortgage rates.
The difference today is that NIMBYism and exclusionary zoning have made it very difficult to build new housing in areas of high demand.
Upzone everywhere! – build more houses, more condos, more multis. more apartments…
Increase the supply and drive down housing prices! As a plus, we can screw the “greedy boomers” at the same time.
Phoenix,
She’s a federal worker? Did I get that right? And she’s rather attractive. Us homely guys need to scrap hard for our meals. No soup bones for me.
“Whiskey Dick”
Yup. Had that a few times in college. Once, it made me the champion in bed. The other time, I got so tired, I fell asleep in the middle of the act.
LOL, seriously.
Jack Daniels I’d have a heart attack or just flat run out of energy before getting off…vodka, well, that’s the more traditional problem….
I can’t take seriously anyone who complains about the housing market without stating the obvious- we need to build more housing.
Why. So more hedge funds can turn them all into rentals?
This is what you do. Limit the amount of property that is allowed to be rental property. Especially single family housing.
You own it and live in it. Or you sell it.
“Whiskey Dick”
This is hardcore blues jam about to begin ala Leslie West/Robin Trower/Johnny Winter in about 10 minutes. The overdrive will be on 10, bridge pickup setting, key of C, pentatonic scale starting on the 8th fret.
FE,
Yeah, with a security clearance.
You don’t have to watch the whole video, others do, then comment.
It’s interesting to see where my business comes from. I mean, I do know the stories, but this is just another interesting take.
It is probably causing some bias in me, but I really believe that a very, very large part of the population is high, drunk, on some sort of psych meds, or valium. Then driving their 4000 lb missile down the highway.
Grim – Starship is stacked up again.
Destacked yesterday, repaired over night, tested around midnight, restacked this morning about 18-20 hours repair process….Pretty impressive NASA could never do that.
https://www.youtube.com/watch?v=mhJRzQsLZGg
Mentioned it here before, grim in particular if you’re going to a launch worth picking up the latest Isaacson book on Musk…even just for the chapters on SpaceX…some pretty funny/interesting anecdotal stories for background.
BREAKING NEWS!
G.O.P. Ethics Chair Moves to Expel George Santos From Congress
The resolution from Representative Michael Guest, a Republican, sets the stage for a vote shortly after Thanksgiving.
Only five members of the House have been expelled in the body’s history. Three of them were expelled in the Civil War era for fighting for the Confederacy. Two others — Michael J. Myers in 1980 and James A. Traficant Jr. in 2002 — were convicted in criminal court before being expelled.
Republican Rep. Mike Lawler on expelling George Santos:
“I bet the votes are there when we get back…A subscription to OnlyFans? I mean, it’s absolutely absurd. It would be funny if it wasn’t so sad and pathetic.”
LMAO! And Very Unstable Muppet rises from his box long enough to belch out a statement from page 36 that nobody could give a shit about. Don’t you know the sun is out? Won’t you melt or burn up or something? Lol.
Never subscribe to OF sites .;)
Unless they’re super hot.
OC1 says:
November 17, 2023 at 11:25 am
“I can’t take seriously anyone who complains about the housing market without stating the obvious- we need to build more housing.”
I’ve got the solution: allow housing to be built on top of the monstrous warehouses that are springing up next to every interstate highway. Some are already the size of a small town, so simply build the 4-over or 5-over wood frame apartments/condos that are also springing up everywhere, directly on top of those Amazon warehouses. Think of the convenience, place an order for light bulbs, bald spot spray paint and laundry detergent and have them all delivered by conveyor belt 15 minutes later.
BRT says:
November 17, 2023 at 8:52 am
“The inflation is getting worse.”
Didn’t you get the message, inflation is over! Joe, Jerome and Janet fixed it. Never mind the fact that I paid $2.50 for a single grapefruit at Shop Rite last weekend.
Should there be a limit on how many houses someone can own? What if someone like Musk, Bezos and such got together and bought large amounts of SFH?
Or if some Russian/Chinese oligarch wanted to buy up a state or two, would that be “American?”
Truth. Why is housing expensive? Well, how many people are profiting off it? How many people get wealthy off it? What do people expect when almost an entire generation grew wealthy off it? How many properties do some people own? Then people blame nimby…sure.
This coming from someone who has made significant money off real estate.
Phoenix says:
November 17, 2023 at 12:13 pm
I can’t take seriously anyone who complains about the housing market without stating the obvious- we need to build more housing.
Why. So more hedge funds can turn them all into rentals?
This is what you do. Limit the amount of property that is allowed to be rental property. Especially single family housing.
You own it and live in it. Or you sell it.
Sure. Have the workers live there. Any problems with production they can just jump on some fire poles and be downstairs in a jiffy and available 24/7.
Sixteen tons, and what do get, another day older and deeper in debt…..
I’ve got the solution: allow housing to be built on top of the monstrous warehouses that are springing up next to every interstate highway. Some are already the size of a small town, so simply build the 4-over or 5-over wood frame apartments/condos that are also springing up everywhere, directly on top of those Amazon warehouses. Think of the convenience, place an order for light bulbs, bald spot spray paint and laundry detergent and have them all delivered by conveyor belt 15 minutes later.
I’ve got the solution: allow housing to be built on top of the monstrous warehouses that are springing up next to every interstate highway.
I’ll go one better; put cots, a hot plate and a 16 inch TV next to the conveyor belts. It’ll bring working from home to a whole new level. Kill two birds with one stone, a house and a job all in one.
It’s amazing how the boomers will suggest the youth should live like rats in apartment dwellings that they own and profit from, but won’t subject themselves or their families to the same treatment.
No, not amazing.
More like not surprising. At all. Guess that’s what happens when your soul and brains atrophy before your money runs out.
Planet fitness is only ten dollars a month vs 900 for Ozempic.
One does not lose weight at the gym, that’s done in ones kitchen.
Tired of eating greens for lunch and have not picked up take out this week. Just got back from Soup Dumplings Plus. One sesame chicken, one chicken & broccoli, combo platters. $32 out the door.
Phoenix,
https://tinyurl.com/jw49pmyp
Lib, ALKS
Incredibly relaxing week. Punctuated with Organic Green Tea.
A cruise through the canyons yesterday “Decker Canyon Road” .
Perfect top down temps. M3 is dialed in.
Phoenix-
Rentals- whether houses or apartments- compete with home ownership.
Increase the number of rentals, or increase the number of homes for sale- it doesn’t matter which.
Increase the number of either and prices go down for everybody. That’s basic economics. They probably didn’t teach you that at med school… :)
“I’ve got the solution: allow housing to be built on top of the monstrous warehouses that are springing up next to every interstate highway.”
SmallGov- this is a great idea!
I think this is the most (only?) intelligent thing I’ve ever seen you post here.
OC,
Not really, because one is an apple, and one is an orange.
One of these things is not like the other…….
The “American Dream” has always been home ownership, not apartment dwelling.
George Bush said so.
Here is a picture of such, directly from the most honest website in the world, the American White House.
https://georgewbush-whitehouse.archives.gov/news/releases/2003/12/images/20031216-9_d121603-3-515h.html
Georgie W is a pure Repub.
He wanted Americans to own a piece of land. He wanted them to have pride in homeownership, not to share cockroaches and bedbugs between apartments.
Nor to listen to machinery and robots from 24 hour factories. Or smell the wafting spices from a culture you don’t like the food from.
Single family home ownership should be limited. Passive income is for those that are too lazy to work, and need Ozempic to keep them from turning into a beachball.
In fact, passive income should be taxed at triple the rate of earned income.
But since your lazy government makes it’s money that way, you will never see that happen.
ChiFi, young kid from Vlora running ChatGPT today…very impressive.
Leftwing
If you can afford cereal you must be rich
Phoenix-
No, one is a gala apple and the other is a macintosh. :)
About time. Enough is enough.
‘The era of “do nothing, the boss can’t fire me” is over’ says Ivy League professor Jeremy Siegel, as workers face down fear of layoffs
Not so long ago economists were largely convinced employees were the most powerful players in the labor market.
A stuttering economy, rampant inflation and a handful of mass layoffs later, it seems the tables may be turning.
According to Professor Jeremy Siegel, emeritus professor of finance at the Wharton School of the University of Pennsylvania, staff looking over their shoulders at laid off peers may have actually proved useful to the economy.
Professor Siegel pointed out that productivity is surging, with the Bureau of Labor Statistics reporting last week it had risen at a 4.7% annualized rate for the third quarter of the year.
Some of the motivation behind this productivity surge could be fear, Professor Siegel wrote in his weekly commentary on Wisdom Tree: “Workers might be working harder so they cannot be laid off; the era of ‘do nothing, the boss can’t fire me’ is over.”
Chi, important game tonight. Away. A win would matter later in the season… let’s go boys!
Adams to cut 4 billion from NYC s budget, police, education and libraries facing big cuts to their budgets.
NYPD facing the biggest cuts, including canceling the next 5 police academy classes, This guy is a former cop who promised to fight crime, police levels will be going back to 1990 levels. Good luck getting people back to all those empty office buildings 5 days a week. It ain’t happening.
But Biden has billions to give away to other countries.
Enjoy your crime America, you get what your politicians think you deserve while they get their own detail to protect them.
Future Favalaland.
3b says:
November 17, 2023 at 6:58 pm
Adams to cut 4 billion from NYC s budget, police, education and libraries facing big cuts to their budget
NYPD facing the biggest cuts, including canceling the next 5 police academy classes, This guy is a former cop who promised to fight crime, police levels will be going back to 1990 levels. Good luck getting people back to all those empty office buildings 5 days a week. It ain’t happening.
https://www.nytimes.com/2023/11/17/us/politics/colorado-trump-14th-amendment.html
Prolly going to be him and Gavin
Sam Altman relieved of duty by the board of directors. The board, comprised of six people, three open AI folks, said they no longer have confidence that he can lead OpenAI after not being truthful with them on multiple occasions.
Also, Altman’s sister a (generous 5/10) has an onlyfans account which she appears to be plugging publicly?
The [expletive]?
If there is grass on the field, play ball.
Female teachers are starting to make Catholic priests look like the saints they pretend they are….
https://dailyvoice.com/new-jersey/morris/former-nj-teacher-had-sexual-relationship-with-high-school-student-for-years-police/
You think the freshman are coming back to earth? They shot out of the cannon, but really flub it last weekend. Now they come out and get smacked the face, make a game of it, but played press offense in the third period? Or were they just gassed trying to come back all night? Much closer than the final score.
Was going to take my son and two of his senior friends who applied early to tomorrow night. Didn’t get focused and now it is locked out.
If those guy get in next month, we will probably road trip up there. The cross country team is already talking to my son.
leftwing says:
November 17, 2023 at 6:39 pm
Chi, important game tonight. Away. A win would matter later in the season… let’s go boys
https://www.nytimes.com/2023/11/16/science/bonobos-cooperation-study.html
A female adult bonobo groomed an adolescent male from a neighboring group in the Kokolopori Bonobo Reserve in the Democratic Republic of Congo.
Yup, I’m sure she did.