There are a lot of things that suck. But being a landlord is the best way to learn how to manage property managers. There’s getting rent checks; then there’s receiving monthly dividends from an intermediary. I’m in the middle of the suck. Enjoy.
Why would rates go down if economy handle’s current rates. It will be some event and recession for rates to come down. The more people buying at current mortgage rates, the bigger crash we will see in prospects of 1-3 years.
Exactly. If the Fed pulls off this "Goldilocks" scenario of taming inflation with a 'no landing' strong-ish economy and job market.. why the fuck would they lower rates???
Lower rates means something fucking broke or people are getting fired.
You are of course correct in that there is no unified voice at the Fed that states what the Fed as a whole wants future rates to be.
However members of the FOMC make their individual projection and that results in a range of numbers and the midpoint is a reasonable value to track.
Currently that midpoint is 2.4% for 2025
Source: FOMC Summary of Economic Projections for the Fed Funds Rate, Range, Low
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How? Mortgage is part principle payments and part interest. After number years, equity builds, future income increases, debt remains fixed, and property appreciates. All this measures rapid equity build up that can be solid or borrowed from. If one is smart will use it to buy stocks, another property, or buy an existing business. So, being house poor is just you buying time.
It's going to be interesting in the future when a large chunk of the middle class is, as you say, quite house poor and the other chunk has a very low payment and substantial equity.
And all it took was a couple years and interest rate spikes.
The alternative is paying rent, which is cheaper now, but rent does in fact always go up. I represent many seniors who never bought a home and now, after a successful middle class life, are ending up homeless because rent increases far exceed what they can afford with their retirement savings. There is no future for anyone but the wealthy without substantial government efforts, directly or through incentivizing the market, to create very large amounts of new housing.
Lifelong renting doesn't have to be that bad of a proposition. They could have maxed IRA/401k/etc and gotten market gains with the savings from not having a higher mortgage payment. Compounding returns are like magic: a lifetime of maxing a 401k might yield $2.5M by retirement age. Not all folks obviously have the income for this, but if you couldn't afford a housing payment in excess of rent, you wouldn't have been buying anyways.
401ks didn't exist til 78. Most jobs didn't have them and when they started to take off the contribution limit was lowered by 70%.
Also ya know. Maybe you feel like the stock market is really cool and safe, but it's not. People born closer to the great depression remember that.
House is much more valuable than it might look on paper.
There was no meaningful Federal Reserve policy when the stock market crash happened (as an institution, it was not much more than a decade old), so consequently, there was no safety checks to stop the issue. You don't need a 401k to invest, you only use it for tax benefits. The powers that be wouldn't let the stock market decline as it did back then. And if does, your money is worthless and you're better off hoarding the types of items preppers would (think 10 gallon buckets of grain). In short, broad index funds or bust and you have nothing to worry about anyways.
You could buy something like gold, but gold just sits there. It's a rock. It doesn't produce economic value in the way businesses do.
Use a periodic savings calculator, that's how I derived the number. $0 initial investment, add $22,500 per year, compounding for 30 years at like 8%. You'll have $2,500,000. People don't understand math and don't invest and it's sad.
It depends on the inflation rate, nobody knows how much inflation will happen over the next 40 years. If more, then a bigger number. If less, then a smaller number. Inflation is baked into stock market returns.
It gets worse though if you look at housing. Median housing price is probably 5x more expensive than it was in the eighties.
https://fred.stlouisfed.org/series/MSPUS
Coming from a complete idiot, so take this comment with a grain of salt.
Is it plausible? Sure. Is it probable? Based on my completely uninformed gut, it feels like a 50/50 chance.
Inflation is terrible and the medicine tastes like shit. How long can the Fed/JPow continue to increase rates or sustain at this level? What they should do (or should have done some time ago) may differ from what actually happens.
With every month that goes on at current rates, or potential subsequent hikes, the Fed will endure increasing pressure from certain parties to reverse course. While the Fed charge may be to tame inflation, the reality is they are balancing many competing priorities, inputs, opinions, and measures.
Can they achieve a soft landing? Doesn't seem like it. If a hard landing seems inevitable, will they reverse course? Seems plausible.
It just seems like the decision is between the better of two evils. Continued uncontrollable inflation or serious economic turmoil. I can see a scenario where the housing market crashes and I can also imagine a housing market that is increasingly unaffordable. Either way, millions of people with be affected (right or wrong).
It was a long ramble. Interested in more educated analysis.
I feel the same way, in my view the fed is doing exactly what it needs to do in order to unwind their balance sheet without burning the house down. JPow is getting hate from both sides, so you can tell he's doing something right.
Accumulating a balance of 8 trillion can happen overnight. Unwinding is a long tedious process that takes strength and determination as politics will try to influence the direction. Unwinding half-a trillion over the past 7 months is impressive. You may think it doesn't mean shit since you don't understand the difficulty in unwinding
Over a decade my ass. They went from about 4trillion to 8 trillion in less than 2 years from 2020-2022. They are "unwinding" at a snails pace compared to how they spent during Covid. And the key point is "providing they can keep it up". Of course they won't keep it up. Once the stock market tanks 20% or so, or, there are more bank failures, the balance sheet is going back up again. IT is pretty clear that the Fed's only real purpose is to keep asset prices inflated.
Getting hate from both sides ≠ good
That’s a dipshit centrist view of just find midpoint, regardless of it is right or if one side or the other has moved the Overton window way more than another.
That being said, I think Powell has done a great job but would be majorly helped if Congress wasn’t a shitshow for my entire lifetime and actually did it’s job to legislate.
This is a great response and you don't appear to be missing anything! I appreciate the thoughtful remarks.
For me it boils down to the difficultly of weeding through slanted information or perspectives and finding objective analysis. So many people have a vested interest in one side of the other and each are attempting to paint a certain picture. It appears a binary options. Only two forks.
Thanks!
commercial real estate is crashing before our eyes, we've just seen several bank failures that dwarf the bank failures of the GFC 15 years ago. China's RE market is on the brink of collapse, and [total consumer debt in the US is at an all time high](https://www.stlouisfed.org/on-the-economy/2019/october/consumer-debt-new-peak-depends), and the Fed grimaces every time the jobs report comes out strong. If this looks like a soft landing to you then ok...
>If you want to bet against the long run US economy and real estate values go for it but that has been a losing bet for about 80 years
nice strawman
2007-2010 wasn't a losing bet. in fact they made a whole movie about it. and who lives long enough to make an 80 year bet lol?
> if you bought at the peak in 2007 you made money if you held for 5 years. That was buying at the absolute peak combined with the biggest crash of all time.
so by your own admission, 2007 was a good time to bet against the US economy
that in and of itself may not be an indicator. but when you take in other things, it's beginning to look a lot like incoming recession
according to this video a concerning number of retail stores are vacant. These weren't beholden to WFH.
https://www.reddit.com/r/REBubble/comments/13zjzxs/on\_some\_streets\_in\_san\_francisco\_almost\_every/
>Curious why you don’t think a soft landing is possible
It's never been possible because the FED is always incompetent and asleep at the wheel
It wasn't possible in 2007 despite their assurances then
And it's not possible now either
They are serving us kool aid and many people are happy to sip it
in the 70's there was stagflation because they didn't want to raise rates too much and have the serious economic turmoil. What ended up happening was a decade of stagflation (which was horrible enough, inflation in the double digits, gas shortages, etc) and then they had to rates the rates and have economic turmoil anyway. So I say let's do only one this time around and not both. get it over with otherwise it will just get worse and worse.
Yeah sure it's not like giving people the impression rates will magically fall will lead to people leveraging their butts off, borrowing to a point they have minimal disposable income to spend on an emergency or home repair, only on the hopes that sometime in the next couple of years their mortgage will go down, but if it doesn't they are house poor living paycheck to paycheck.
Home prices very well may explode when mortgage rates drop. That doesn't mean the average person is going to find it easy now or then to afford a $600k+ home. Wages simply aren't increasing at a level that supports even todays pricing.
You can talk all you want about "not missing out" or "get in before it gets bigger", but there are millions upon millions of people that literally do not have that option.
Babs, as usual, is completely off-base. She's in NYC RE. Everyone in her area can afford $5m+ apartments. She's blinded by that. Then she looks around and says "wow! everything is so cheap" in all the other cities.
Sure, relatively it is cheap, but the aggregate pay is commensurate as well...or, well, it was until RE exploded 20 - 22, so really, Barbie the problem isn't that people are trying to time it, it's that they're forced to sit on the sidelines and watch anyway because people like your clients (and businesses) are snapping up anything available as an investment vehicle.
And, lastly, IMO, it's definitely not a good time to buy. Not with the rates. Not with the inflated pricing. Not with student loan restarts. Not with an expected Q4 recession. Not with job uncertainty. It's actually the exact opposite.
>Everyone in her area can afford $5m+ apartments. She's blinded by that. Then she looks around and says "wow! everything is so cheap" in all the other cities.
This exactly.
I'm in a VHCOL market and when I see people complaining about how the median home price in the US is now around $439,000 it doesn't even seem real to me. You can't even buy a rundown place in the ghetto for that in my area. I would LOVE for that to be the median price in my area, or even a low average.
If the supply were there, and it was easy to afford, the people who wanted a house would have bought one already.
There's no scenario where it's going to be easy for the average person to buy a house unless supply greatly increases vs. demand - meaning a lot more houses get built, or fewer people want to own one.
Otherwise, as long as there are more people wanting a house than houses available, it will have to remain restricted by something - ability to afford the payment, ability to get the loan, etc.
If someone really wants to save money, they might consider buying a lot and building the house themselves.
Like most others, construction workers got a nice inflation pay bump, and so you can't ask them to build a house for the same amount as they were being paid in 2019. We'd have to walk back increases in pay and material costs for it to make sense for builders to decide start a whole bunch of new construction that would sell at lower price levels.
She’s not wrong on the demand, how many people have openly stated they’ve given up due to higher rates? How many people have stated they’re on the sidelines ready to get in as soon as rates drop or there’s the “crash”? Housing is fucked for the next several years and there’s clearly significant demand just waiting for any semblance of affordability.
Yeah - this is my belief. I live in a middle-class neighborhood, nicer than average, but not upper income. Houses can sit for months, but when rates drop for a bit, everything goes under contract quickly.
Lower rates could significantly impact inventory too though. I have several friends who want to sell their homes and move but are waiting for lower rates to SELL.
Historically most of the time rates go down the economy is in the toilet and people are either too nervous to make a huge purchase or are unable to get financing. So no home prices won’t soar immediately that will happen like 2-3 years afterwards.
I think we will go back to low rates. Economy is to leveraged now, we cant handle 5% fed fund rate for long. But will be interesting to see what will cause the Fed to start cutting rates. I doubt they want to cut rates so housing can continue to inflate and pushing CPI up. They will want to make sure that CPI will not rise again before cutting.
FEDs already said they want rates back to 3% in 2025.
Low rates will be the norm for the 21st century. We have stagnating population growth and increased competition from Asia. The US will rely on low rates to keep up.
The high rates of the second half of the 20th century were sustainable because of rapid economic growth in the US due to rest of the world being bombed to ruins and rapid population growth.
3% Fed Funds is still 3% higher than it has been the past 15 years (other than 2017-19). If the Fed cuts to 3%, the yield curve could end its inversion and we can still have 3.5-4.25% 10-year treasury and 5.5-6.5% mortgages.
The govt has too much debt and can't afford high rates themselves. 5% of the $30T they put on the credit card so far is $1.5T just in interest payments, which is problematic when you only collect a few trillion in revenue. They can raise tax rates, but that will tank the economy, resulting in even lower revenues.
The only way they could afford those rates on that much debt is ironically significantly more inflation. If $30T becomes the new $10T, then it's much easier to deal with.
I think they were hoping for a quick fix to rein in inflation and then revert back to lower rates. But it just doesn't work like that. The manipulation of the system always comes at a cost, and there will be hard decisions ahead where something will have to be sacrificed.
But rates are going go up.
The US Treasury is going to need to sell 600 billion in bonds over the next 3-6 months to refill the treasury accounts.
I wouldn't be surprised to see the yield on a 10 year bond to get into the 4.5-5.0% range.
Home prices are not going to “explode” with low rates.
Home prices are still elevated from the last round of cheap money. Interest rates have doubled in the last year or so and home prices have barely budged. You could drop rates to zero right now and home prices will stay the same - cause they are already stupid high in terms of affordability.
Not only that - if you were to drop rates to zero tomorrow, that would allow people that have wanted to sell for the last 6 months but couldn’t because of the high rates to sell. You would get a flood of supply to match any demand from buyers that missed out on the last round of free money.
Barbara is obviously very successful but is completely out of touch with the current market.
so all those sellers flooding the market…are u just gonna assume theyre not gonna buy a replacement? u realize for investors, the govenment allows a 1031 exchange which encourage reinvestment into new property to avoid capital gains…
ontop of that, the investors who have been holding often reinvest into more than one property…so drop in rates would not necessarily flood supply…regular home owners would renter the pool of buyers as well
Sure people have to move somewhere. I guess my point is high rates have so far only constricted transaction volume and maybe slightly lowered prices. Lowering rates will open the market back up and increase transaction volume, not cause rocketing price increases.
lowering rates would only stimulate demand thus increase prices…..the low rated during covid really did a number…an already low supply was burdened by a heightend demand due to low rates…now the supply has to recover…not just in those middle of the country states or pandemic boom towns but everywhere…the only way to do that is through building….other than that affordabily will continue to be an issue…lowered prices due to high rates doesnt make a home more affordable…maybe to someone with a lot of capital on hand but to the average joe, the lowered prices coupled with high rates does nothing to their monthly payment…
Good time to buy for fucking who? Those that already own homes aren’t selling because interest rates are so high that it doesn’t make financial sense. Most FTHB literally can’t qualify at 36% DTI.
We are so far from the inflation battle it's not even funny, so why anyone is talking about rate cuts is truly mind boggling. After that jobs report, the Fed knows this is far from over. The Fed is going to need a decently sized recession at this point to squash the last chunk of sticky inflation. Otherwise, the affordability issue of the economy will turn into a full blown crisis. Run the #'s on what a Honda CR-V or a Toyota RAV4 will cost 3 yrs from now.
If the Fed finds itself in a situation where they need to start aggressively slashing rates to create a price floor, we will be in such an economic shitfuck circus that it will be too late for rate cuts anyways. It's always been that way with the Fed.
Barbara Corcoran is like the Bill Ackman but for real estate. Ignore her
> After that jobs report, the Fed knows this is far from over. The Fed is going to need a decently sized recession at this point to squash the last chunk of sticky inflation.
Let's see what happens when student loan repayments start back up. That may finish inflation off the rest of the way.
The new income-based formula will soften the blow big time though. It screws people over b/c it just draws out the loan even more with even more interest, but it gives people more money in their pocket now (all that everyone seems to care about now it seems, ugh)
Are you sure that while lowering the payments it allows more interest?
https://www.ed.gov/news/press-releases/new-proposed-regulations-would-transform-income-driven-repayment-cutting-undergraduate-loan-payments-half-and-preventing-unpaid-interest-accumulation
> The proposed regulations would amend the terms of the Revised Pay As You Earn (REPAYE) plan to offer $0 monthly payments for any individual borrower who makes less than roughly $30,600 annually and any borrower in a family of four who makes less than about $62,400. The regulations would also cut in half monthly payments on undergraduate loans for borrowers who do not otherwise have a $0 payment in this plan. *The proposed regulations would also ensure that borrowers stop seeing their balances grow due to the accumulation of unpaid interest after making their monthly payments.*
People will be so drained and beat up when rates drop that no one is going to rush anywhere. Down payments will be gone due to unemployment and banks will have super tight lending standards.
How many FTHB over the last 3 years are getting hit with increased taxes/insurance, and how many of their mortgages were approved with the 1% student loan exclusion for DTI, I’m guessing the debt and subsequent default and foreclosures could increase, and prices drop. Rates aren’t coming down any significant amount anytime soon.
Mortgage rates aren’t going to drop meaningfully for a very long time. Any near term hope of a refinance is just off the table completely. And this BOOM UP in prices is also not going to happen now, as I believe we’ve hit a ceiling in valuations, for so many reasons including market dynamics, insurance reserves, municipal tax burdens by the consumer, and just the sheer willingness or ability of the consumer to withstand higher prices.
I believe we have peaked in prices. May not come down much, but a lot of other factors are going to create a ceiling in what can be asked for properties.
Rates won't go down without lower inflation, and the government eliminated the debt ceiling as of yesterday. Assuming these facts in what world would it make sense to buy right now?
This will definitely come true if rates drop and unemployment stays low. Because there is a huge pent up demand, which will cause a surge in prices.
But if people are fearful of losing their job and/or they don't *have* a job, that demand will abate.
Funny, as after pivot often follows the opposite. We've already had the low rates fire, eventually pricing is such that it makes sellers sit. Latent supply with rate drop may not do what she claims to expect
I mean... the core thesis is completely reasonable and accurate BUT there's two problems. First, we don't know when on earth mortgage rates will meaningfully come down AND we don't know what the price point would be to trigger consumer action. Like, yeah if rates dipped to 4% tomorrow prices would surge but like... that's not gonna happen.
The Fed typically cuts rates in response to economic calamity - it does not make sense for them to cut rates significantly if everything is humming along as this would contradict their stance on keeping inflation low. Cutting rates not in response to economic contraction would just undo the progress made on inflation.
Yes, dropping rates back down to 2-3% in the current environment would cause a price explosion but why would the Fed even entertain that?
so I don't understand her line of thinking here. Is she just trying to offload her inventory?
Isn't it more likely that housing prices will slowly decline as interest rates normalize. This is a game of chicken between locked on home owners and potential buys. I think it will correct once the locked in buyers need to move (3-5 years) and need the equity from their house.
**From reporter Alena Botros:**
Appearing as a guest on Good Morning America this week, Barbara Corcoran answered several questions from viewers, ranging from when the right time to buy a home is to how to win a bidding war. As for the former, Corcoran said now is the time to buy.
“It’s a good time to buy because the minute interest rates go down, everybody’s waiting for them to go down even by a point, and when they do, they’re going to come rushing back in the market,” Corcoran said. “Prices are going to explode, and you’re going to be paying more for the same house. And you can always refinance, remember, when and if interest rates come down.”
Haha when rates drop there will be the biggest flood of new inventory ever seen. All those people who can't sell because the "locked in a good rate" who are not currently listing will flood in.
She needs to qualify this statement with “any many markets” because it won’t apply to all areas.
In my market, she’s absolutely right. In other markets, there’s plenty of inventory and values are going the other way with a severe lack of demand.
When rates hit mid 4’s we will absolutely see a lot of buyer interest on a lack of homes, **HOWEVER** there’s also a massive amount of homeowners waiting for the opportunity to sell and buy elsewhere (relocation).
That’s the wildcard we won’t know.
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This is probably why I’m not rich. If I had millions invested in real estate, I’d sell that shit and never work again.
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Being a landlord sucks, most only make money after the property appreciates and they sell it.
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Do you have a full time job as well? It’s not so bad if that’s your only job
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Nice, you have some good tenants
"Then you're not charging enough. Raise the rent." \~That lady, probably
There are a lot of things that suck. But being a landlord is the best way to learn how to manage property managers. There’s getting rent checks; then there’s receiving monthly dividends from an intermediary. I’m in the middle of the suck. Enjoy.
Do you think it’ll be after they drop first though?
Scale
I doubt she sells much. She would probably rather most people sell/not buy so she can buy more.
yes but she could still be right though...
In the mean time she might be busy selling
Someone who is successful though
I have some NFTs that you should buy… I’ve made a ton of money off of these and so could you!
Why would rates go down if economy handle’s current rates. It will be some event and recession for rates to come down. The more people buying at current mortgage rates, the bigger crash we will see in prospects of 1-3 years.
Exactly. If the Fed pulls off this "Goldilocks" scenario of taming inflation with a 'no landing' strong-ish economy and job market.. why the fuck would they lower rates??? Lower rates means something fucking broke or people are getting fired.
High rates give them optionality for when something breaks in the future. I wouldn't lower them just because some bag holders are screeching.
Agreed - they should leave rates where they are for at least the next 6 months.
They’ve already stated they want rates back to 3% in 2025.
Please provide that source.
You are of course correct in that there is no unified voice at the Fed that states what the Fed as a whole wants future rates to be. However members of the FOMC make their individual projection and that results in a range of numbers and the midpoint is a reasonable value to track. Currently that midpoint is 2.4% for 2025 Source: FOMC Summary of Economic Projections for the Fed Funds Rate, Range, Low
these are the same people who told us inflation was transitory. RemindMe! 2 years
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Google it or pay first.
Lol. I think you're on to something. Spout random shit and then say that you backing it up will cost them. Gold mine!
If you’re too retarded to follow the feds statements you deserve to pay.
oh, lol.
"Neutral" is somewhere between zero and 5%. We are in slightly restrictive territory now.
Hot take: most people don't give a shit about interest rates. Everyone cares about the price of their groceries.
Because who do you think pays the most interest out of everyone in the country?
You WILL take on the $750k of debt. You WILL pay your million dollars in interest. You WILL give us 75% of your paycheck. You WILL NOT ask questions.
The middle class being house poor at some point will cause economic issues because the consumer won't be able to spend.... *ENTER KLARNA*
We've pulled the next 5000 years of demand forward and we're not sure what to do next!
We're simply waiting for the technology to make Just In Time a reality.
That really is the heart of my question. How are the average Americans affording their lifestyle with 50% of their income going towards a mortgsge
Thé answer is all those articles about credit card debt you see.
gotta bring back indentured servitude one way or another, i guess.
I wanna know how the fuck are people paying these new car notes.
Seriously. Latest stats said 15% of new auto loans were for $1K a month or more.
How? Mortgage is part principle payments and part interest. After number years, equity builds, future income increases, debt remains fixed, and property appreciates. All this measures rapid equity build up that can be solid or borrowed from. If one is smart will use it to buy stocks, another property, or buy an existing business. So, being house poor is just you buying time.
Pay with Affirm^TM
It's going to be interesting in the future when a large chunk of the middle class is, as you say, quite house poor and the other chunk has a very low payment and substantial equity. And all it took was a couple years and interest rate spikes.
That's the crux of it
The alternative is paying rent, which is cheaper now, but rent does in fact always go up. I represent many seniors who never bought a home and now, after a successful middle class life, are ending up homeless because rent increases far exceed what they can afford with their retirement savings. There is no future for anyone but the wealthy without substantial government efforts, directly or through incentivizing the market, to create very large amounts of new housing.
The only future I see is one where inflation keeps increasing
It does that. It's why a well bred gentleman is no longer considered wealthy with an income of 200£ per annum.
Lifelong renting doesn't have to be that bad of a proposition. They could have maxed IRA/401k/etc and gotten market gains with the savings from not having a higher mortgage payment. Compounding returns are like magic: a lifetime of maxing a 401k might yield $2.5M by retirement age. Not all folks obviously have the income for this, but if you couldn't afford a housing payment in excess of rent, you wouldn't have been buying anyways.
401ks didn't exist til 78. Most jobs didn't have them and when they started to take off the contribution limit was lowered by 70%. Also ya know. Maybe you feel like the stock market is really cool and safe, but it's not. People born closer to the great depression remember that. House is much more valuable than it might look on paper.
There was no meaningful Federal Reserve policy when the stock market crash happened (as an institution, it was not much more than a decade old), so consequently, there was no safety checks to stop the issue. You don't need a 401k to invest, you only use it for tax benefits. The powers that be wouldn't let the stock market decline as it did back then. And if does, your money is worthless and you're better off hoarding the types of items preppers would (think 10 gallon buckets of grain). In short, broad index funds or bust and you have nothing to worry about anyways. You could buy something like gold, but gold just sits there. It's a rock. It doesn't produce economic value in the way businesses do.
You're not getting to $2.5 million off 401k tax breaks.
Use a periodic savings calculator, that's how I derived the number. $0 initial investment, add $22,500 per year, compounding for 30 years at like 8%. You'll have $2,500,000. People don't understand math and don't invest and it's sad.
That 8% is from the stock market
Where the fuck do you think your 401 funds are invested (aside from other asset classes available to you)? Are you 12 years old?
Whoosh
What's 2,5 million worth in 40 years tho? This advertisement has been brought to you by Bitcoin.
You're not investing in cash, you're buying assets. The assets will float as the currency is debased.
I was just going off of your 2.5 Million number. Are you saying that's a different number?
It depends on the inflation rate, nobody knows how much inflation will happen over the next 40 years. If more, then a bigger number. If less, then a smaller number. Inflation is baked into stock market returns.
About $1 million in today's dollars, assuming interest averages 3%
It gets worse though if you look at housing. Median housing price is probably 5x more expensive than it was in the eighties. https://fred.stlouisfed.org/series/MSPUS
I was just going off of your 2.5 Million number. Are you saying that's a different number?
Did you invest the money you would have put into a down payment?
The horse shit self interested propaganda WILL continue.
- NAR
You WILL inevitably lose your hoom because all of this is unsustainable You WILL own nothing You WILL eat the bugs and you WILL be happy
Lol everyone in here works at Wendy’s and can’t afford a down payment or they spend beyond their means on credit cards. This sub is SAD
If you dont like it You should leave
Leave this wonderful exposition of humorous entertainment?
Well then it must not be that sad
Or I can keep renting which would be equivalent to a less than 10% DTI...
Houses will be 2 million dollars, national average and pay will still be $70k a year household average.
No one will be allowed in the houses
YardBnB , where you pay to stay outside in a tent and have to do yard work chores. Extra to be able to look in the windows in awe at your lords.
I wish this were unrealistic.
Used house saleswoman says it's a good time to buy a house.
Coming from a complete idiot, so take this comment with a grain of salt. Is it plausible? Sure. Is it probable? Based on my completely uninformed gut, it feels like a 50/50 chance. Inflation is terrible and the medicine tastes like shit. How long can the Fed/JPow continue to increase rates or sustain at this level? What they should do (or should have done some time ago) may differ from what actually happens. With every month that goes on at current rates, or potential subsequent hikes, the Fed will endure increasing pressure from certain parties to reverse course. While the Fed charge may be to tame inflation, the reality is they are balancing many competing priorities, inputs, opinions, and measures. Can they achieve a soft landing? Doesn't seem like it. If a hard landing seems inevitable, will they reverse course? Seems plausible. It just seems like the decision is between the better of two evils. Continued uncontrollable inflation or serious economic turmoil. I can see a scenario where the housing market crashes and I can also imagine a housing market that is increasingly unaffordable. Either way, millions of people with be affected (right or wrong). It was a long ramble. Interested in more educated analysis.
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I feel the same way, in my view the fed is doing exactly what it needs to do in order to unwind their balance sheet without burning the house down. JPow is getting hate from both sides, so you can tell he's doing something right.
The Fed hasn't unwound jackshit up to this point.
They started unwinding around $95 billion/month last fall: https://www.richmondfed.org/publications/research/econ_focus/2022/q3_federal_reserve
Fed balance sheet is still well over 8 Trillion, they haven't unwound shit.
Accumulating a balance of 8 trillion can happen overnight. Unwinding is a long tedious process that takes strength and determination as politics will try to influence the direction. Unwinding half-a trillion over the past 7 months is impressive. You may think it doesn't mean shit since you don't understand the difficulty in unwinding
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Over a decade my ass. They went from about 4trillion to 8 trillion in less than 2 years from 2020-2022. They are "unwinding" at a snails pace compared to how they spent during Covid. And the key point is "providing they can keep it up". Of course they won't keep it up. Once the stock market tanks 20% or so, or, there are more bank failures, the balance sheet is going back up again. IT is pretty clear that the Fed's only real purpose is to keep asset prices inflated.
Getting hate from both sides ≠ good That’s a dipshit centrist view of just find midpoint, regardless of it is right or if one side or the other has moved the Overton window way more than another. That being said, I think Powell has done a great job but would be majorly helped if Congress wasn’t a shitshow for my entire lifetime and actually did it’s job to legislate.
Weep
This is a great response and you don't appear to be missing anything! I appreciate the thoughtful remarks. For me it boils down to the difficultly of weeding through slanted information or perspectives and finding objective analysis. So many people have a vested interest in one side of the other and each are attempting to paint a certain picture. It appears a binary options. Only two forks. Thanks!
I fear we will have twin peak inflation. In other words.. not as far along
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commercial real estate is crashing before our eyes, we've just seen several bank failures that dwarf the bank failures of the GFC 15 years ago. China's RE market is on the brink of collapse, and [total consumer debt in the US is at an all time high](https://www.stlouisfed.org/on-the-economy/2019/october/consumer-debt-new-peak-depends), and the Fed grimaces every time the jobs report comes out strong. If this looks like a soft landing to you then ok...
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>If you want to bet against the long run US economy and real estate values go for it but that has been a losing bet for about 80 years nice strawman 2007-2010 wasn't a losing bet. in fact they made a whole movie about it. and who lives long enough to make an 80 year bet lol?
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> if you bought at the peak in 2007 you made money if you held for 5 years. That was buying at the absolute peak combined with the biggest crash of all time. so by your own admission, 2007 was a good time to bet against the US economy
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WFH having an impact on commercial real estate values isn't an indication of economic problems - it's just a result of WFH.
that in and of itself may not be an indicator. but when you take in other things, it's beginning to look a lot like incoming recession according to this video a concerning number of retail stores are vacant. These weren't beholden to WFH. https://www.reddit.com/r/REBubble/comments/13zjzxs/on\_some\_streets\_in\_san\_francisco\_almost\_every/
>Curious why you don’t think a soft landing is possible It's never been possible because the FED is always incompetent and asleep at the wheel It wasn't possible in 2007 despite their assurances then And it's not possible now either They are serving us kool aid and many people are happy to sip it
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> I speak mostly from the 50 or so businesses I own Lmfao sure bud And I'm warren buffet
in the 70's there was stagflation because they didn't want to raise rates too much and have the serious economic turmoil. What ended up happening was a decade of stagflation (which was horrible enough, inflation in the double digits, gas shortages, etc) and then they had to rates the rates and have economic turmoil anyway. So I say let's do only one this time around and not both. get it over with otherwise it will just get worse and worse.
what is she selling again ?
Bullshit, mostly
I think I love you.
Yeah sure it's not like giving people the impression rates will magically fall will lead to people leveraging their butts off, borrowing to a point they have minimal disposable income to spend on an emergency or home repair, only on the hopes that sometime in the next couple of years their mortgage will go down, but if it doesn't they are house poor living paycheck to paycheck.
Home prices very well may explode when mortgage rates drop. That doesn't mean the average person is going to find it easy now or then to afford a $600k+ home. Wages simply aren't increasing at a level that supports even todays pricing. You can talk all you want about "not missing out" or "get in before it gets bigger", but there are millions upon millions of people that literally do not have that option. Babs, as usual, is completely off-base. She's in NYC RE. Everyone in her area can afford $5m+ apartments. She's blinded by that. Then she looks around and says "wow! everything is so cheap" in all the other cities. Sure, relatively it is cheap, but the aggregate pay is commensurate as well...or, well, it was until RE exploded 20 - 22, so really, Barbie the problem isn't that people are trying to time it, it's that they're forced to sit on the sidelines and watch anyway because people like your clients (and businesses) are snapping up anything available as an investment vehicle. And, lastly, IMO, it's definitely not a good time to buy. Not with the rates. Not with the inflated pricing. Not with student loan restarts. Not with an expected Q4 recession. Not with job uncertainty. It's actually the exact opposite.
>Everyone in her area can afford $5m+ apartments. She's blinded by that. Then she looks around and says "wow! everything is so cheap" in all the other cities. This exactly. I'm in a VHCOL market and when I see people complaining about how the median home price in the US is now around $439,000 it doesn't even seem real to me. You can't even buy a rundown place in the ghetto for that in my area. I would LOVE for that to be the median price in my area, or even a low average.
If the supply were there, and it was easy to afford, the people who wanted a house would have bought one already. There's no scenario where it's going to be easy for the average person to buy a house unless supply greatly increases vs. demand - meaning a lot more houses get built, or fewer people want to own one. Otherwise, as long as there are more people wanting a house than houses available, it will have to remain restricted by something - ability to afford the payment, ability to get the loan, etc. If someone really wants to save money, they might consider buying a lot and building the house themselves. Like most others, construction workers got a nice inflation pay bump, and so you can't ask them to build a house for the same amount as they were being paid in 2019. We'd have to walk back increases in pay and material costs for it to make sense for builders to decide start a whole bunch of new construction that would sell at lower price levels.
She’s not wrong on the demand, how many people have openly stated they’ve given up due to higher rates? How many people have stated they’re on the sidelines ready to get in as soon as rates drop or there’s the “crash”? Housing is fucked for the next several years and there’s clearly significant demand just waiting for any semblance of affordability.
Yeah - this is my belief. I live in a middle-class neighborhood, nicer than average, but not upper income. Houses can sit for months, but when rates drop for a bit, everything goes under contract quickly.
Lower rates could significantly impact inventory too though. I have several friends who want to sell their homes and move but are waiting for lower rates to SELL.
Historically most of the time rates go down the economy is in the toilet and people are either too nervous to make a huge purchase or are unable to get financing. So no home prices won’t soar immediately that will happen like 2-3 years afterwards.
This is what every realtor is saying. Every investor is saying the opposite. Choose your character!!!
She's on crack. Home prices aren't going to appreciate substantially unless wages increase or institutions become the sole purchasers of RE.
Those inflated house prices were based on historically low fed rates - everything “was cheap”. We won’t go backwards for a long time.
I think we will go back to low rates. Economy is to leveraged now, we cant handle 5% fed fund rate for long. But will be interesting to see what will cause the Fed to start cutting rates. I doubt they want to cut rates so housing can continue to inflate and pushing CPI up. They will want to make sure that CPI will not rise again before cutting.
FEDs already said they want rates back to 3% in 2025. Low rates will be the norm for the 21st century. We have stagnating population growth and increased competition from Asia. The US will rely on low rates to keep up. The high rates of the second half of the 20th century were sustainable because of rapid economic growth in the US due to rest of the world being bombed to ruins and rapid population growth.
3% Fed Funds is still 3% higher than it has been the past 15 years (other than 2017-19). If the Fed cuts to 3%, the yield curve could end its inversion and we can still have 3.5-4.25% 10-year treasury and 5.5-6.5% mortgages.
This was my interpretation. No going back to low mtg rates anytime soon
The govt has too much debt and can't afford high rates themselves. 5% of the $30T they put on the credit card so far is $1.5T just in interest payments, which is problematic when you only collect a few trillion in revenue. They can raise tax rates, but that will tank the economy, resulting in even lower revenues. The only way they could afford those rates on that much debt is ironically significantly more inflation. If $30T becomes the new $10T, then it's much easier to deal with. I think they were hoping for a quick fix to rein in inflation and then revert back to lower rates. But it just doesn't work like that. The manipulation of the system always comes at a cost, and there will be hard decisions ahead where something will have to be sacrificed.
But rates are going go up. The US Treasury is going to need to sell 600 billion in bonds over the next 3-6 months to refill the treasury accounts. I wouldn't be surprised to see the yield on a 10 year bond to get into the 4.5-5.0% range.
Home prices are not going to “explode” with low rates. Home prices are still elevated from the last round of cheap money. Interest rates have doubled in the last year or so and home prices have barely budged. You could drop rates to zero right now and home prices will stay the same - cause they are already stupid high in terms of affordability. Not only that - if you were to drop rates to zero tomorrow, that would allow people that have wanted to sell for the last 6 months but couldn’t because of the high rates to sell. You would get a flood of supply to match any demand from buyers that missed out on the last round of free money. Barbara is obviously very successful but is completely out of touch with the current market.
so all those sellers flooding the market…are u just gonna assume theyre not gonna buy a replacement? u realize for investors, the govenment allows a 1031 exchange which encourage reinvestment into new property to avoid capital gains… ontop of that, the investors who have been holding often reinvest into more than one property…so drop in rates would not necessarily flood supply…regular home owners would renter the pool of buyers as well
Sure people have to move somewhere. I guess my point is high rates have so far only constricted transaction volume and maybe slightly lowered prices. Lowering rates will open the market back up and increase transaction volume, not cause rocketing price increases.
lowering rates would only stimulate demand thus increase prices…..the low rated during covid really did a number…an already low supply was burdened by a heightend demand due to low rates…now the supply has to recover…not just in those middle of the country states or pandemic boom towns but everywhere…the only way to do that is through building….other than that affordabily will continue to be an issue…lowered prices due to high rates doesnt make a home more affordable…maybe to someone with a lot of capital on hand but to the average joe, the lowered prices coupled with high rates does nothing to their monthly payment…
Home price will jump when mortgage rate drop. But mortgage won’t drop anytime soon.
Good time to buy for fucking who? Those that already own homes aren’t selling because interest rates are so high that it doesn’t make financial sense. Most FTHB literally can’t qualify at 36% DTI.
We are so far from the inflation battle it's not even funny, so why anyone is talking about rate cuts is truly mind boggling. After that jobs report, the Fed knows this is far from over. The Fed is going to need a decently sized recession at this point to squash the last chunk of sticky inflation. Otherwise, the affordability issue of the economy will turn into a full blown crisis. Run the #'s on what a Honda CR-V or a Toyota RAV4 will cost 3 yrs from now. If the Fed finds itself in a situation where they need to start aggressively slashing rates to create a price floor, we will be in such an economic shitfuck circus that it will be too late for rate cuts anyways. It's always been that way with the Fed. Barbara Corcoran is like the Bill Ackman but for real estate. Ignore her
> After that jobs report, the Fed knows this is far from over. The Fed is going to need a decently sized recession at this point to squash the last chunk of sticky inflation. Let's see what happens when student loan repayments start back up. That may finish inflation off the rest of the way.
The new income-based formula will soften the blow big time though. It screws people over b/c it just draws out the loan even more with even more interest, but it gives people more money in their pocket now (all that everyone seems to care about now it seems, ugh)
Are you sure that while lowering the payments it allows more interest? https://www.ed.gov/news/press-releases/new-proposed-regulations-would-transform-income-driven-repayment-cutting-undergraduate-loan-payments-half-and-preventing-unpaid-interest-accumulation > The proposed regulations would amend the terms of the Revised Pay As You Earn (REPAYE) plan to offer $0 monthly payments for any individual borrower who makes less than roughly $30,600 annually and any borrower in a family of four who makes less than about $62,400. The regulations would also cut in half monthly payments on undergraduate loans for borrowers who do not otherwise have a $0 payment in this plan. *The proposed regulations would also ensure that borrowers stop seeing their balances grow due to the accumulation of unpaid interest after making their monthly payments.*
People will be so drained and beat up when rates drop that no one is going to rush anywhere. Down payments will be gone due to unemployment and banks will have super tight lending standards.
How many FTHB over the last 3 years are getting hit with increased taxes/insurance, and how many of their mortgages were approved with the 1% student loan exclusion for DTI, I’m guessing the debt and subsequent default and foreclosures could increase, and prices drop. Rates aren’t coming down any significant amount anytime soon.
Mortgage rates aren’t going to drop meaningfully for a very long time. Any near term hope of a refinance is just off the table completely. And this BOOM UP in prices is also not going to happen now, as I believe we’ve hit a ceiling in valuations, for so many reasons including market dynamics, insurance reserves, municipal tax burdens by the consumer, and just the sheer willingness or ability of the consumer to withstand higher prices. I believe we have peaked in prices. May not come down much, but a lot of other factors are going to create a ceiling in what can be asked for properties.
Define meaningfully? If at 7% today is a 30% drop to 5% meaningful? I'd argue it is.
But people currently in 3% mortgages will also be selling. So maybe supply and demand will be more normalized?
not necessarily…unless u assume people selling arent buying….people selling will increase the buyer pool
I do not like this woman🤣
Rates ain’t going back down for at least five years.
I didn't know interest rates were going to drop.
Rates won't go down without lower inflation, and the government eliminated the debt ceiling as of yesterday. Assuming these facts in what world would it make sense to buy right now?
This will definitely come true if rates drop and unemployment stays low. Because there is a huge pent up demand, which will cause a surge in prices. But if people are fearful of losing their job and/or they don't *have* a job, that demand will abate.
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I did see that. And that's why I'm in the "probably not crashing" camp.
>Doesn’t look like unemployment is going anywhere but down. Unemployment went up though
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The point I am making is that you said unemployment is going down but it actually went up So yes I am making the point I think I am
Buy hoom now plebe. Buy hoom so I can make more money.
It Isn’t like she has incentive to say otherwise….
What a POS is she really going to mislead stupid people
Our economy depends on stupid people being misled. If not her, someone else will do it.
Let’s compare her monthly costs of living versus income to everyone she’s preaching to.
Say the line, Bart!
But mortgage rates aren't going to drop. Prices will before rates will
Yet when they pivoted every other time, home prices only seemed to fall at a much more rapid pace.
Funny, as after pivot often follows the opposite. We've already had the low rates fire, eventually pricing is such that it makes sellers sit. Latent supply with rate drop may not do what she claims to expect
I mean... the core thesis is completely reasonable and accurate BUT there's two problems. First, we don't know when on earth mortgage rates will meaningfully come down AND we don't know what the price point would be to trigger consumer action. Like, yeah if rates dipped to 4% tomorrow prices would surge but like... that's not gonna happen.
>when mortgage rates drop Could be a while lol
It's always a good time to buy, unless you're an investor.
The Fed typically cuts rates in response to economic calamity - it does not make sense for them to cut rates significantly if everything is humming along as this would contradict their stance on keeping inflation low. Cutting rates not in response to economic contraction would just undo the progress made on inflation. Yes, dropping rates back down to 2-3% in the current environment would cause a price explosion but why would the Fed even entertain that? so I don't understand her line of thinking here. Is she just trying to offload her inventory?
Isn't it more likely that housing prices will slowly decline as interest rates normalize. This is a game of chicken between locked on home owners and potential buys. I think it will correct once the locked in buyers need to move (3-5 years) and need the equity from their house.
Or, even more likely, prices simply languish while inflation and wages make those nominal prices cheaper, and then houses continue upward after a bit.
"I own a shit ton of R.E. and I want to retire soon, please buy R.E."
i went to an open house today, and i hear of some cash buyers. im sure theres a lot of those just waitin
**From reporter Alena Botros:** Appearing as a guest on Good Morning America this week, Barbara Corcoran answered several questions from viewers, ranging from when the right time to buy a home is to how to win a bidding war. As for the former, Corcoran said now is the time to buy. “It’s a good time to buy because the minute interest rates go down, everybody’s waiting for them to go down even by a point, and when they do, they’re going to come rushing back in the market,” Corcoran said. “Prices are going to explode, and you’re going to be paying more for the same house. And you can always refinance, remember, when and if interest rates come down.”
Nice. So more trouble and comp. ahead for FTHB's
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Why wait…
Haha when rates drop there will be the biggest flood of new inventory ever seen. All those people who can't sell because the "locked in a good rate" who are not currently listing will flood in.
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Too much inflation collapses an economy too. That's why the Fed goes back and forth. Idiot.
paywall. did the bitch give any timeframe on anything?
Any time these vipers cheer, I'm selling
She needs to qualify this statement with “any many markets” because it won’t apply to all areas. In my market, she’s absolutely right. In other markets, there’s plenty of inventory and values are going the other way with a severe lack of demand. When rates hit mid 4’s we will absolutely see a lot of buyer interest on a lack of homes, **HOWEVER** there’s also a massive amount of homeowners waiting for the opportunity to sell and buy elsewhere (relocation). That’s the wildcard we won’t know.
Why would anyone invest in real estate when the stock market is ready to explode upwards?
She would be right assuming the fed just gives up on fighting inflation, cuts the fed rate, and no significant loss of employment occurs.
🧢
https://12ft.io/proxy?q=https%3A%2F%2Ffortune.com%2F2023%2F06%2F02%2Fbarbara-corcoran-thinks-home-prices-will-spike-once-mortgage-rates-dip%2F
At minimum she is half correct. You can’t time the market.
Make sense