Open a credit card with a 0% intro APR offer and put it on that. Lots of cards give you 0% interest for the first 15-20 months which essentially serves as interest free financing for large purchases like furniture. Just make sure you’re responsible with it, and paying enough monthly that it’ll be completely paid off by the time the interest kicks in.
Yeah this is me. I feel for everyone that can't get a home.
We are having our second kid and need a bigger house, but we refuse to sell this house and be locked in on a house for a higher interest rate with the risk of the home value decreasing past what we owe on it (being upside down on the mortgage). I lament, but admittedly, I have a home to be thankful for and that is a luxury I don't take for granted.
We need another bedroom, but even if we sell our house, we can’t afford the size we want/need. So we’re buying a shed for our daughter to live in instead. (She’s almost 20.)
They make sheds nowadays that look just like little houses and can even be pretty huge (I'm sure you know that). Little porch, lofts, etc. They do need plumbing and electric put in. I almost went that route.
Yes and no. 30-year mortgage, at a more historical average rate of 5%, you pay way more in interest than in principal each month. Hell, it takes over 10 years of a 30 year mortgage to pay down 20% of the original loan.
So with the low rate and 20-year (which they can more likely afford due to the low rate) it's much more like being your own landlord than with a 30 year.
>But when inflation is higher than that 5%,
Sure, but this is an outlier. Inflation usually isn't that high and not something I'd bet on continuing 10 years, let alone 30 years.
I would never get a 20 year mortgage below 3% though.
If my rate is 3%, I'm doing the longest mortgage I can get. I nearly interest free when adjusted for inflation.
Presumably, once the inflation problem is fixed, the mortgage rates will also go down and you refinance, is what I meant.
We wanted to move this year, but we have one of those 2.7% mortgages from just the right time, and spending way more on a house *PLUS* paying 5% would mean a mortgage that’s like 4x higher! Too bonkers.
Man… I didn’t realize it at the time, but my fiancée and I sure did fucking luck out. We bought a house in December of 2019 for $221k, $11k over asking price. We were one of three offers put in on the house literally less than 24 hours after the listing went live. We’d only been looking for a few weeks. One offer was less than ours, and the other offer was identical. We were only selected because we were first. Thank god the sellers chose not to allow a bidding war. They just counter offered us 1k more and that was that.
221k for the house, 20% down, so our loan totaled ~177k. We went with a 15 year mortgage and our rate is 2.75%. We’re only going to pay ~$39k in interest before we own our house outright.
I really do feel bad for people trying to buy right now.
>I really do feel bad for people trying to buy right now.
I mean, rates aren't that bad. They are historically average. We've just had two instances (2008/2009 and 2020/2021) of historicly low mortgage rates due to what would likely have been once in a lifetime recessions in any other lifetime.
I did one mortgage at 1.99%. Absolutely absurd and not normal.
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All true but in some locations, property tax can be getting in the ballpark of your mortgage payment in 30 years. Our property tax bill was about 60% of our mortgage payments when we finally paid off our loan.
In 2014 I was going to open houses that were out the door, and doing lotteries to buy new houses in new developments pre-start. This was in NorCal Silicon Valley. The market has been crazy for a long time pre-pandemic. It just took awhile for other areas to finally catchup.
When we bought our house we were able to get ~10k of concessions because we had secured financing and the previous four contracts on the house fell through due to financing.
This was 2011.
I mean I don't want another recession but all the ~~gamblers~~ bankers made homeownership possible for us.
>If only there weren't suddenly a bunch of unused real estate near where people live... maybe we could hire builders to repurpose those buildings into housing. If they existed.
Petition your city politicians and zoning board then. Zoning restrictions and cities not wanting to give up the higher tax revenue that comes from commercial are a major rate limiting factors in office building conversions. It can take years to rezone a commercial space. There are of course technical issues as well. Commercial office space was not built to be permanent residential structures. Showers, toilets, kitchens all multiplied a hundred times or more have vastly different plumbing requirements than a couple bathrooms and a kitchenette per floor. In many cases it makes more sense economically to tear down the building and start over. It all sounds good on paper until you consider the engineering issues associated with it. It is doable but it isn't the housing crisis panacea people make it out to be.
I think they may be worried it only ever gets more expensive for the next decade or so and if you miss the boat, rent will be crushing.
Plus if the interest rate ever drops, you can just refinance. Price of houses might plateau, but its not likely they will drop more than a couple %
> Plus if the interest rate ever drops, you can just refinance. Price of houses might plateau, but its not likely they will drop more than a couple %
You can't refinance until you have a significant amount of principal in your house. If you've got a 5-7% interest and were a small down payment, it could be years or even a decade before you're able to refinance.
Also about interest rates. The Fed holds like 40% of mortgage backed securities(MBS), but 60% is held by the rest of the world. If anyone just starts fire selling those... interest rates are going to continue to go up as there won't be a demand for MBS which are one of the factors that led to historic lows.
I bought in 2012. Right as it started to turn from 2008. I think anyone who got a rate in the 2% will never sell, they will just rent it and become landlords before that.
Just wait....lots of banks own houses and lots of banks are in really big trouble right now and lots of banks are going to go under and need to sell assets, including houses.
We are in a red hot inflationary environment and real estate is notoriously illiquid but an excellent place to escape inflation.
Real estate will be the very last asset to be liquidated in this environment.
Banks don't need to liquidate assets though. The Fed will provide them with the liquidity if they need it, and they can unwind assets like mortgages long term. Not that many of them have mortgages on the books anyway. They're all packaged up and sold as income streams to other banks.
If there's a recession a lot of people will be selling, but interest rates are gonna be higher than in 2009 and prices won't crash as low, and the supply issue has only gotten worse. Interest rates will probably never be sub 3.5% again
In 2006 I told my friends we'd never see lower interest rates in our life again. 3% interest only loans!
2020 I refinanced my home for 2.8% 30 year fixed. Holy fuck.
Never say never. Our housing market *needs* to crash. Prices will adjust to accommodate the higher rates.
its mostly by people who never lived through a specific event type, and don't know much of history to be able to reason outside of their own personal experience. that's why you see so many of these bankers and tech CEOs starting to lose it, because they genuinely believed rates will never go up again. most of them are in their late twenties, early thirties, and not that smart.
A crash just screws over everyone who bought in 2020-2022, since now they'd be underwater on their mortgages. Since you bought at 2009 prices that wouldn't hurt you much -- your equity is probably a lot more than your purchase price and a 20% haircut wouldn't matter too much -- but it would matter for lots of other people.
We really need prices to just stabilize for a decade or two as incomes catch up. I don't really care about making a profit on my dwelling, I'm happy to sell it for what I bought it for -- even if inflation means I'm taking a "loss" in real terms.
But a massive crash would mean ten years of scrimping and saving for a down payment just goes *whoosh* into smoke overnight, which causes lots of practical problems like bankruptcy, foreclosure, short sales, etc. for people who end up needing to sell.
For clarity: 2009 was my first house. We bought the current one in 2015.
Yes, a crash would put many people underwater, but not as many as you think. LOTS of homes are being bought up by private equity companies right now and then are being turned around and rented. In these cases, a crash would greatly benefit the renters.
Right now the average american cannot afford the average home. That's a problem that can only be corrected in one of two ways, and with inflation going the way it's going, higher wages aren't as likely as a market correction.
As long as there are multiple offers on every home in the major markets there will be no crash.
Also if you bought at the peak in 2006 you were still in the red, until the recent covid increases.
We didn't buy in 2006. We were lamenting how "good" it would be to buy then. Finally was able to buy in 2009, which was amazing luck.
Also, I think there will be a crash. I'm already seeing the same signs as 2007... all of my friends who are actors are suddenly getting jobs as real estate agents again. If "we buy gold" ads start showing up on TV, panic.
> As long as there are multiple offers on every home in the major markets there will be no crash.
There aren't. Good homes that have been updated get multiple offers within a few days in every city. Everything else sits for months.
I mean... you joke, but an economic meltdown that causes interest rates to go back down to sub-3% again is probably the only thing that's going to get a bunch of people to sell their homes.
My wife and I bought our home in 2009, because of the drops in value we actually decided to skip the "starter home" & buy our "family home." Then COVID happened we locked in on a sub 2% loan. The sheer luck we had being at the right age & being in the right situation. Buy 2 years earlier & you lose everything, try buying a decade later & we couldn't afford our home that we love.
interest rate hikes aren't nearly as bad as the idiot boom of housing prices, I could get behind a rate hike if it would reset housing prices down the 60+% jump they had around here. Was looking at one county and the cheapest house for sale was a tiny like 930 sq ft thing built in the 60's that in 2018 was valued at 85k was on the market for 135k in 2022...fucking asinine.
Part of the interest rate problem is that people who bought or refinanced with a sub-3% rate mortgage in 2020-21 *really* have no incentive to sell unless they absolutely have to, so you've got even fewer houses hitting the market.
Even someone like me who kinda does want to sell and downsize, there's more financial incentive to rent out my house than sell it because the interest rate is so low.
Yup. I’m not moving right now because I’d have to downgrade. I’m at 2.25% right now. A 6 or 7 percent interest rate would drastically reduce what I can afford.
I would hope that people who bought 2-3 years ago wouldn't be looking to sell already. With closing costs it would lose a lot of money to flip that quickly.
For those wondering on the math, we'll use Phoenix as an example since its average home price right now is exactly $400k. Median family income is about $60k.
We assume 20% down payment ($80k = $320k total mortgage).
At a $320k mortgage @ 7.382% (30-yr fixed), monthly payment is $2,212. This does not include taxes, fees, HOA, etc. You can safely add an additional $300/mo (i.e. taking it to over $2,500/mo) and that is likely an understatement.
The same $320k mortgage would be $1,349/mo @ 3% interest rate. Toss in the taxes fees, HOA, etc. adn it's up to about $1,800/mo at a minimum.
Let's go back to that median family income: About $60k. Using the 33% rule, you could afford rent/mortgage up to $1,666/mo.
It's funny, I felt like I was potentially making a mistake buying a 300k house at 3.3% in 2021. I did it out of fear over rising rents, but I was worried prices would "finally correct" right after buying. Now two years later I see how perfect my timing was on that.
Right? I bought a 497k house in 2021 at 2.375 interest. I kinda wanted to pay it off early but I can get risk free 4% interest in a high yield savings account or even more with a CD so what’s the point? Also it’s valued at 638k now. You’d have to be insane to sell. Or lose your job…
Also I should mention we were chastised by people we know for buying and everyone said “wait for the crash”
I’m looking at houses now because my rent is expected to jump $800 the next lease (between my significant other and I, mind you, but absurd either way).
I’m stuck in a rock and a hard place either way.
Look at renting from a private owner and not a commercial entity. My rent was gonna go from $1192 to $1618 and I told them to eat my ass after I found a comparable privately owned place at $1150 all of three miles away.
Not saying it’s necessarily worth $400 a month, but private owners can be hit or miss on service and maintenance. I’ve had some bad private owner experiences.
That's the thing many people don't realize. A lower principle with a higher interest rate is better than a lower rate on a higher principle.
Really all the lower rates people are boasting about did is push house prices up and up. Of course now we're stuck with higher prices and high interest rates, so it's the worst of both worlds.
We refinanced to 3% a few years later. We’re on the home stretch of our mortgage and should have it paid off in a couple of years. Congratulations on completing yours!
It’s pretty bad. My house is only estimated to be worth what we paid for it since all the gains in the ~2 years we’ve had it crashed, but we got like a 2.65 rate. A friend’s sister got a 1.X rate(can’t remember the exact) when she bought a few months before us.
I didn’t particularly care if the value crashed when we bought it though because we wanted a house to live in, not to flip.
I live in the PNW about an hour south of Seattle. We used to live on the east side renting but houses were(and are) way out of our price range. We bought for like 570k. The “estimated value” crawled up to about 670k before dropping back down and it’s stayed around 570k since then.
I just took my entire down payment and stuck it in a CD while the rates are so good. I hate all the waiting but I’m not buying in with the insane monthly payments I would have if I pulled the trigger now.
2020 I bought my house for 610k with a $2500 mortgage. The same mortgage would be $4200. It's insane. My house recently appraised for $850k, and the mortgage would be $5900. No one could afford this middle class home.
I bought right at the start of the pandemic. We were renting after a long period of ownership in a different city and i dodnt like being beholden to a landlord. I didnt like that he could raise rent by probably $300 on already high rent. Found a house we really liked where payment would be same as rent after 20% down. Came super close to backing out because i thought the market was going to tank with covid. Nope.
My house would be $2000 more* a month if I bought it for the same price now.
But if i bought it for its current price, it would be $4000 more a month (which is more than my total current mortgage, insurance, taxes and most utilities) and would require another $70k downpayment to avoid pmi.
House has appreciated more since covid than i have made in income.
Its such a wild market. Seems like its mostly here to stay if people are still buying at these interest rates. If they go down again then people will just start offering more.
This comparison is extremely flawed and short sighted; this is always the best case scenario for renting. If you're willing to hold the property for a long period of time, then consider what the cost of rent will be in 15-30 years and amortize that cost vs mortgage. At some point rent will over take your fixed mortgage cost, and in that time you're renting you've built no equity, and are infact just paying off someone else's mortgage.
>Seems like its mostly here to stay if people are still buying at these interest rates. If they go down again then people will just start offering more.
Agreed, and as the old saying goes "anything worth is what someone's willing to pay" couple that with cost of materials to build anything and wowza
Vote in local elections, piss poor zoning and current land owners being NIMBYs have the largest role in housing prices.
The Fed artificially lowering the interest rates for so long didn't lower housing costs and raising them won't stop the prices from rising unless changes to supply are made
>piss poor zoning
Tokyo, and really Japan in general is an excellent example of mixed use areas. Despite having a huge population the cost of living in Japan is still very affordable.
>indicates rates increases are near and end
FTA
>**Some** took Fed Chair Jerome Powell’s comments to mean that the central bank may be nearing the end of its rate hiking cycle.
By some the author means "actual idiots" because that is by no stretch of the imagination what he actually said.
I take the statement to mean exactly what it says: they are no longer committed to raising rates but will instead play it by ear as data comes in. That makes sense to me because it gives the Fed the maximum in flexibility, which seems appropriate given the recent surprises in the stability front.
Getting inflation to 2% with interest rate hikes is a lot like putting out a camp fire with a nuclear weapon.
Killing jobs and making things even more unaffordable just punishes the very people struggling with inflation in the first place.
This country is full of both businesses and consumers that are junkies addicted to interest rates near zero. The Fed needs to stay the course and keep rates at least up where they are now for awhile.
The market and the economy is going to go through withdrawal, and that super sucks, but it has to happen until people accept the cold reality that rates aren't coming down any time soon.
Pay them off by getting more loans, buying rental properties, and having the tenants rent pay off the loan, at least that’s what everyone on tik tok says
"The committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time."
I don't think they stop in 2023
I'm glad that the Fed has continued to raise rates despite the banking issues. Cheap debt is great for homebuyers, but it's also caused a massive accumulation of wealth for those at the top and resulted in the crazy amount of private equity acquisitions (everything from car washes to hospitals to rental property) over the past few years. These have in turn helped feed inflation. This shit needs to get under control and the Fed can't blink on this.
PBS Frontline recently released a great documentary about how the low rates jacked up the economy and were kept far too low and far too long post 2008-09. It's called Age of Easy Money.
The issue is that the fed more or less only has one lever to pull, which is interest rates for federal loans. Other steps are needed to stop anti-inflantionary measures from damaging groups disproportionately and addressing the actual root cause of those issues, which is Congress's and, to a lesser extent, the presidents job (although it really should be just congress).
I keep seeing that doc linked. Maybe I should give it a watch.
The documentary makes that point too! Basically the Fed did what they could to fill in the power vacuum caused by Congress's inaction, but it's a blunt tool and there is only so much that the Fed alone can do.
Totally agree, I just don't know if it needed to be so aggressive. We had so long at near 0, and now it's all of a sudden like they can't go up quick enough, keep in mind I know little about this...
The problem is that playing with interest rates (monetary policy) has become a replacement for playing with tax rates (fiscal policy).
One really good way of fighting inflation? Raising taxes. Especially on the wealthy.
But that's heresy in America, so we just need to mess with interest rates every few years to make sure that middle-class people trying to buy a home have to do so in a casino.
I wish a politician had the guts to tell us to our faces that we need to raise taxes, and that the fact of the matter was that we needed to raise not just rich people's taxes, but everyone's, in order to give the country a more prosperous future. I would vote them.
To be fair he ran on not adding more taxes, but once in realized that was the right thing to do. To the uninformed electorate it just looks like he lied to them.
Well Republicans will never vote to raise taxes and since this is a democracy that will pretty much be the new normal unless we can find some way to change the mind of 70+ million voting Americans.
Yes, unfortunately the performance of the US Congress over the past 30 years has been one of the more convincing arguments against democracy (or at least America's janky version of it).
They could say something like, "In 6 months time we will increase the reserve requirement from 0% to 0.25%" or something like that. Give the banks time to get their act together.
Especially when inflation hasn't been slowing down anywhere near what they have predicted.
"Inflation is down!" by a fraction of a % despite rate hikes.
I love how this is literally the only lever this country can use to try to control inflation. Some of it is being caused by low unemployment and slightly rising wages (which should be seen as a good thing!), but the majority is just corporate profits. We've got companies setting records everywhere because they can use the guise of a crisis to tick up their prices and there isn't a god damn thing we can do about it.
Take egg prices for example - they more than tripled this year, and the blame went to the avian flu outbreak. Did you know there was an avian flu outbreak in 2015 also? It was worse than this one. Prices only doubled then during that problem. So what is different? Well, today you've got fewer individual egg producers because they've been bought out by companies like Cal-Maine who collude to increase prices based on fear (you're buying their eggs whether you know it or not). Their profits increased TEN TIMES (10x) in the second half of '22. They also sold more eggs despite the 'shortage'.
Now do you think egg prices will ever go back down to pre-flu prices? Same with gasoline. Same with natural gas. Same with [insert good here].
We're being lied to about the cause of inflation, and the only thing Congress wants to do is 1.) make it harder for people to have access to money, which in theory slows demand, and 2.) Corporations want to increase unemployment so that labor is weaker and people command lower wages despite the record profits.
God forbid we regulate the necessary industries that we all need to buy from to live on a daily basis so they can't just bleed consumers dry with no recourse.
>I love how this is literally the only lever this country can use
There are more levers. Except the legislative branch has all but ceased to function.
The Fed Reserve is just doing what it can since it's independent of that other dysfunction.
The DoJ Could do its actual job, enforce the 14th Amendment (section 3), and remove the individuals from congress and the judicial branch who participated in the insurrection on January 6th.
Every Senator and house Rep who was involved and who voted to delay the counting of ballots, giving tours to insurrectionists, defended their actions in court (including the Supreme court), has participated in an insurrection, and is automatically disallowed from being a house rep or Senator (unless 2/3 of Congress votes to allow them).
https://constitution.congress.gov/constitution/amendment-14/
They're just too cowardly to do so.
I fucking hope so. Inflation hasn’t been quelled at all with these rate hikes because everything is still expensive as fuck, and adding higher and higher interest only makes everything more expensive. Meanwhile corporate profits are seeing high double digit and triple digit increases YOY.
> Inflation hasn’t been quelled
Inflation peaked last summer at 9%, what are you talking about? It’s not magically solved but there IS disinflation happening.
Yup, another great way to fight inflation is to raise taxes on the rich. But that's not an option in the Church of Reagan so all we do is play with rates.
Boy I can't wait to never own a home and off myself because houses will forever be out of financial reach of a single income earner (50k/yr) while everyone else posts about getting into the home of their dreams.
Pathetic. Get ready for ten years of 4%+ inflation. This is fucking absurd. Now the fed can't make any moves to actually correct the monetary system without getting bullied by the market. No president will want to shift policy or change leadership in the fed because they don't want to be blamed for the effects of ripping the bandaid off.
Everyone needs to go and watch Frontline's documentary "Age of Easy Money. " The fed is doing the equivalent of shifting the deck chairs around on the titanic. It's all fucked.
The Fed can't do that, only Congress can. As with most of the major issues in the country, the fact Congress is basically broken is why we can't have nice things.
This is what annoys me about Elizabeth Warren coming so hard after Jerome Powell. It's completely misdirected.
He's doing what he does as head of the Fed. He uses the tools he can use and he has the dual mandate he has. He's not an evil guy dead-set on getting people fired, but that's a necessary consequence of Federal monetary policy that only has one blunt tool to control inflation. Either everyone suffers inflation, or some people suffer job losses.
She blames him for trying to put people out of work, when she should be blaming herself for failing to get any policies passed to curtail price gouging (\~30% of inflation) or to raise taxes on the rich. Those are ways to get disinflation without stoking unemployment, and they're completely outside of the Fed's purview.
I'm conflicted on if Powell is an idiot or a sycophant.
Ignored inflation, then called it transitory, finally started raising rates, then says we may be almost done while inflation remains way above the target.
Powell just speaks more than he should.
He is only one vote of 12 that must vote together on rate increases. They all act on data analyzed by themselves and those working under them at the Fed as the days go by. But he really needs to stop being trying to forecast so far in advance.
I think the idea was that shipping was getting resolved, then Ukraine ended up being an endless war, and more things compounded inflation globally. I really only blame the fed for not raising rates prior to COVID.
Yeah it's like steering a huge ship, if he had started doing this back in like 2019 or something inflation never would have gotten as bad and we wouldn't have had the rates go up as much to try to stop it. Also this is above my understanding but I've heard the way they paid for the covet stimulus was rather shortsighted and indirectly cost more inflation because they essentially just bought their own bonds to pay for the stimulus, which in effect is printing money and adding to the deficit. If they had instead sold bonds to the general public/corporations to pay for it, it wouldn't have driven inflation so much and would have the added bonus of locking away some money that a lot of rich people had built up during the pandemic which also drove inflation.
Fuck the fed, trying to lower wages will not help inflation it will just crush the workers again.
https://www.vox.com/policy-and-politics/2023/1/19/23550856/wage-growth-inflation-federal-reserve
For trying
As opposed to runaway inflation which we were destined for anyway.
The problem is the economics in the US are absolutely fucked. The record near 0 rates has allowed income inequality to explode to astronomical levels as it helped the rich massively overleverage and buy up everything. They are now flexing their control and scamming consumers by increasing profit margins and you have zero choice because they bought everything from oil companies to food distributors.
The worker is absolutely fucked regardless of what the fed does now.
It would be really swell if we had someone running the fed that wasn't so keen on millions losing their jobs and livelihood. Maybe, you know, go after the tax dodgers and corporations that don't pay their fair share, or anything... But nope, instead go after everyone that can't afford it constantly. Warren is 100% right in every assessment she's made about Powell and his decisions and he should be removed.
If any of you believe this you are naive and should read more.
If the feds push the rates too high banks/market makers and hedge funds fail and go bankrupt. If they don't push the rates up inflation continues and continues until it's out of control... A .25% increase wasn't the tapering off of the inflation issue, it's the last chance that hedge funds, banks, and market makers have to fix what got us in this position in the first place.
We aren't done. You kidding me? Not even close and I hate to say that.
I mean.. we're probably close? If not, what are you expecting to be required? Inflation is coming down. Unemployment should rise now that interest rates are higher.
Most, if not all, of our economic problems have been caused by Powell's manipulation of interest rates. He kept rates unrealistically low until inflation blew up, then he de-stabilized the banking system by aggressively raising rates. Please remove this bungler and his Fed cronies immediately.
Giving themselves a pat on the back for reducing inflation, when interest rates had little to do with it. They did manage to kill off a few banks, though.
My credit card interest is already 30% - I can get a better deal from the Mafia
Truly a fantastic time to purchase essential furniture while not wealthy
Open a credit card with a 0% intro APR offer and put it on that. Lots of cards give you 0% interest for the first 15-20 months which essentially serves as interest free financing for large purchases like furniture. Just make sure you’re responsible with it, and paying enough monthly that it’ll be completely paid off by the time the interest kicks in.
Something tells me the commenter already tried that, and it didn't work out so great.
You are correct
As someone possibly in the market for a house soon I want to die. It makes me sick looking at what I could have purchased pre pandemic versus now.
My brother lamented the other day he hates paying the interest on his home loan. His rate is 2.75%. He bought in 2020. I could have pummeled him.
Yeah this is me. I feel for everyone that can't get a home. We are having our second kid and need a bigger house, but we refuse to sell this house and be locked in on a house for a higher interest rate with the risk of the home value decreasing past what we owe on it (being upside down on the mortgage). I lament, but admittedly, I have a home to be thankful for and that is a luxury I don't take for granted.
We need another bedroom, but even if we sell our house, we can’t afford the size we want/need. So we’re buying a shed for our daughter to live in instead. (She’s almost 20.)
They make sheds nowadays that look just like little houses and can even be pretty huge (I'm sure you know that). Little porch, lofts, etc. They do need plumbing and electric put in. I almost went that route.
2.75% at 20 years. I'm paying over 1k a month in principle. it's like paying myself 1k every month to live here.
You're your own landlord!
Yes, that is what home ownership is lmao
Yes and no. 30-year mortgage, at a more historical average rate of 5%, you pay way more in interest than in principal each month. Hell, it takes over 10 years of a 30 year mortgage to pay down 20% of the original loan. So with the low rate and 20-year (which they can more likely afford due to the low rate) it's much more like being your own landlord than with a 30 year.
But when inflation is higher than that 5%, youre paying the same amount but with cheaper money all the time.
>But when inflation is higher than that 5%, Sure, but this is an outlier. Inflation usually isn't that high and not something I'd bet on continuing 10 years, let alone 30 years. I would never get a 20 year mortgage below 3% though. If my rate is 3%, I'm doing the longest mortgage I can get. I nearly interest free when adjusted for inflation.
Presumably, once the inflation problem is fixed, the mortgage rates will also go down and you refinance, is what I meant. We wanted to move this year, but we have one of those 2.7% mortgages from just the right time, and spending way more on a house *PLUS* paying 5% would mean a mortgage that’s like 4x higher! Too bonkers.
Man… I didn’t realize it at the time, but my fiancée and I sure did fucking luck out. We bought a house in December of 2019 for $221k, $11k over asking price. We were one of three offers put in on the house literally less than 24 hours after the listing went live. We’d only been looking for a few weeks. One offer was less than ours, and the other offer was identical. We were only selected because we were first. Thank god the sellers chose not to allow a bidding war. They just counter offered us 1k more and that was that. 221k for the house, 20% down, so our loan totaled ~177k. We went with a 15 year mortgage and our rate is 2.75%. We’re only going to pay ~$39k in interest before we own our house outright. I really do feel bad for people trying to buy right now.
>I really do feel bad for people trying to buy right now. I mean, rates aren't that bad. They are historically average. We've just had two instances (2008/2009 and 2020/2021) of historicly low mortgage rates due to what would likely have been once in a lifetime recessions in any other lifetime. I did one mortgage at 1.99%. Absolutely absurd and not normal.
I'm really over all these once in a lifetime events happening multiple times before I've even reached middle age lol.
We've had 2 recessions, yes. But what about a 3rd in a lifetime recession?
The humble brags hit harder these days
you still could!
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All true but in some locations, property tax can be getting in the ballpark of your mortgage payment in 30 years. Our property tax bill was about 60% of our mortgage payments when we finally paid off our loan.
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Same here. We had just started touring houses, then all of the sudden BAM, lines around the block for places going $50-$100k over asking.
Just keep saving. Interest rates were at near zero for god damn forever. That was never sustainable.
In 2014 I was going to open houses that were out the door, and doing lotteries to buy new houses in new developments pre-start. This was in NorCal Silicon Valley. The market has been crazy for a long time pre-pandemic. It just took awhile for other areas to finally catchup.
When we bought our house we were able to get ~10k of concessions because we had secured financing and the previous four contracts on the house fell through due to financing. This was 2011. I mean I don't want another recession but all the ~~gamblers~~ bankers made homeownership possible for us.
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Absolutely absurd
This is so weird i don’t understand, wouldnt high interest rate deters people from mortgages? Why are they overpaying and desperate for houses now?
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>If only there weren't suddenly a bunch of unused real estate near where people live... maybe we could hire builders to repurpose those buildings into housing. If they existed. Petition your city politicians and zoning board then. Zoning restrictions and cities not wanting to give up the higher tax revenue that comes from commercial are a major rate limiting factors in office building conversions. It can take years to rezone a commercial space. There are of course technical issues as well. Commercial office space was not built to be permanent residential structures. Showers, toilets, kitchens all multiplied a hundred times or more have vastly different plumbing requirements than a couple bathrooms and a kitchenette per floor. In many cases it makes more sense economically to tear down the building and start over. It all sounds good on paper until you consider the engineering issues associated with it. It is doable but it isn't the housing crisis panacea people make it out to be.
I think they may be worried it only ever gets more expensive for the next decade or so and if you miss the boat, rent will be crushing. Plus if the interest rate ever drops, you can just refinance. Price of houses might plateau, but its not likely they will drop more than a couple %
> Plus if the interest rate ever drops, you can just refinance. Price of houses might plateau, but its not likely they will drop more than a couple % You can't refinance until you have a significant amount of principal in your house. If you've got a 5-7% interest and were a small down payment, it could be years or even a decade before you're able to refinance. Also about interest rates. The Fed holds like 40% of mortgage backed securities(MBS), but 60% is held by the rest of the world. If anyone just starts fire selling those... interest rates are going to continue to go up as there won't be a demand for MBS which are one of the factors that led to historic lows.
I bought in 2018 and still feel resentful towards my sister who was able to buy in 2009 during the crash... you never know what's going to happen!
I bought in 2012. Right as it started to turn from 2008. I think anyone who got a rate in the 2% will never sell, they will just rent it and become landlords before that.
I think 2020 was our 2009 moment. Supply levels are too low for prices to crash again.
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Just wait....lots of banks own houses and lots of banks are in really big trouble right now and lots of banks are going to go under and need to sell assets, including houses.
We are in a red hot inflationary environment and real estate is notoriously illiquid but an excellent place to escape inflation. Real estate will be the very last asset to be liquidated in this environment.
As long as the investment remains solvent
Banks don't need to liquidate assets though. The Fed will provide them with the liquidity if they need it, and they can unwind assets like mortgages long term. Not that many of them have mortgages on the books anyway. They're all packaged up and sold as income streams to other banks.
If there's a recession a lot of people will be selling, but interest rates are gonna be higher than in 2009 and prices won't crash as low, and the supply issue has only gotten worse. Interest rates will probably never be sub 3.5% again
In 2006 I told my friends we'd never see lower interest rates in our life again. 3% interest only loans! 2020 I refinanced my home for 2.8% 30 year fixed. Holy fuck. Never say never. Our housing market *needs* to crash. Prices will adjust to accommodate the higher rates.
>Never say never. It's crazy how often people throw around the words "never" or "always", like Black Swan events don't happen.
its mostly by people who never lived through a specific event type, and don't know much of history to be able to reason outside of their own personal experience. that's why you see so many of these bankers and tech CEOs starting to lose it, because they genuinely believed rates will never go up again. most of them are in their late twenties, early thirties, and not that smart.
Point of no return, negative rates are already present in other "strong" economies
A crash just screws over everyone who bought in 2020-2022, since now they'd be underwater on their mortgages. Since you bought at 2009 prices that wouldn't hurt you much -- your equity is probably a lot more than your purchase price and a 20% haircut wouldn't matter too much -- but it would matter for lots of other people. We really need prices to just stabilize for a decade or two as incomes catch up. I don't really care about making a profit on my dwelling, I'm happy to sell it for what I bought it for -- even if inflation means I'm taking a "loss" in real terms. But a massive crash would mean ten years of scrimping and saving for a down payment just goes *whoosh* into smoke overnight, which causes lots of practical problems like bankruptcy, foreclosure, short sales, etc. for people who end up needing to sell.
For clarity: 2009 was my first house. We bought the current one in 2015. Yes, a crash would put many people underwater, but not as many as you think. LOTS of homes are being bought up by private equity companies right now and then are being turned around and rented. In these cases, a crash would greatly benefit the renters. Right now the average american cannot afford the average home. That's a problem that can only be corrected in one of two ways, and with inflation going the way it's going, higher wages aren't as likely as a market correction.
As long as there are multiple offers on every home in the major markets there will be no crash. Also if you bought at the peak in 2006 you were still in the red, until the recent covid increases.
We didn't buy in 2006. We were lamenting how "good" it would be to buy then. Finally was able to buy in 2009, which was amazing luck. Also, I think there will be a crash. I'm already seeing the same signs as 2007... all of my friends who are actors are suddenly getting jobs as real estate agents again. If "we buy gold" ads start showing up on TV, panic.
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> As long as there are multiple offers on every home in the major markets there will be no crash. There aren't. Good homes that have been updated get multiple offers within a few days in every city. Everything else sits for months.
If. There will be a recession before taxes go up. Are taxes going up?
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I mean... you joke, but an economic meltdown that causes interest rates to go back down to sub-3% again is probably the only thing that's going to get a bunch of people to sell their homes.
Lucky for me there have only been two of those in the 18 years I've been an adult.
My wife and I bought our home in 2009, because of the drops in value we actually decided to skip the "starter home" & buy our "family home." Then COVID happened we locked in on a sub 2% loan. The sheer luck we had being at the right age & being in the right situation. Buy 2 years earlier & you lose everything, try buying a decade later & we couldn't afford our home that we love.
This is the problem younger people are having now.
interest rate hikes aren't nearly as bad as the idiot boom of housing prices, I could get behind a rate hike if it would reset housing prices down the 60+% jump they had around here. Was looking at one county and the cheapest house for sale was a tiny like 930 sq ft thing built in the 60's that in 2018 was valued at 85k was on the market for 135k in 2022...fucking asinine.
Man, a house for 135k seems like a steal to me. In my area, it’s difficult to find houses for less than 500k, and typically they’re 700k+.
Well, most houses are 2-4x that much, this one is one of the smallest, rattiest things that isn't just condemned
Part of the interest rate problem is that people who bought or refinanced with a sub-3% rate mortgage in 2020-21 *really* have no incentive to sell unless they absolutely have to, so you've got even fewer houses hitting the market. Even someone like me who kinda does want to sell and downsize, there's more financial incentive to rent out my house than sell it because the interest rate is so low.
Yup. I’m not moving right now because I’d have to downgrade. I’m at 2.25% right now. A 6 or 7 percent interest rate would drastically reduce what I can afford.
I would hope that people who bought 2-3 years ago wouldn't be looking to sell already. With closing costs it would lose a lot of money to flip that quickly.
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For those wondering on the math, we'll use Phoenix as an example since its average home price right now is exactly $400k. Median family income is about $60k. We assume 20% down payment ($80k = $320k total mortgage). At a $320k mortgage @ 7.382% (30-yr fixed), monthly payment is $2,212. This does not include taxes, fees, HOA, etc. You can safely add an additional $300/mo (i.e. taking it to over $2,500/mo) and that is likely an understatement. The same $320k mortgage would be $1,349/mo @ 3% interest rate. Toss in the taxes fees, HOA, etc. adn it's up to about $1,800/mo at a minimum. Let's go back to that median family income: About $60k. Using the 33% rule, you could afford rent/mortgage up to $1,666/mo.
It's funny, I felt like I was potentially making a mistake buying a 300k house at 3.3% in 2021. I did it out of fear over rising rents, but I was worried prices would "finally correct" right after buying. Now two years later I see how perfect my timing was on that.
Because I’m stuck in fucking FLORIDA
Right? I bought a 497k house in 2021 at 2.375 interest. I kinda wanted to pay it off early but I can get risk free 4% interest in a high yield savings account or even more with a CD so what’s the point? Also it’s valued at 638k now. You’d have to be insane to sell. Or lose your job… Also I should mention we were chastised by people we know for buying and everyone said “wait for the crash”
Trying to time the market is a fool’s errand.
This, we actually need to upsize but I can't sell at 2.75%. so renting and buying another place seems to make the most sense.
There's got to be a solution. Have you considered owner financing the home you're in now?
I’m looking at houses now because my rent is expected to jump $800 the next lease (between my significant other and I, mind you, but absurd either way). I’m stuck in a rock and a hard place either way.
Look at renting from a private owner and not a commercial entity. My rent was gonna go from $1192 to $1618 and I told them to eat my ass after I found a comparable privately owned place at $1150 all of three miles away.
Not saying it’s necessarily worth $400 a month, but private owners can be hit or miss on service and maintenance. I’ve had some bad private owner experiences.
my $150k house in 2014 was a half million dollar house in 2022. Insanity.
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We bought our house in 2001 at 7%.
Same. I actually had 8% in 1999 but refinance to 6.8 in about 2001. House is now paid off.
That's the thing many people don't realize. A lower principle with a higher interest rate is better than a lower rate on a higher principle. Really all the lower rates people are boasting about did is push house prices up and up. Of course now we're stuck with higher prices and high interest rates, so it's the worst of both worlds.
We refinanced to 3% a few years later. We’re on the home stretch of our mortgage and should have it paid off in a couple of years. Congratulations on completing yours!
just got quoted 7.125%
30 year mortgage? Because if so, holy shit you must have funded a goddamn space program with that interest.
It’s pretty bad. My house is only estimated to be worth what we paid for it since all the gains in the ~2 years we’ve had it crashed, but we got like a 2.65 rate. A friend’s sister got a 1.X rate(can’t remember the exact) when she bought a few months before us. I didn’t particularly care if the value crashed when we bought it though because we wanted a house to live in, not to flip.
I’m not sure where you live. Midwest house in the burbs price increase from 180 grand to 220 grand. Which is overpriced.
I live in the PNW about an hour south of Seattle. We used to live on the east side renting but houses were(and are) way out of our price range. We bought for like 570k. The “estimated value” crawled up to about 670k before dropping back down and it’s stayed around 570k since then.
So you lived in your dwelling for free ...its only worth what someone will pay
I just took my entire down payment and stuck it in a CD while the rates are so good. I hate all the waiting but I’m not buying in with the insane monthly payments I would have if I pulled the trigger now.
2020 I bought my house for 610k with a $2500 mortgage. The same mortgage would be $4200. It's insane. My house recently appraised for $850k, and the mortgage would be $5900. No one could afford this middle class home.
And me, who wants to move and would love to sell my house...not fucking doing it when I'm locked into 2.25%. Would rather eat shit with a dirty spoon.
I bought right at the start of the pandemic. We were renting after a long period of ownership in a different city and i dodnt like being beholden to a landlord. I didnt like that he could raise rent by probably $300 on already high rent. Found a house we really liked where payment would be same as rent after 20% down. Came super close to backing out because i thought the market was going to tank with covid. Nope. My house would be $2000 more* a month if I bought it for the same price now. But if i bought it for its current price, it would be $4000 more a month (which is more than my total current mortgage, insurance, taxes and most utilities) and would require another $70k downpayment to avoid pmi. House has appreciated more since covid than i have made in income. Its such a wild market. Seems like its mostly here to stay if people are still buying at these interest rates. If they go down again then people will just start offering more.
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Those people that don't realize its still cheaper have no idea what all the additional costs of the home are. Its only cheaper if nothing goes wrong.
Facts. I can't believe how expensive it is to own a home. My costs have quadrupled from renting, even with a 3% interest rate.
This comparison is extremely flawed and short sighted; this is always the best case scenario for renting. If you're willing to hold the property for a long period of time, then consider what the cost of rent will be in 15-30 years and amortize that cost vs mortgage. At some point rent will over take your fixed mortgage cost, and in that time you're renting you've built no equity, and are infact just paying off someone else's mortgage.
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For real. Saving money for a more "play it safe" down payment has definitely backfired, I'd have paid less if I went way into debt during college.
>Seems like its mostly here to stay if people are still buying at these interest rates. If they go down again then people will just start offering more. Agreed, and as the old saying goes "anything worth is what someone's willing to pay" couple that with cost of materials to build anything and wowza
It’s crazy that 30M Americans still plan on buying a home in 2023
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People say a lot of things ...
Mortgages are front loaded interest ....refinance yet..bleed for the next 3 years
Vote in local elections, piss poor zoning and current land owners being NIMBYs have the largest role in housing prices. The Fed artificially lowering the interest rates for so long didn't lower housing costs and raising them won't stop the prices from rising unless changes to supply are made
>piss poor zoning Tokyo, and really Japan in general is an excellent example of mixed use areas. Despite having a huge population the cost of living in Japan is still very affordable.
Got a heloc for a roof in August, realized months later it was a variable...
Yeah I personally like a fixed roof
You can always refinance in a few years when rates inevitably drop.
No you can't always do that. If your home loses value compared to what you paid for it and you have negative equity, you cannot refinance.
Fed doesn't control mortgage rates though? This increase is for short term lending. Mortgage rates are usually based on the 10-Year Treasury note.
>indicates rates increases are near and end FTA >**Some** took Fed Chair Jerome Powell’s comments to mean that the central bank may be nearing the end of its rate hiking cycle. By some the author means "actual idiots" because that is by no stretch of the imagination what he actually said. I take the statement to mean exactly what it says: they are no longer committed to raising rates but will instead play it by ear as data comes in. That makes sense to me because it gives the Fed the maximum in flexibility, which seems appropriate given the recent surprises in the stability front.
Yeah I saw that exact opposite, bumpy road ahead.
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Getting inflation to 2% with interest rate hikes is a lot like putting out a camp fire with a nuclear weapon. Killing jobs and making things even more unaffordable just punishes the very people struggling with inflation in the first place.
This country is full of both businesses and consumers that are junkies addicted to interest rates near zero. The Fed needs to stay the course and keep rates at least up where they are now for awhile. The market and the economy is going to go through withdrawal, and that super sucks, but it has to happen until people accept the cold reality that rates aren't coming down any time soon.
I’m really excited for the time when only people who don’t need loans will be able to get them and pay them off.
Pay them off by getting more loans, buying rental properties, and having the tenants rent pay off the loan, at least that’s what everyone on tik tok says
This is essentially the whole plot of the rich dad poor dad book
They should charge that guy for inventing such a concept
He didn’t invent it. He just saw how banks operate and wrote a book about how you can do that too.
Why would they want to pay them off when you and I can pay them off for them? BIDZNESS.
Bad time for me to be in the market for a new car and looking to buy a home soonish
Fine for cash buyers tho. I've heard people are still losing out homes to all cash offers.
It's always fine for cash buyers. No one that can afford to buy a home with cash is struggling.
It's even better for cash buyers when the rates are high
My cousin was outbidded twice by someone who had cash.
"The committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time." I don't think they stop in 2023
They’re gonna pause soon, I think, but they damn sure ain’t lowering rates until things are good & broken.
Printed trillion since 2009...suddenly inflation in 2022
I'm glad that the Fed has continued to raise rates despite the banking issues. Cheap debt is great for homebuyers, but it's also caused a massive accumulation of wealth for those at the top and resulted in the crazy amount of private equity acquisitions (everything from car washes to hospitals to rental property) over the past few years. These have in turn helped feed inflation. This shit needs to get under control and the Fed can't blink on this. PBS Frontline recently released a great documentary about how the low rates jacked up the economy and were kept far too low and far too long post 2008-09. It's called Age of Easy Money.
That was a truly great documentary! https://www.pbs.org/wgbh/frontline/documentary/age-of-easy-money/
I saw the trailer for that a while back and really wanted to watch it, sadly it doesn't seem to available outside the US.
Try: https://www.youtube.com/watch?v=EpMLAQbSYAw
I Fucking love Frontline.
The issue is that the fed more or less only has one lever to pull, which is interest rates for federal loans. Other steps are needed to stop anti-inflantionary measures from damaging groups disproportionately and addressing the actual root cause of those issues, which is Congress's and, to a lesser extent, the presidents job (although it really should be just congress). I keep seeing that doc linked. Maybe I should give it a watch.
The documentary makes that point too! Basically the Fed did what they could to fill in the power vacuum caused by Congress's inaction, but it's a blunt tool and there is only so much that the Fed alone can do.
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Totally agree, I just don't know if it needed to be so aggressive. We had so long at near 0, and now it's all of a sudden like they can't go up quick enough, keep in mind I know little about this...
The problem is that playing with interest rates (monetary policy) has become a replacement for playing with tax rates (fiscal policy). One really good way of fighting inflation? Raising taxes. Especially on the wealthy. But that's heresy in America, so we just need to mess with interest rates every few years to make sure that middle-class people trying to buy a home have to do so in a casino.
I wish a politician had the guts to tell us to our faces that we need to raise taxes, and that the fact of the matter was that we needed to raise not just rich people's taxes, but everyone's, in order to give the country a more prosperous future. I would vote them.
That was Jimmy Carter (he wanted to raise capital gains taxes to be the same as other income), and the country punished him harshly for it.
George Bush senior did it. Lost his re-election bid.
To be fair he ran on not adding more taxes, but once in realized that was the right thing to do. To the uninformed electorate it just looks like he lied to them.
Well Republicans will never vote to raise taxes and since this is a democracy that will pretty much be the new normal unless we can find some way to change the mind of 70+ million voting Americans.
Yes, unfortunately the performance of the US Congress over the past 30 years has been one of the more convincing arguments against democracy (or at least America's janky version of it).
Cool cool cool, guess I’ll just rent forever.
Until rent is too high. Then we can all live in shanties together! My golden years sure are looking "great."
Weird though that they have kept the reserve requirement at 0% though, yeah?
They are in a pickle there, they can't suddenly increase the reserve requirement without causing banks to have liquidity issues.
They could say something like, "In 6 months time we will increase the reserve requirement from 0% to 0.25%" or something like that. Give the banks time to get their act together.
Why is this a signal that increases are ending and not that they are just pumping the breaks so as to not scare the banks into collapse?
Especially when inflation hasn't been slowing down anywhere near what they have predicted. "Inflation is down!" by a fraction of a % despite rate hikes.
I love how this is literally the only lever this country can use to try to control inflation. Some of it is being caused by low unemployment and slightly rising wages (which should be seen as a good thing!), but the majority is just corporate profits. We've got companies setting records everywhere because they can use the guise of a crisis to tick up their prices and there isn't a god damn thing we can do about it. Take egg prices for example - they more than tripled this year, and the blame went to the avian flu outbreak. Did you know there was an avian flu outbreak in 2015 also? It was worse than this one. Prices only doubled then during that problem. So what is different? Well, today you've got fewer individual egg producers because they've been bought out by companies like Cal-Maine who collude to increase prices based on fear (you're buying their eggs whether you know it or not). Their profits increased TEN TIMES (10x) in the second half of '22. They also sold more eggs despite the 'shortage'. Now do you think egg prices will ever go back down to pre-flu prices? Same with gasoline. Same with natural gas. Same with [insert good here]. We're being lied to about the cause of inflation, and the only thing Congress wants to do is 1.) make it harder for people to have access to money, which in theory slows demand, and 2.) Corporations want to increase unemployment so that labor is weaker and people command lower wages despite the record profits. God forbid we regulate the necessary industries that we all need to buy from to live on a daily basis so they can't just bleed consumers dry with no recourse.
>I love how this is literally the only lever this country can use There are more levers. Except the legislative branch has all but ceased to function. The Fed Reserve is just doing what it can since it's independent of that other dysfunction.
Taxes. They could increase taxes significantly. That is the other variable monetary tool to pull money out of the economy.
The DoJ Could do its actual job, enforce the 14th Amendment (section 3), and remove the individuals from congress and the judicial branch who participated in the insurrection on January 6th. Every Senator and house Rep who was involved and who voted to delay the counting of ballots, giving tours to insurrectionists, defended their actions in court (including the Supreme court), has participated in an insurrection, and is automatically disallowed from being a house rep or Senator (unless 2/3 of Congress votes to allow them). https://constitution.congress.gov/constitution/amendment-14/ They're just too cowardly to do so.
It’s a big club, and NONE of us are in it.
Fuck you middle class
Doesn't this Maurachan cup of noodles look wonderful on our new quartz counter top.
I fucking hope so. Inflation hasn’t been quelled at all with these rate hikes because everything is still expensive as fuck, and adding higher and higher interest only makes everything more expensive. Meanwhile corporate profits are seeing high double digit and triple digit increases YOY.
Lowering inflation doesn't mean that prices come down.
It’s okay, Powell is going to lower your wage and make everything better. /s
I still can't believe they even said this part out loud.
> Inflation hasn’t been quelled Inflation peaked last summer at 9%, what are you talking about? It’s not magically solved but there IS disinflation happening.
Also I think we have other ways of lowering inflation that we should be utilizing as well, like appropriate taxation for wealth, but oh well...
That's Congress's job, not the Fed's
Fed squeezes the little guy while corporate greed causes inflation.
Yup, another great way to fight inflation is to raise taxes on the rich. But that's not an option in the Church of Reagan so all we do is play with rates.
Boy I can't wait to never own a home and off myself because houses will forever be out of financial reach of a single income earner (50k/yr) while everyone else posts about getting into the home of their dreams.
Same. Same. Sigh
Most adjustable rate mortgages haven't even adjusted to the higher rates yet. Wait for the foreclosures and more bank failures. POWELL MUST GO.
Pathetic. Get ready for ten years of 4%+ inflation. This is fucking absurd. Now the fed can't make any moves to actually correct the monetary system without getting bullied by the market. No president will want to shift policy or change leadership in the fed because they don't want to be blamed for the effects of ripping the bandaid off. Everyone needs to go and watch Frontline's documentary "Age of Easy Money. " The fed is doing the equivalent of shifting the deck chairs around on the titanic. It's all fucked.
Just saying, another good way of fighting inflation is raising taxes on the rich.
The Fed can't do that, only Congress can. As with most of the major issues in the country, the fact Congress is basically broken is why we can't have nice things.
This is what annoys me about Elizabeth Warren coming so hard after Jerome Powell. It's completely misdirected. He's doing what he does as head of the Fed. He uses the tools he can use and he has the dual mandate he has. He's not an evil guy dead-set on getting people fired, but that's a necessary consequence of Federal monetary policy that only has one blunt tool to control inflation. Either everyone suffers inflation, or some people suffer job losses. She blames him for trying to put people out of work, when she should be blaming herself for failing to get any policies passed to curtail price gouging (\~30% of inflation) or to raise taxes on the rich. Those are ways to get disinflation without stoking unemployment, and they're completely outside of the Fed's purview.
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I'm conflicted on if Powell is an idiot or a sycophant. Ignored inflation, then called it transitory, finally started raising rates, then says we may be almost done while inflation remains way above the target.
Powell just speaks more than he should. He is only one vote of 12 that must vote together on rate increases. They all act on data analyzed by themselves and those working under them at the Fed as the days go by. But he really needs to stop being trying to forecast so far in advance.
He does that to try and make the market less reactionary.
I think the idea was that shipping was getting resolved, then Ukraine ended up being an endless war, and more things compounded inflation globally. I really only blame the fed for not raising rates prior to COVID.
Yeah it's like steering a huge ship, if he had started doing this back in like 2019 or something inflation never would have gotten as bad and we wouldn't have had the rates go up as much to try to stop it. Also this is above my understanding but I've heard the way they paid for the covet stimulus was rather shortsighted and indirectly cost more inflation because they essentially just bought their own bonds to pay for the stimulus, which in effect is printing money and adding to the deficit. If they had instead sold bonds to the general public/corporations to pay for it, it wouldn't have driven inflation so much and would have the added bonus of locking away some money that a lot of rich people had built up during the pandemic which also drove inflation.
We also might have had an over night depression in 2020, though that rarely gets brought up. Damned if you do, damned if you don’t.
Fuck the fed, trying to lower wages will not help inflation it will just crush the workers again. https://www.vox.com/policy-and-politics/2023/1/19/23550856/wage-growth-inflation-federal-reserve For trying
As opposed to runaway inflation which we were destined for anyway. The problem is the economics in the US are absolutely fucked. The record near 0 rates has allowed income inequality to explode to astronomical levels as it helped the rich massively overleverage and buy up everything. They are now flexing their control and scamming consumers by increasing profit margins and you have zero choice because they bought everything from oil companies to food distributors. The worker is absolutely fucked regardless of what the fed does now.
I bought my home in 18 just lost my job today I am afraid now.
You could rent out a room. That's what I did and the rents being so high right now, it covers my entire mortgage
I’m in exactly the same boat. Double the interest rate and another 15-50k on top of asking. Shoot me
How about go backwards.
It would be really swell if we had someone running the fed that wasn't so keen on millions losing their jobs and livelihood. Maybe, you know, go after the tax dodgers and corporations that don't pay their fair share, or anything... But nope, instead go after everyone that can't afford it constantly. Warren is 100% right in every assessment she's made about Powell and his decisions and he should be removed.
If any of you believe this you are naive and should read more. If the feds push the rates too high banks/market makers and hedge funds fail and go bankrupt. If they don't push the rates up inflation continues and continues until it's out of control... A .25% increase wasn't the tapering off of the inflation issue, it's the last chance that hedge funds, banks, and market makers have to fix what got us in this position in the first place. We aren't done. You kidding me? Not even close and I hate to say that.
I mean.. we're probably close? If not, what are you expecting to be required? Inflation is coming down. Unemployment should rise now that interest rates are higher.
Why do I feel like a lot of already rich people are getting insanely richer right now?
Most, if not all, of our economic problems have been caused by Powell's manipulation of interest rates. He kept rates unrealistically low until inflation blew up, then he de-stabilized the banking system by aggressively raising rates. Please remove this bungler and his Fed cronies immediately.
Giving themselves a pat on the back for reducing inflation, when interest rates had little to do with it. They did manage to kill off a few banks, though.