Mortgage Rates Spike, Home Sales Drop for 7th Month, and Suddenly Here Come the New Listings

But it doesn’t yet reflect the recent spike in mortgage rates to 4.5%.

By Wolf Richter for WOLF STREET.

OK, the “existing home sales” data released today by the National Association of Realtors was for February, and in February the average mortgage rates were a lot lower than today. In mid-February, the average conforming 30-year fixed mortgage rate had just edged over 4% for the first time since 2019, according to the Mortgage Bankers Association’s weekly index.

According to the daily measure by Mortgage News Daily, the average 30-year fixed rate mortgage hit 4.50% yesterday, the highest since March 2019. Since last fall, the average rate has jumped by 1.5 percentage points, from 3% to 4.5% (chart via Mortgage News Daily):

In its report for November, the National Association of Realtors expected the average 30-year mortgage rate to reach 3.70% by the end of 2022. Now it’s only March 2022, and we’re at 4.5% already. This is moving fast. Last month, I speculated that 4% might be the magic number beyond which the housing market is going to feel it.

It’s not a secret: As mortgage rates rise, more and more buyers are priced out at these sky-high prices, and they step away from the market.

But among buyers who still qualify, rising mortgage rates trigger a mad scramble to buy something “now,” no matter what the price and no questions asked, and they’re waving inspections and are taking huge risks – even NPR aired something like a warning about that yesterday, LOL – to lock in whatever mortgage rates are still available before they rise even further.

There is a well-established pattern: Sales activity picks up in the early phases of the cycle of rising mortgage rates, and we saw some of that, but it’s getting impossible for an increasing number of potential home buyers.

Sales of previously owned houses, condos, and co-ops in February fell by 7.2% in February from January, and by 2.2% year-over-year, to a seasonally adjusted annual rate of 6.02 million homes, the seventh month in a row of year-over-year declines (historic data via YCharts):

“Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases,” the NAR said in the press release. It pointed out that monthly payments had risen by 28% from a year ago. “Some who had previously qualified at a 3% mortgage rate are no longer able to buy at the 4% rate,” the report said.

Home sales peaked in the 2003-2006 era. The current era remains solidly below that peak. The seasonally adjusted annual rate of 6.02 million sales in February was also well below the pandemic peak, but was up from the prior years.

Sales of single-family houses dropped 7.0% for the month and 2.2% year-over-year, to a seasonally adjusted annual rate of 5.35 million houses.

Sales of condos plunged by 9.5% for the month and by 4.3% year-over-year to a seasonally adjusted annual rate of 670,000 condos.

By Region, the percent change of the seasonally adjusted annual rate of total home sales in February from January, and year-over-year (yoy):

  • Northeast: -11.5% from January, -12.7% yoy.
  • Midwest: -11.3% from January, -1.5% yoy.
  • South: -5.1% from January, +3.0% yoy.
  • West: -4.7% from January, -8.3% yoy.

Here come the new listings. The number of homes listed for sale in February jumped by 13.4% year-over-year, after the 13.2% jump in January, and were down only 3.0% from February 2020.

New listings come out of the woodwork when interest rates rise and volume stalls — because it’s now suddenly time to put the extra house on the market before the market turns. In February, new listings essentially rose back to the normal range for a February, after having been woefully low during the past two years. The green lines connect the Februarys (source: realtor.com residential listings database):

Supply of homes listed for sale ticked up from the record low in January to 1.7 months of sales. The number of unsold homes on the market rose 2.4% from record lows in January to 870,000, seasonally adjusted.

The median price ticked up from January and was up 15% from a year ago, to $357,300. The year-over-year spikes had peaked last May and June at over 23%. The seasonal peak in the median price was in July 2021 at $362,800:

Investor share of sales remains about level. “Individual investors or second-home buyers, who make up many cash sales,” accounted for 19% of the transactions in February, down from 22% in January but up from 17% in February 2021. “All-cash” sales remained in the same range, accounting for 25% of the transactions in February, down from 27% in January but up from 22% in February 2021.

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  357 comments for “Mortgage Rates Spike, Home Sales Drop for 7th Month, and Suddenly Here Come the New Listings

  1. Gattopardo says:

    “…rising mortgage rates trigger a mad scramble to buy something “now,” no matter what the price”

    A broker I know confirms that has been the sentiment here in SD, accelerating over the last few weeks. Yup.

    • cas127 says:

      DC has created an utterly phony interest rate environment for 20 years…and by this point most people know it.

      Boom/bust 1.0 relied upon the suckers – those ignorant of DC’s manipulations.

      Boom/bust 2.0 is relying upon the hyper-speculating psychopaths (they know the game for what it is)…thus the rush for the door…they know their “wealth” is wholly contingent upon DC’s increasingly runny empire of bullsh*t (interest rate division).

      • Raj says:

        A 0.25% higher rate with postponed QT will cause house prices to inflate further.

        When inflation is at 8%, the 4.5% mortgage gives you a 3.5% return over cash, even when house prices don’t go up. However, 30 year treasuries pay only 2.7%, and house prices are jumping by 20% a year, REITs got a 17.4% return over treasuries. So, no big investor will stop buying housing.

        Also, there is both a Fed put and a Govt put on house prices, so they never go down and should keep going up. In essence, US is all in on Housing, and housing markets can only correct when whole US is going bankrupt, not because of dollar debt that we can print, but because we no longer manufacture stuff and may not have anything to offer in lieu of our imports.

        • makruger says:

          Great, with a Fed and Gov put on housing we’re on the same path as China.

        • georgist says:

          We need forced sales. If the Fed triggers a deep enough recession that will happen.

        • JeffD says:

          @Raj and @makruger Exactly. And I think that is where we are headed. The only strike against that outcome is that there are no annual taxes for real estate in China, so taxes put a drag on purchases in the U.S. Also, for me, the fact that the Fed is not even pretending they want Prime rate above CPI highlights the govt wants to inflate the property market similar to China.

        • historicus says:

          Remarkable that people believe 8% seems okay but dont dare raise rates a couple of % pts..
          INFLATION will cause a recession. People will stop going out to eat in order to fill up their gas tanks. People will stop driving trips.
          Hotels/Motels will suffer. Restaurants too. We are a service economy reliant on mobility.
          2 or 3% short rates will not damage the economy as much as people think….IT WILL hurt stock and real estate, but they have had a free lunch for 12 years and the job of the Fed is not to defend spiked asset prices….or is it?

        • joedidee says:

          exactly
          I need to SPEND MY WORTHLESS fiat $dollars before I lose anothe 30% of value
          mortgage??? don’t have one called cash

    • RH says:

      Inflation is probably really 7.5% to 12% per year, so even a mortgage at 7% per year means that they are gifting you .5% to 5% per year. So in areas with reasonable property taxes, since the banksters’ “Federal” Reserve clearly is only going to pretend to try to slow down inflation, any asset that can keep its value against inflation is better than cash or bonds or CDs with their puny returns. I heard advertising about adjustable rate mortgages, now those would be crazy to get.

      • Jake W says:

        so i see that a lot, and a 30 year fixed at 7% per year is only a “gift” if inflation *stays* at 7.5%-12% per year. if that does happen, the us dollar is doomed.

        • RH says:

          The US dollar is probably doomed as a reserve currency in coming years albeit not for a while because our allies have now realized that the US is the only viable opponent to China and Russia, so they may keep it up for a while. The “Federal” Reserve will not raise interest rates enough to tame inflation like Volcker did.

    • gametv says:

      this is the stupid lemmings running off the cliff. there is a simple reason they run to buy a home – because they think the prices will keep going up. if you told those buyers that they would be sitting on a 10-15-20% price decline over the next 5 years they would run away from that purchase.

      but people are greedy.

      the problem with the idea of locking in a low interest rate on a home purchase during a speculative bubble is that interest rates have not stopped moving up. and demand for homes will eventually be hit by a lack of buyers who can afford the monthly payment.

      once the market finally hits that inversion point and prices start to fall, the supply will finally hit the market – at the wrong time and will drive a stake in home prices.

      i see 50% declines in many overpriced markets like southern california.

      i was predicting 5% interest rates by May in January and people called me crazy. we might get to 6% by the end of May.

  2. JeffD says:

    I’m betting months supply heads lower from here for the rest of the year as CPI inflation continues to increase for at least six more months. The only thing that would change my bet is several 0.5% rate hikes in a row.

    • Wolf Richter says:

      JeffD,

      So just another thought here:

      For home buyers struggling to qualify for a mortgage, it doesn’t matter if “real” mortgage rates are negative (below CPI).

      If they cannot qualify for a mortgage because they don’t have enough income to cover the mortgage payment, now that the rate is 4.5%, that’s it… they’re not buying. Those buyers are gone from the market. It doesn’t matter what CPI is.

      The number of potential home buyers that disappear from the market increases with rising mortgage rates and rising home prices. At some point, the market stalls (volume slows), and price discovery starts.

      In fact, big inflation leaves less money for mortgage payments.

      • Jake W says:

        to add on that, the “all cash investors,” many of whom are actually leveraged, just not with a traditional mortgage, will bail the moment they see things slowing down. the investors don’t have to dump what they have bought in the past 18 months. they just have to merely stop buying new stuff, and the buying pressure is gone. and i think that’s a distinct possibility when you consider that the people you described being gone from the market will put downward pressure on prices for everyone.

        • Raj says:

          After Fed’s demonstrated apathy to inflation, stock markets are roaring again.

          Why should it ne different for Housing? “To infinity and Beyond…”

        • HB69 says:

          I agree. We have not only stopped buying, but have reduced some property that we considered to be much more than fully valued (values up over 50% in the past 2 years). We are not alone, many other large real estate investors we know have been selling for the past 18 months and we are all sitting in heavy cash positions waiting for better opportunities over the next 2-3 years. Will our cash take a hit from inflation while we wait – yes – but we feel we will more than make up for it with better buying opportunities in the next few years.

        • Implicit says:

          The 10-year treasury note is often cited as an important reading for the market partially due to its function associated with variable rate equity lines If that gets up around 4% it could be a hurting point It was for me until I refinanced 6 months ago and consolidated the mortgage and equity line.

          10 Year Treasury Rate is at 2.14%, compared to 2.20% the previous market day and 1.71% last year. This is lower than the long term average of 4.29%.

      • JeffD says:

        USDA home loans have a very low bar, similar to “are you breathing?” I just typed fictitious numbers into their eligibility quiz with an approval. You would be surprised where USDA home loans apply.

        • JeffD says:

          Example: 47 charlottes way, muir beach is an eligible property under USDA loan guidelines.

        • JeffD says:

          Whoops. Showed as eligible in their tool, but violated loan cap:

          Properties financed with direct loan funds must:

          * Generally be 2,000 square feet or less
          *Not have market value in excess of the applicable area loan limit
          *Not be designed for income producing activities

          For instance, anywhere in Scotts Valley is eligible that meets these requirement.

      • Augustus Frost says:

        1.5% on a $300,000 mortgage is about $250 more per month.

        Not sure how much the cost of financing has gone up for institutional buyers if it’s comparable, there is a limit to how much of it can be passed to the renter.

        • TonyT says:

          About a 20% increase in the monthly payment.

        • qt says:

          You also need to factor in the price increase as well. Those 300k crap shack is now “worth” 350K – 400K on paper.

      • Dazed And Confused says:

        But for investors, the CPI specifically rent CPI is an important factor because it represents the growth rate for the gross income they expect to accrue from their investment.

        So even if the market stalls and capital appreciation slows, the income growth potential relative to the cost of capital (mortgage rate) may make housing an attractive investment.

        • Jake W says:

          i don’t know where these investors think the money is going to come from. in many places, rents have gone up 20-30% this year. anecdotally, it seems that renters are tapped out.

        • Augustus Frost says:

          Jake.

          I’ve wondered the same thing myself. I live in a 2BR where the rent is about $2000 which is supposed to be about average in metro ATL but I’m in much better than average location and the complex was built in 2019.

          2BR units range up to $3800, depending upon location in the complex. 3BR of which there are a few I think range up to $5000.

          Last I checked, the vacancy rate was something like 1%.

        • JeffD says:

          I’m sure many people said it was “impossible” for paycheck-to-paycheck renters to pay an additional 20-30% per month, and yet somehow they are paying it, right?

        • unamused says:

          “Last I checked, the vacancy rate was something like 1%.

          Not bad for an economy that has been “gutted”.

        • cas127 says:

          Unamused,

          1% vacancy because insufficient apartments built for 7 years (reaction from Bust 1.0 blast crater).

          And people have to live *somewhere* (but the longer they get rent raped, the more tolerable having a roommate seems).

          And when people start doubling up, what happens to occupancy?

        • Jake W says:

          jeffd, most people are not paying 20-30% more. that was the average increase for asking rents, but renewals didn’t pay anywhere near that, in my anecdotal experience.

          as always, prices are set on the margins.

        • gametv says:

          people will start to move away from expensive areas and that will also destroy the demand in those areas.

          we are sitting on a bubble still, the bursting has barely begun. watch for real pain in the real estate market in the near future.

          i say that as homes come on the market in May, June, July, they start to cut prices to sell and that starts the downtrend, but the bigger downtrend happens in the Fall.

      • Hal says:

        “In fact, big inflation leaves less money for mortgage payments.”

        Salient point there… Rising mtg rates *coupled* with inflation is *double trouble*.

      • JayW says:

        “In its report for November, the National Association of Realtors expected the average 30-year mortgage rate to reach 3.70% by the end of 2022.”

        I would never put any stock in anything NAR has to say. NEVER.

        Most likely, the magic number is about 4.5%, and I agree that certain groups of buyers will start to disappear from the market. Also, listing prices in the next 3-6 months will start to pull back a little for those final sellers that become desperate.

        Since mortgage closings lag rate changes, the sales numbers will continue to deteriorate from here on out and will accelerate once rates hit 5%. If rates hit 5.25%, then the housing market will begin a 10% rollover which the FED is fine with.

        What they don’t want to see is a 15% or more pullback. We’ll know by late this year if a greater than 10% pullback is in the cards.

        • Pea Sea says:

          If that’s true, it’s insane. 15% wouldn’t even unwind the last year’s price spike.

        • Michael Scott Gorback says:

          Lawrence Yun is the Baghdad Bob of real estate.

      • Dazed And Confused says:

        Another way inflation plays into this is that homebuyers won’t mind stretching themselves early on because the payments will stay fixed while their incomes soar at or ahead of inflation place and so will become much less of a burden over time.

        Lenders might start to lend based on what the borrower will be earning next year which might make it easier to qualify. That’s part of the heightened inflation expectations we hear so much about.

        • HB69 says:

          While I agree with your premise to a point, it is also important to remember that in most places, overall inflation is taking a bite out of most, if not all, wage gains. Additionally, the one thing that none of us have control over are property taxes – and in urban TX you can expect these to go up the maximum allowed each year.

        • COWG says:

          “ Additionally, the one thing that none of us have control over are property taxes

          HB69,

          Correct… you have to allow for that in your calculations if you’re buying the house to live in…

          In protected tax states like Florida, the payment you had in year one was based on current tax rates and probably tax protected… in year two, it reset to prevailing values because of the property sale…

          Add in some insurance increases, and your house payment can increase 20% before you blink…

          If you were even close to marginal going in, with inflation, you can be hurting very soon…

      • Masked Ghost says:

        Wolf. At what point do we start seeing NINJA loans again……and wouldn’t those contribute to even higher home prices ?

        • Gabby Cat says:

          We were offered a NINJA loan by house builder a year ago. They had 49 houses sold in a subdivision around that time and 35 of them where closed with NINJA loans.

        • JeffD says:

          Beating a dead horse:

          USDA loans are available to home buyers with low–to–average income. They offer financing with no down payment, reduced mortgage insurance, and below–market mortgage rates.

          Not quite NNJA yet, but I expect that by year end.

        • Peanut Gallery says:

          Gabby Cat, what area was this?

      • lisa2020 says:

        But But But the real big question is price discovery starts for whom?
        AND how does price discovery continue for certain proprietary and really proprietary AI’s for whom, and where?

      • YuShan says:

        Correct. Nominal rates matter, not just real rates. You have to be able to come up with the payments.

        This is even true for corporations and governments. Real rates may be negative, but if interest payments are higher than revenues you could get into trouble.

      • Thomas says:

        Don’t forget this last booster in the arm for the market:

        “A significant number of U.S. consumers will have their medical collection debt dropped from their credit report, the nation’s biggest credit reporting bureaus announced Friday.”

        • Wolf Richter says:

          Thomas,

          Nah, that’s not changing anything. Medical debts have been discounted for decades by lenders. So you had a low FICO score, but you had a $500k hospital bill that you couldn’t pay, but everything else is top notch and on time — all this data is in the detailed credit report — the lender just said, OK, that’s a medial default, and then went ahead and made the loan.

          The credit bureaus are just doing what has been de facto reality already.

          Credit scores and credit reporting aren’t punitive measures. They’re designed to predict future credit performance by that individual. And that’s why it makes sense to ignore medial debts if everything else it top notch.

      • AD says:

        It comes down to affordability. House prices in large part are based on the mortgagee paying no more than 38% of household income on housing costs (mortgage, property tax, property insurance and HOA fee). I state 38% because that is what I remember the bank telling me in regards to a VA mortgage.

        I recall also the house price to household income ratio being between 4.5 to 5.5 for low interest rates (less than 4% rate for 30 year mortgage).

      • Educated but Poor Millennial says:

        Wolf,
        Instead, the cash buyers and wealthier middle class will buy multiple houses and rent them out. A strong substitute.

    • dang says:

      I remember buying a house in 1982 with an interest rate of 14% +1/2 for PMI. Duh ! The beauty of youth is not explainable.

      Off topic, maybe, but relevent in the sense that it may provide perspective. Anyway, I overheard two OG’s discussing a mutual acquaintance this morning.

      The first OG remarked that so and so recently turned 98.

      The second OG remarked that apparently, even Hell didn’t want him.

      Our world is dominated by the same crowd that has been making horrible decisions for the last 65 years, and now their going to fix it.

      Well, the naked humanity of it takes my breathe away, and makes me want to continue believing that it’s normal.

  3. J-Pow!!! says:

    Buy now or be priced out forever!!! I have tamed inflation with my .25 rate hike!!! The market will never go down!!! Just double your money on Bitcoin!!!! Buy now and then the house you dream of will be half price next year coz Bitcoin will quadruple and houses will double!!!! I have create the greatest economy known to man!!! Can never go down!!!

    • Harrold says:

      The first WHIFF of falling house prices will spook everyone into listing all at once. This is what happened in 2009. Homeowners watch thier values like a hawk. They all want to sell at the very top. The media amplifies any lower prices into a stampede to get out.

      More listings at first stops the bidding wars. Later on it creates a buyers market which lowers prices even more.

      If mortgage rates go up a percent or two, that is what will happen. Buyers qualify for lower loans, which means lower bids.

      • Depth Charge says:

        “Homeowners watch thier values like a hawk. They all want to sell at the very top.”

        Those are speculators, not homeowners. Homeowners use their houses for shelter from the storm.

        • Enlightened Libertarian says:

          Don’t forget that many homeowners locked ino a 30 yr fixed at 3%. That means affordable payments well into the future.
          If you sell your current house good luck on buying a other house at that rate.
          I can see lot of people staying put.
          Being able to borrow against equity to tide over a short term income loss will also help.
          Then there is the shortage of housing and the huge numbers of buyers.
          I don’t see any big or long term collapse in housing prices. If there is a hint of that the FED will bail everyone out again.
          What the heck, it is just printed money.
          We will see.

  4. Not Smart says:

    Inventory is far lower compared to 2018 and real mortgage rates are still negative.

    I hope I’m wrong, but it’s probably going to take higher rates than 4.5% to see a 2018-like slow down in the RE market.

    • DougP says:

      To be clear, Wolf states average rates at 4.5% which means half are lower and half are higher.
      In my area, several Credit unions are still closer to 3.5 than 4.5.

      The one I watch just raised 30 year fixed to 3.675.

      Not 2.875 like I saw before but not that much higher either.

      • Michael Gorback says:

        Data set: 13, 18, 13, 14, 13, 16, 14, 21, 13

        Average (mean): Add up all the values and divide by the number of data points. Average is 15.

        Median: the midpoint of the data set. Order the data points by value and pick the middle value.

        13 13, 13, 13, 14, 14, 16, 18, 21 -> 14

        Median is often used because mean (average) is sensitive to outliers.

        Replace 21 with 100. 13 13, 13, 13, 14, 14, 16, 18, 100.

        Mean is now almost 24.
        Median is still 14.

      • Max Power says:

        That 3.675 probably includes points and I don’t think the national average includes those.

        • DougP says:

          Today it went to 3.70 but no points. Still historically low and a bargain looking back a year from now.

  5. LGC says:

    People don’t buy a house (car), they buy a payment. They only have so much per month. And when rates go from 3% to 4.5% that’s a lot less price they can put into a payment. (also as insurance goes crazy because of insurance) and property tax because of valuations………….. Again, lot less house for the same payment.

    Housing prices are sticky. Takes a long time to go down. When the time on market (can you get that nationally?) really starts to jump up, then you’ll know ti’s really starting to bust.

    • DougP says:

      “People don’t buy a house (car), they buy a payment”

      Not me, never. But people do and I think they are foolish for that path.

      Nobody ever even looks at the total interest paid over the course of 30 years.

      Interest over 30 years on 1 million borrowed increases overt 200K from 3% to 4%. If anyone looked at that we would already be in a slowdown.

      • MiTurn says:

        “Nobody ever even looks at the total interest paid …”

        For many buyers, I think that you’re spot on. Afterall, interest payments are a tax deduction. Right? Ask the realtor — that’s a selling point.
        :)

        • DougP says:

          People don’t think about the fact that paying cash for a home results in buying the home for tens, often hundreds of thousands of dollars less than the financed option. Well, the ones that pay cash do. People don’t understand the costs of interest over the life of the loan, even if you pay off early. In this sense they do buy monthly payments without considering the actual cost.

          Accumulated interest adds enormous amounts to the cost of the home. Deductions are of course nice but they are not reducing the amortized amount of the loan.

      • Enlightened Libertarian says:

        Yes, but the money you are using for your house payment in 10-20-30 years in the future is worth far less than money today.
        If your paycheck keeps up with inflation and inflation runs at 10% for a few years, you house payment, relative to your income, is going to get smaller and smaller.
        Not uncommon for people who have held on to their house for decades to see the property tax portion of your payment exceed the principle and interest portion.
        Enough inflation and the principal and interest will sink to near zero.

      • SK says:

        Not sure why “nobody ever even looks at the total interest paid” since I look at the amortization schedule for my loan nearly every time I log on to the mortgage account online.

        I like to see the breakdown of interest and principal being paid over time. It also summarizes the total interest paid for the remainder of the schedule.

        Maybe other mortgage service companies don’t offer this?

        • Jake W says:

          if i recall correctly, they’re required by law to offer it. but most people don’t bother to read the details.

    • Hal says:

      “People don’t buy a house (car), they buy a payment”

      Some people actually do “buy a house”. They do that by writing a check. Others just change landlords and now they rent from the bank.

      Until the day you pay it off, it ain’t your house. It’s the bank’s house.

      • VintageVNvet says:

        Even when house, anywhere in USA, is without mortgage, ya still just renting it from the local taxing authorities H.
        If you don’t pay your taxes, they WILL and DO all the time TAKE your house.
        Surely, you can put it off, sometimes in some states for the rest of your life if elderly,,, BUT,,,
        Sooner and later, they WILL take your house.

        • MiTurn says:

          Vintage,

          I agree, especially in states that allow ‘owners’ to walk away without penalty. These are the houses that some investors pounce on. I know a guy that almost exclusively buys these as fixer-uppers. The house is trashed, the former ‘owners’ have walked away, and the bank sells it — often at a loss. He buys them, polishes them up, and then resells.

          He used to be a plumber, but makes more doing this than fixing leaky pipes.

        • YuShan says:

          Housing is a trap.

          Why? Because this is where most wealth is located. With $30T government debt and $45T unfunded liabilities (which cannot be “inflated away”), housing is where they are going to get it. There is simply no other source!

          The cool thing (for government) is that a house cannot be moved. It it captive capital. First they will milk it with taxes, but I fully expect that reverse mortgages will become a big thing when gov defaults on their unfunded liabilities and people will be forced to eat their house first.

        • Michael Gorback says:

          AMEN!

          I’d also go as far as saying you only rent your freedom from the government.

        • Jake W says:

          yushan, excellent point that others including augustus have been trying to make for a while. most of what we consider “wealth” isn’t. shares in facebook won’t be worth anything if the bubble economy around us collapses. who will be paying for all of the advertising then?

          there’s a reason that russia matters. it’s not because of its gdp, which includes bubble wealth and other non-productive activities, but because russia controls a huge swath of the earth’s land. that’s what wealth is.

      • unamused says:

        “Until the day you pay it off, it ain’t your house. It’s the bank’s house.”

        All too true.

        People have been sold on the idea that buying a house constitutes an ‘investment’, when for most people it should be treated as an expense. The important thing is that the ‘homeowner’, so called, is accumulating equity for oneself, and not for a landlord.

        Rule #1 in Personal Finance: live below your means. With high inflation that becomes increasingly difficult for a large fraction of the population to do, even while being tenaciously frugal, even though such persons are routinely castigated for profligacy by the predator class.

        • El Katz says:

          The added bonus is that, as a “homeowner”, you (for the most part) are able to keep your costs of housing somewhat stable.

          This makes it much easier for you to budget…. Sure, stuff breaks or wears out. However, that can also be budgeted for (rainy day fund) and reduce the impact of any unexpected “shocks” to your living expenses.

          We do something that’s thought to be weird by some people and that is we pay ourselves a “mortgage payment” every month – even though we own this barn outright. We discovered this ploy back in the 1980’s when we owned our first paid off house. We put aside over $900 a month (in 1985 money) by being our own bank as that was our monthly payment up until the time we paid it off… we just continued to pay our “mortgage” but the recipient wasn’t the mortgage company, it was us. To this day, when we make an improvement or repair, we also “finance” it ourselves and make the payment to… ourselves.

          I know it sounds stupid, but it works for us…. it just takes a little discipline.

        • unamused says:

          “I know it sounds stupid, but it works for us”

          It’s not stupid, El Katz. Give yourself some credit for coming up with something that works for you.

    • Bobber says:

      It’s a tale of two worlds. Half the people spend based on monthly payments, and their buying will decrease with higher interest rates. The other half cares more about making good investment decisions. They will buy less because the other group is buying less.

      I wouldn’t be putting expected home price increases in my buy/sell decision or my rent v. buy decision at this time, when mortgage rates are rising and the Fed is about to start quantitative tightening.

      If you are a buyer, it makes sense to wait another year to see if the markets tank. You likely have nothing to lose, because the clear trend of falling housing transactions in place, housing prices likely aren’t going up over the next year.

      • Jake W says:

        that’s my feeling. even if prices don’t go down, i don’t see them continuing to go up, not unless the fed restarts qe.

        but you’re so right about the tale of two worlds. whenever i’ve walked into a car dealership, the idiot sales people always start with “how much are you looking to pay per month?” they can’t wrap their heads around the idea that i’m interested in the price (whether or not I choose to finance it), and not the monthly payment.

        • El Katz says:

          Then there’s the “Four Square” used in car sales……

          Look it up. It’s pretty clever how you can get sucked in.

        • Wolf Richter says:

          El Katz,

          Hahahaha, yes, the four-square is a theme in my book about the “Ford Superstore” (which is in the humor category).

          On the Amazon page, click on the book cover to open the book, and you can read the first few chapters for free.

          To buy: The book is free for Amazon Prime members, and $2.99 for everyone else (Kindle). I know, great business model, LOL. As you can tell, I made a fortune selling my books :-]

          Click on the image to get there:
          tp-banner-2-336-300

  6. John Apostolatos says:

    I believe Wolf is right that tapering is the main thing to watch here and not the discount rate that the Fed is slowly increasing.

    Without the Fed support of MBS mortgage rates are spiking much more than the rise in 10 year and the rise in discount rates. I fear all those who bought in the last year or two because of FOMO will get their rears handed to them, and realize any gains due to low interest rates will be more than offset by the losses in home equity. They won’t feel so smart that they “locked” at 2.75% especially when they will need to sell due to a job change, divorce, or other life events.

    • Augustus Frost says:

      It’s a terrible time to buy but it’s a harder decision when rents are going up so fast unlike in 2006.

      Though I definitely consider the current market another bubble, I don’t think there is going to be an immediate housing crash this time. History never repeats exactly.

      For this reason, I would consider buying a moderately priced home as long but then would need to commit to staying in it which I can’t do right now. Any loss would be treated as a consumption expense.

      There needs to be one though because artificially inflated prices are not a sign of economic health and in the aggregate the country be better off.

      • Depth Charge says:

        There are no “moderately priced homes” when the median single family residence price is 10x household income.

        • Cem says:

          To add to that the moderate priced ones are snatched up immediately with cash by institutions.

          I’d buy a pos and work on it happily but they are on the market here (phx) for a day or two and then sell for asking with a cash offer.

    • Depth Charge says:

      “I fear all those who bought in the last year or two because of FOMO will get their rears handed to them, and realize any gains due to low interest rates will be more than offset by the losses in home equity.”

      I don’t fear that at all, I celebrate it. These people are the dumbest of the dumb, and were responsible for driving up prices.

    • Pea Sea says:

      “I fear all those who bought in the last year or two because of FOMO will get their rears handed to them”

      I fear that they won’t get their asses handed to them. The worst thing that could happen would be these batshit insane prices becoming permanent.

    • Old School says:

      Someone said that stock market price has been 85% correlated to QE. I suppose there is similar correlation in overall housing. If QE is complete and QT starts, seems like like it is pretty clear the direction. But might be typical escalator up and elevator down or saw tooth pattern in markets.

    • Peanut Gallery says:

      LOL, divorce.

  7. Depth Charge says:

    People who can do basic math understand that the FED’s 1/4 point rate hike is window dressing at best, outright criminality at worst. They could never dream of getting ahead of inflation at that rate. So the massive iBuyers and institutional investors continue to pour into housing and all hard assets because the FED has signaled they don’t G A F about inflation, so it’s going to continue roaring for many years, fueled by said criminals.

    • Gen Z says:

      The Chinese money launderers and oil dictators are living a better life than we Canadians and Americans. This world is truly Hell.

      • phleep says:

        Sorry, dude. There was a time when the filthy rich (and their antics) were small in number. Once everybody saw the grift, they sharpened their pencils and stopped living like a bunch of lushes. They got steel in their eyes and joined the contest. It was a matter of, if you are not at the table, you are on the menu. Evolution doesn’t say who is right (or nice, or neighborly, or good-looking), it simply says who is left.

        Things like war and large instability (1930s-1940s) open up gaps and opportunities to move up. This may be the thing that interrupts long periods of peace and tranquility, where inequality builds up. That is not a comforting thought for me either.

        • Depth Charge says:

          Yeah, you’re right. Blame it on those 5 year olds who just couldn’t see what was going on 20 years ago, and failed to prepare.

        • patrick says:

          well stated and true – truth is like evolution you can ignore it but eventually it will extract its toll

        • Goomee says:

          Phleep-excellent comment!

        • Gen Z says:

          I’m sure it’s evolution when Canadian workers have to complete FINTRAC forms to withdraw from C$10,000, but a thick Chinese accent man can walk around Toronto with a duffle bag of cash to buy homes and no one bats an eye.

      • Depth Charge says:

        And the hell is just beginning for the younger generations with no assets. The FED just insulted them yet again yesterday. Notice how they couldn’t even provide any details on reducing their balance sheet after having months upon months to think about it? Yet these clowns show up in a MINUTE to hammer rates to zero, pour QE on assets, and save the stock market.

        • The wealth effect is a Ponzi scheme says:

          “Morale hazard” has become a 10% stonk correction.

          We don’t agree on everything DC but I’m right there with you in your disgust of policy makers crucifying our young people.

        • w.c.l. says:

          They’re not doing we savers trying to earn a safe return any favors either.

        • Jake W says:

          w.c.l., it’s not just savers, but anyone looking to lend money period. even junk bonds trade at crap rates.

        • w.c.l. says:

          Junk bond rates are down because yield hungry investors are willing to take a chance on them bidding up the price and lowering the yield. I don’t see how lenders are limited by anything. Credit cards sure aren’t, payday lenders are only limited by law, and self financing car dealers don’t seem to be restricted. IMHO It comes down to how bad do you want the money and what are you willing to give for it.

        • Jake W says:

          but that’s just the point. the fed has created so much fake money that got lent out that the yields are terrible for money that anyone else wants to lend out.

    • YuShan says:

      I think that people are discounting the risk that the Fed will actually see it through this time.

      The argument that they cannot raise rates much because there will be debt defaults doesn’t hold imo, because letting inflation roar will lead to the same result eventually, but with much greater damage. Because you would sacrifice the currency too (which can only lead to much higher real rates).

      I get the feeling that they are trying to deflate the bubbles slowly but steadily, but they are failing atm because nobody believes them anymore, because in the past they u-turned as soon as stocks turned south. Hence the roaring stock market: everybody expects them to crap out again. But investors may be getting this wrong.

      • Bobber says:

        All the issues the Federal Reserve disregarded in the past, such as raging inflation, financial instability risks and threats caused by “elevated” asset prices, are now facing the economy in the short-term, solely because of the Federal Reserve’s long-term disregard of long-term consequences.

        I agree it is going to crash soon no matter what they do. They now have to try and kick the can through a brick wall.

      • Peanut Gallery says:

        YuShan, I agree that the markets are discounting / underestimating the Fed this time.

        IMHO I don’t think the Fed really has a choice here. They cannot go down the inflationary path any further. Their hand has been forced to go down the deflationary route.

        I think the question at hand is basically: deflation, at what pace and timing? And will deflation (of any size/amount) create “panic”?

        Personally I hope for deflationary overreaction, as that will most likely bring back (some) purchasing power to the cash I am holding. I realize such an event will probably only be a small “air pocket” in the grander scheme of governments debasing fiat, but still I think it will present some buying opportunity at least in the short term.

        I just don’t see the Fed allowing for inflation to run any further at this point. It just doesn’t pencil in at this point.

      • DarkMatter says:

        It’s also important to recognize the inflation we are seeing today isn’t the typical flavor. It is exacerbated by supply chain issues which can’t be resolved using traditional means.

    • Old school says:

      Steve Hanke says money supply ensures inflation is going to run very hot til 2024. My thought is interest rate and QT is going to take down asset inflation, but not do much on real inflation. That’s going hurt as assets go down and inflation stays high.

      • YuShan says:

        I think that is indeed the most likely scenario.

        However, if they wanted they could dampen import inflation by raising interest rates enough to make the exchange rate rise substantially. But the paradigm of the past decennia has been competitive currency DEvaluation. They would have to do the opposite: competitive REvaluation.

        I wish they could simply fire the complete Fed/ ECB and appoint people without all the historical baggage to fix this thing Volcker style.

  8. Ian says:

    People that haven’t moved house for years will now be seeing their property tax increase thanks to yet another crazy house price boom. The ten metros with the highest property tax growth from 26% to16% –

    • Shiloh1 says:

      In Illinois, DuPage property tax is now worse than Crook County. A couple of decades of suburban school districts “arms races” will do that.

      • Peanut Gallery says:

        I like that area. Nice neighborhoods.

        Terrible taxation though…

      • Hal says:

        Sangamon county is brutal too. It’s crazy all over Illinois. It’s very expensive to fund that level of corruption.

        I recently sold property there. The young couple that bought my house were a little surprised at just how much tax they were adopting.

        Lost a bit on the sale, but not my property tax anymore. I will never own property in Illinois again.

        I also know “expats” that sold a condo on Michigan Avenue on Chicago. They lost a BUNDLE. High taxes for high crime just ain’t tolerable.

        • Lisa says:

          I agree. We’ve been looking for the past 2 years and haven’t found anything worth purchasing. The prop taxes in Cook Cty are hard to digest. 1k a month for a 600k house and just average yard? I will wait and buy where the taxes are lower, since there’s only 6 years until the kids are on their own.

  9. phleep says:

    FOMO, BTFD, TINA, diamond hands, to the moon ….

    Just a sigh of relief all my family members bought into some hard assets awhile back. And, for the most part, they didn’t try anything flashy with the financing. It is nice to be able to sleep reasonably well. Very underrated.

  10. brewski says:

    It would take a new Fed to do what needs to be done.

    Will it happen?

    My guess is more & more & more inflation until the debt is wiped out by funny money.

    Good luck to the bond holders.

    Cheers,

    B

  11. Confused says:

    I try not to laugh at people who complain about mortgage interest rates rising to 4.5 percent because in 1978, I was paying 9.75 percent.

    For decades, American taxpayers were paying billions in taxes to protect the country from the Soviet Union. Now, we have a Federal Reserve that behaves like the central planners of that Soviet Union. I’m not against having a central bank, but think that the Fed has assumed, and been granted, too much power over the lives of the American people. This transformation has occurred under both Democratic and Republican administrations and Congresses.

    • Jake W says:

      “I try not to laugh at people who complain about mortgage interest rates rising to 4.5 percent because in 1978, I was paying 9.75 percent.”

      i’m really getting tired of this particular refrain (nothing against you specifically). in 1978, when you were paying 9.75%, you paid for the house the market price that 9.75% interest rates lead to. so while you were paying a high interest rate, you paid 1/10th for that house than anyone today has to pay.

      • Confused says:

        Jake,

        I didn’t take any offense from your comment. About six months ago, an economist in Washington, DC, opined to me that low interest rates make houses more affordable. That view arguably is true when prospective buyers are shopping for a house payment in the world of ceteris paribus. Unfortunately, suppressed long-term interest rates (and the inflation that often results) drive up house prices, so are these buyers really better off? FWIW, I’ve started thinking of economists as witch doctors.

        • Jake W says:

          thanks for understanding. you’re exactly right. and the disgusting and despicable janet yellen repeated the lie about low rates helping homebuyers.

          no, they help homeowners who are looking to sell and downsize. that’s it.

        • TonyT says:

          It appears that many economists and politicians think human behavior is static, e.g. lower interest rates do not affect house prices.

          I think it’s pretty obvious that for given monthly payment for the same house, higher rates make houses more affordable, for example, property taxes will be lower, insurance will likely be lower, there’s the possibility of refinancing later if rates drop, and your down payment matters more (e.g. think of $100K down payment on a $300K house vs $500K house)

        • Augustus Frost says:

          “I’ve started thinking of economists as witch doctors.”

          As practiced in recent government policy, it’s idiotic where it isn’t intentional.

        • JeffD says:

          … sorry to everyone else. I had a comment in moderation I wanted to be deleted (hopefully along with these trailings).

        • COWG says:

          “ About six months ago, an economist in Washington, DC, opined to me that low interest rates make houses more affordable”

          Indeed true…

          Circa 2013-17…

      • KGC says:

        Well, yes, houses were cheaper. But the middle class wasn’t buying a house as an investment, they were buying a home. And remember, wages were a heck of a lot lower too.

        I bought my first home in 1989. I had to put down approximately one years wages (before taxes) to qualify for a 13.25 home loan. To put that into perspective, my mortgage payment then was almost exactly the same as my mortgage on a house bought in 2012 that cost 3 times as much, at a time when I was earning 5 times as much. And in 2012 the amount down was the same.

        If you’re over 30 and you did not buy a house in the last 10 years you’re going to regret it, because I see this inflationary cycle running 10 years or more. It’s going to be very hard on anyone who rents, has credit card (or any other) debt, and isn’t in a position to be upwardly mobile in their chosen career path.

        Milton Friedman is going to kick Joe Biden to the curb.

        • Jake W says:

          where do you get this nonsense? the middle class is not buying a house as an investment. they’re buying to live. and wages were actually a lot *higher* as a percentage of home costs.

          how anyone can say that people are better off today trying to buy a house than in the 70s and 80s is beyond me

        • Gomp says:

          Back in mid eighties, I could have bought a condo for $7k. I didn’t buy it because there was no one to rent it to and the HOA because of all the vacancies would have jacked the fees to unbelievable. Denver area. Some of you don’t realize what can happen when people lose their jobs, companies shut down, unemployment rises. When you have to choose between food, gas and rent; many times rent or mortgage comes last. Just sayin’.

        • Bobber says:

          So, you are saying rising mortgage rates won’t matter?

      • Confused says:

        Jake,

        I forgot to mention a fact that often gets overlooked when people are comparing house prices then and now. Salaries and wages also were lower back in the good old days when houses cost a lot less than they do now. I think I was earning about $17,000 per year, which wasn’t sufficient to pay for a house in my area, I had to settle for a condo.

    • MiTurn says:

      “because in 1978, I was paying 9.75 percent”

      Confused, my in-laws bought at +12% in 1978, but they were desperate for a place and simply bought — an element of desperation. Of course, later they were able to refinanced for a much better rate.

  12. If mortgage rates rise sellers will offer to carry the note. As a seller I would gladly lock in full price at lower interest rates.

    • Jake W says:

      most people selling a house need the sale proceeds for something, whether for retirement in a downsized condo or a new home. seller notes are not an option for them, and indeed, most people.

      i’d never recommend someone get involved in something like that as a seller unless the buyer is a family member, and even then, to be cautious.

    • Wolf Richter says:

      Being a mortgage lender is not a business most home sellers want to be in, I guarantee you that. That’s why so few people are doing it. Like any business, it’s complicated, and if you don’t know what you’re doing, you can get run over.

      • David says:

        Not that complicated – just need to know credit, get plenty of skin in the game and properly assess the risk – an excellent way to make some steady interest in a market that offers little else.

        • Wolf Richter says:

          This works until the buyer stops the payments, but owns the home, and doesn’t want to leave. Start saving for the legal fees, the costs of foreclosure, and the loss after you finally get to sell the beat-up property, maybe a year or two after the buyer first defaulted.

        • MiTurn says:

          Wolf,

          I personally know of two scenarios you described, and the ‘owners’ gutted the houses before they walked away. One was intentionally trashed.

          As a seller, I couldn’t do it…I gotta be able to sleep at night.
          :)

        • Having a loan below market rates is a tremendous incentive for the buyer to keep the property. If the property value goes underwater you ride with them. The seller takes theirs up front. I approach TIP bond auctions the same way. Buy reissues while inflation expectations are low (they are always wrong) Buy at a discount, then wait for inflation to rise and the Fed is sitting on yields, (QE) You’re collecting a nice return on something you didn’t pay full price for. Powell said normalize several times, that means there is not going to be a Quixotic chasing of rates to match inflation, and consumers care about the monthlies, vendors care about price.

        • Jeff says:

          I carried a note and deed of trust @ 4.00 % on my house I sold about 5 years ago. The 5 year balloon is coming due and they’re paying it off. I would have preferred to roll it over, it’s been some nice income. They put $275K down a n $850k sales price (private sale, no broker) which was enough for me to build a new house on a $98k lot I owned. It took me 2 years to build the new house working 7 days a week and it went on the tax rolls at $734k. Zillow says it’s now worth $1.1M. Strange times!

      • phleep says:

        Onto that, I can add, in a recession, there may be a lack of new-alternative buyers at a desired price. This happened after 2008: my neighbor defaulted on her mortgage, eventually sliding to where she brought in a druggie-felon boyfriend, and whoever held the mortgage didn’t foreclose for a long, agonizing time, for whatever reason.

        I suppose maybe Depth Charge’s foreigners with sacks of flight capital, or private equity smarties, might swoop in and save the day from an owner’s perspective, but that sure didn’t happen in my neighborhood. 2008 is still fresh in my mind. It is like selling a business with provision repossess it: it can be dicey.

      • Beardawg says:

        WOLF and DAVID

        I would say you are both right. I now make my living as a lender. I absorbed about 4 foreclosures and it hurt. I learned what happens when there is no skin in the game (SITG).

        When skin is required, it’s astonishing how the field of borrowers dwindles. That said, with 25% down as SITG, even in a deflationary market, I am fine with the risk and 10% annual mailbox $$.

    • Augustus Frost says:

      Are you going to hold that paper for 30 years or deed it to someone who will?

      If not, do you expect to sell it at a discount versus publicly traded paper because the chances are this might be necessary.

      Even with the current increase in rates, it’s one of the worst possible uses for the money.

      The bond bull market from 1981 might not be over (I think it is) but it’s not going to last anywhere near another 30 years from now.

      Taking back long-term paper now on a property sale is the equivalent of buying a (relatively) illiquid debt security in a raging mania where the long-term economic fundamentals are also mediocre to awful.

  13. Kenny says:

    If you borrow $300K 30 yr fixed,
    At 3.5%, monthly payment is $1347
    At 4.5%, monthly payment is $1520

    That’s 12.8% higher in terms of cash outflow on household spending.
    So a rising interest rate has an inflation like impact.

    But interest costs are not included in CPI as per BLS.
    https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf
    “”Interest costs (such as mortgage interest), property taxes and real estate fees, along with most maintenance and all improvement costs, are part of the cost of the capital good and are not consumption items either. The CPI adjusts the expenditures for
    home maintenance downward before using it in the CPI weight. “””

    They say it’s part of Capital Goods and not something consumed, therefore not part of CPI.

    But interest costs and property taxes don’t add any value to the Capital Goods so should be considered consumption, shouldn’t they?

    • Wolf Richter says:

      Rightly or wrongly, the BLS looks at housing costs as a service (“shelter”), and it uses two rent factors to approximate the costs of this shelter = 1/3 of CPI.

      • Kenny says:

        I guess two rent factors are supposed to capture in interest costs, property taxes, maintenance, etc., as landlords factor those costs when setting the rent.

        But what about the cost of interest in a broader sense like auto loans, credit card or any other financing?
        My question would be, is the cost of money captured anywhere in the CPI? If not, why not?

        • Dazed And Confused says:

          BLS deliberately excludes interest costs because it is circular.

          Since many interest rates are linked directly or indirectly to Fed Funds Rate, it would mean that the Fed easing monetary policy by lowering interest rates is counterproductive because it will cause deflation by lowering interest costs.

        • Kenny says:

          Could it be said that raising the interest rate accelerates the rate of inflation?
          I mean it increases cash outflow for borrowers and increases income for lenders.
          There is nothing deflationary about a rising interest rate in itself.

          As they say the cure for high prices is high prices, the only way a higher rate suppresses inflation is by destroying demand.
          The way I see it, a rising interest rate only speeds up the inflation until we reach that point where demand gets destroyed.

        • Gomp says:

          I’ve bought a couple rentals in my time. Maybe 20 in my life time. All in cash now because… But simple formula. What’s the going rent for the area? $2000? times 12 =$24000. Taxes & insurance & maintenance, $6000? $18000 divided by desired rate of return (5%)?. House is worth $360,000. Not $500k.

        • COWG says:

          Kenny,

          You’re trying to apply theory across all classes of income…

          Top 20% of income doesn’t care about interest rates… if they want it ( if they don’t already have it ) , they’ll buy it on favorable terms….

          The lower 30% can’t afford anything, so they don’t care about interest rates…

          The impact most felt is in the middle 50%, they will get crushed playing to play the “ look at me “ game…

          That’s where the most demand will be destroyed…

          One phrase that should cause shivers in a lot of men is “ the lifestyle me and the children have become accustomed to” :)

      • Michael Gorback says:

        Exactly. BLS only counts the “service” value of the shelter.

        Too bad SAAS is already taken. “Shelter as a service” would be SAAS.

      • georgist says:

        Wrongly.

        They created a category that contains something everyone needs, then made it underweight in the inflation calculation, then let banks run wild forcing the price up. They also changed lending from 3 times primary income to 3 (and more) times household income to force both parents to work and to capture the additional income.
        Everyone working more for the same pile of bricks. That’s usury for you.

  14. TimTim says:

    Curious how some areas move glacially, but with inexorable progress in one particular direction, yet no one wants to know. Like the Dr Evil employee infront of the steamroller smiling and walking forwards Austin’s steamroller,

    .. instead of shrieking.

    Whilst, in other news, some areas soar,crash, rise like a phoenix to fly just a little lower before they… just inexplicable trade sideways in an otter-like recumbent snooze.

    Tide’s or tiredness always right for somebody, I suppose.

    That said it’s about time a spring’s tide goes out and shows those swimmin’ with nothin’ on, I reckon.

  15. Lune says:

    While the stats do seem to be turning, there’s a big base effect going on. Last year was absolutely bonkers as people were buying homes in response to covid. Looking at the actual numbers, it looks like sales are still higher than they were in 2019 and early 2020. So we’re still only getting back to our baseline trends. That said, I understand these numbers are lagging indicators so perhaps the market has cooled off much more, more recently. But I think we have to wait for the numbers before declaring the peak has come.

  16. Dazed And Confused says:

    Wolf wrote:

    “According to the daily measure by Mortgage News Daily, the average 30-year fixed rate mortgage hit 4.50% yesterday, the highest since March 2019. ”

    In March 2019, the median house sales price was $261,100 compared to $357,300 today. That’s an increase of almost 37% over the last 3 years.

    Since the mortgage rate is same now as it was then, this means that monthly housing payments (PITI) are also up 37% while household incomes over the last 3 years are likely up no more than CPI – about 12%.

    This is a huge drop in affordability over the last 3 years and will just get worse as mortgage rates rise further even if house prices level off.

    This is not sustainable – something’s gotta give ….

    • homeless generation says:

      What gives is people’s hopes of owning a home. The fed apparently has no concern with turning multiple generations of Americans into lifetime renters. I guess that’s just the will of the free market at play? But how free is a market when it’s controlled by fed policy?

      When homes are owned by investors, how will fed policy effectuate their wealth effect on younger generations? The only channel left is the stock market.

      Under this line of thinking, anyone priced out of a home should be fully invested in the stock market. You can’t afford to leave any cash in a savings/checking account, or you’ll risk being left behind and destroyed by inflation in the long run. Also, avoid pension plans and focus on employers with 401k matching.

      • historicus says:

        homeless…
        Dead on!
        “”The fed apparently has no concern with turning multiple generations of Americans into lifetime renters.”
        The Fed has lent to the mortgage industry 40,000 Million dollars A MONTH buy buying MBSs (40 billion)
        For two years…..why?
        In 2006 the Fed owned NO MBSs, now they own 2.7 TRILLION!!

        https://fred.stlouisfed.org/series/WSHOMCB

        The younger generations are having their futures saddled with debt ($30 Trillion now) and that money is being used, in part, to bid up housing and equities from them, denying any reasonable entry into either. Criminal, IMO.
        It used to be young families could save to buy a house. Now savings go backwards as real estate explodes away from them due to Fed activity.

      • COWG says:

        homeless,

        So what’s YOUR plan for YOUR future?

        Do you have one based on your best and worst economic forecasts? Short term and long term?

        Just curious…

      • Pea Sea says:

        If they don’t die in it, or starve to death. What a lunatic thing to wish for.

      • PNWGUY says:

        Bro, don’t worry. Huge economic implosion coming next few years that will pull the rug out from all US asset prices.

        2 key drivers: commercial real estate devaluations and US demographic cliff.

        Boomers about to start drawing down IRAs en masse. But more importantly, $16+ trillion of US commercial real estate about to lose 50%+ of its value.

        You think the Fed was panicking in 2020? You ain’t seen nothing yet.

        And when the Fed goes back to ZIRP, QE, and “emergency accommodative policy” again, for the 15th year … someone will finally have the guts to ask JPow the only question that matters…. “Will it ever end Jay?!”

        Eventually the truth will come out: No. It can’t end. Fed can never stop. Because you can’t allow deflation in a debt based monetary system, only inflation. And besides money printing, the only other inflationary drivers — population growth and productivity growth — are over for the foreseeable future.

        And that will be the day the public finally realizes the emperor (USD) isn’t wearing any clothes.

        And then I don’t know what happens. But it won’t be pretty!!

        • PNWGUY says:

          Hm, double checked that $16T, too high. Only $3T is office space. So the hole will be smaller, but still big enough to cause a bit of mayhem.

        • VintageVNvet says:

          after was estimator/project manager in commercial RE mkts for many years PNWG, and AGREE with you, far shore…
          one real hard question for investors, is where between your $16T and $3T will be THE sweet spot going forward from here with re ALL commercial RE???
          another, equally hard Q might be, how much of the totally unknown secondary, tertiary, and these days likely even more obscure financialized ”paper” is connected to commercial RE in USA and else where???
          really and truly from what I read on Wolf’s Wonder and elsewhere, NOBODY KNOWS at this point in time…
          ”going to be interesting” is the understatement of the era, far damn shore

    • historicus says:

      And what does that say about the purchasing power of the dollar…in the real world,….not the Fed world?

      • Gomp says:

        I’ve been meaning to say this for some time. So.. no more MBS purchases , no more FED Treasury purchases. Treasuries go to sale , few buyers. Rate increases to the few buyers desires? Right? Also, the FFR is what the FED controls. But their only and recent manipulation of rates has been their ability to step in and buy Treasuries when there are few buyers. So even if they don’t raise rates, the rates will rise on their own competition. Thus, mortgage rates to stay competitive must increase. Sorry, I’m not that in the know. Thanks for your patience.

  17. breamrod says:

    I think the number where it really slows is 6%. Then just all cash foreign buyers will be left.

    • Dazed And Confused says:

      According to the NAR methodology, the Housing Affordability Index reached an all-time high of 184 in Jan 2021 due to a combination of stimmie enhanced family income and record low mortgage rates.

      Right now the HAI is about 132 which is down massively over the last year but still well above the all-time low of 100 from 2006.

      If or when mortgage rates hit 6%, HAI will drop to 108 – a level not seen since the last bubble peak in 2007.

      To set a new record low affordability, mortgage rates would need to exceed 6.6%.

  18. Frank says:

    We’re in the last hurrah of the baby boomers shafting the young with their cash. Not sure when, but eventually demographics will kick in, with ever smaller younger generations, eventually there will be a lot fewer buyers and potentially empty homes. Likely the first hit will be states with negative population growth.
    It will be interesting to see how investors react. They don’t care necessarily about mortgage rates and still have no better place to put their cash. Rents rises will have to eventually level off, but they will have leveled off after huge increases.

    • Hal says:

      I’m a boomer and I didn’t shaft anyone.

      • Wolf Richter says:

        Hahahaha, I’m a boomer and I got shafted many times, and I’ve come to understand that that’s life and that you’ve got to deal with it (this kind of understanding comes from being around long enough to be a boomer).

        • Michael Gorback says:

          I always enjoy it when Wolf admits taking a hit because experience is what you get after you screwed up. Anyone who only tells success stories is just locker room BS.

          Being a Boomer wasn’t all sunshine and roses. I get acid flashbacks watching what’s going on today. In the 60s and 70s cities were literally burning due to race riots. 4 students were shot to death by the government at Kent state. RFK and MLK were assassinated.

          My first mortgage in 1984 was about 13%. We were in the middle of stagflation. Volcker came along and cranked up interest rates to fight inflation but at the inevitable cost of recession.

          It wasn’t all bad though. We had “free love” and your worst virus fear was herpes.

          One of my goals is to become a financial burden on my children. One went to Duke, the other to NYU. Due to my income financial aid was out of the question. $500,000 to put them through college.

          Time to collect. I also hope that at my funeral people will say “That guy owed me a lot of money”. :-)

        • phleep says:

          I graduated high school (mid 70s) and law school (1981-2) in recessions. The 70s had oil shocks, lines at gas stations for suddenly pricey gas, Vietnam war loss, terrible inflation, US loss of prestige, Iran revolution US hostages every day in media, mass demoralization. We were under constant nuclear standoff, facing the USSR and China. Tell me how simple it all was. I bought a home at age 37 and had no idea before then that I ever would. It turned out to be a pretty good deal but I had to scrimp to keep it (and my balance sheet in good shape). Happy sailing!

      • Jake W says:

        maybe not directly, but i’m sure you feel entitled to your social security and medicare.

        which is the problem.

        when i tell boomers “what if the money isn’t there from current production such that the working people have to be shafted with ruinous taxes?” they say “oh, well, they have to figure it out, because it’s mine!”

        • Hal says:

          You are absolutely %100 correct, Jake. I feel very much entitled to what I’ve been working and paying for since I turned 13 years old. That’s why it’s called an “entitlement” as opposed to “welfare”.

          I’ll never get back what I’ve paid in, but I will never blame you or your generation for that raw deal or ever ask you or your generation for reparations.

          I learned a long time ago who causes all of my problems. It’s the guy in the mirror. He’s the only one with the power to invoke change. Blaming others is a complete, foolish waste of time, Jake.

        • MarkinSF says:

          The way to strengthen and make Social Security permanently viable is simple. Drop the limit on taxable wages. Tax stock based compensation as ordinary income applicable to the same Social Security rates.
          These programs are a social contract everyone enters into to become part of a civilized society. And you advocate to break that contract and commitment? Is that where your values lie?
          There’s always enough money for wars and interventions and tax cuts for the wealthy. There are armies of accountants and lobbyists and lawyers who do the bidding for their billionaire masters so that they pay little or even no taxes.
          There is a reason these programs were initiated and carried on for all these years. Once the house of cards the speculators and robber barons built self destructed, the pain and suffering, especially by the elderly, inflicted on the common man was so obvious and horrifying that “Civilized society” bonded to ensure there would always be a safety net. That we were all in this together.
          You’re not being shafted by ruinous taxes. You’re being shafted by the predatory activities of the vultures working every angle to get as much of your earnings as possible. Blaming Hal and “the Boomers” only makes you an unwitting accomplice.

        • VintageVNvet says:

          The other important ingredient to ensure SS, etc., are viable for ever and ever is to make a constitutional amendment that requires EVERY GUV MINT retirement and medical services delivery program EXACTLY the Same for each and every GUV MINT public servant as for everyone else…
          Just think about it for a minute: IF and only IF every politician was eligible for the same SS, etc., what kind of shape would that system be in today???
          It’s one step toward fairness and elimination of the obvious 2nd class citizenship of the vast majority of WE the Peons, eh???

        • Jake W says:

          hal, what if the money isn’t there, meaning the taxes that the then working people pay can’t support it? then what?

          markinsf, dropping the limit on taxable wages just means that the top earners are paying 60-70% of their wages in taxes, while more than half pay almost nothing. that isn’t sustainable either.

          if they’re a social contract, where is my signature on it? i don’t recall signing up for it.

          there isn’t money for wars and interventions either. society as a whole feels way too “entitled” for things we can’t afford. that’s why we’ve made up the differences with debt and printing.

        • Lisa says:

          Not a very well thought out comment, Jake.

    • historicus says:

      Frank…
      “last hurrah of the baby boomers shafting the young”

      Those who are “running the show” may be baby boomers, but they dont speak for that generation. That generation was comfortable with low inflation, saving, earning, and doing “some” investing. The current policy makers PUNISH such behavior.

      The younger generation is being saddled with tens of Trillions in debt, essentially taking money from their future and having it used to BID UP housing and stocks out of their reasonable reach. Criminal in my opinion.

      It was once incumbent on each generation to “pay its own debts”…..but the game since 2009 has been to STEAL FROM THE FUTURE….$21 Trillion worth to date.

      • Jake W says:

        i think it’s really the greatest generation and the silent generation that was comfortable with that.

        the boomers are the most selfish generation america has ever seen.

        • Michael Gorback says:

          Obviously you don’t have Millennial children.

        • Jake W says:

          michael, i am a millennial myself, on the younger side. all i see from my parents’ generation is gloating about how they “paid their way through school” leaving out the fact that tuition has gone up by a factor of 30x since then.

          i hear them talking about the 10% interest rates they paid on their houses, but leave out that the houses were only 2x income, not 10x or more like they are today.

          i hear them bragging about how they’re such “brilliant” investors for “dollar cost averaging into the indices,” leaving out that their stonks would be worth 1/5th without massive fed printing which is stealing from my generation.

          other than the older boomers who served in vietnam, this is a generation that has seen no hardship, and has only known prosperity, although much of it is fake prosperity built on debt and printing that is only possible due to the patrimony that they inherited from their parents and grandparents.

        • Wolf Richter says:

          Jake W,

          I love you but with this line — “this (boomers) is a generation that has seen no hardship — you show the entire world that you don’t have a clue.

          You have no idea what it’s like to be drafted to go die in Vietnam, and demonstrate in the streets against it and get shot. Boomers went through every recession you went through, PLUS all the prior ones, including the infamous double-dip (yes, go look it up). Check out the homeless people — lots of boomers among them. Boomers died at a young age of diseases that are no-nothing curable diseases today. Boomers died in car accidents like you cannot imagine because those cars were death traps. Boomers went through the worst inflation, and you cannot even imagine what this was like; much worse than now. Boomers had no idea when they grew up what the internet was and cellphones, and they had no way of venting by posting angry comments on websites like this. You need to get real!!!

          The issues in this society – and there are huge issues – are not generational. That’s a braindead red herring. You need to look at the REAL issues.

          You need to quit trolling my site with this generation BS. Your future comments on boomers will just vanish. So save your breath for something that makes sense.

        • MarkinSF says:

          Assigning elemental characteristics to generations disregards the obvious – people are people who pretty much share the same desires, dreams and destinies as the human race plays out. People will utilize the resources available to them. That will never change.
          80-85% of any population just wants to procreate in an environment that will provide safety and opportunity for them and their offspring. That is true throughout the annals of recorded history.
          I’m a boomer who went to Viet Nam, fiercely opposed globalization, all the Middle East wars, the destruction of unions, the repeal of Glass-Steagall and the repeal of other legislation and executive orders that paved the way for the creation of the “billionaire class” but I’m as helpless as any ordinary individual in shaping history.
          Whether you like it not you have signed on the social contract. Everything you take for granted, the use of roads and highways, the power grid that provides the infrastructure that heats your home in the winter and cools it in the summer, the satellites that enable the internet, cell phones and GPS, essentially everything that allows you to live an existence that provides the relative luxury you enjoy. All paid for and built with your tax dollars by a government that has been systematically gutted by accumulated wealth.
          Sorry you’re around a bunch of idiotic older people who don’t understand the plight of your generation. Sounds like you need to expand your horizons.
          Instead of focusing your ire at small individuals who were just trying to survive and are currently in a fortunate position (that can change overnight) why aren’t you lashing out at the true source behind this mess?

        • Old School says:

          Somebody invested in you to give you a free K – 12 experience and if you sent to a state university funded part of the bill. Teachers don’t work for free and buildings don’t construct and maintain themselves.

        • Flea says:

          Do u hate tour parents there boomers I presume

        • Jake W says:

          wolf,

          i apologize for generalizing with a broad brush. note that i did exclude those who were drafted to vietnam.

          i’m just tired of hearing sanctimonious bs from people who grew up in the 60s and 70s and talk about how they saved for college and a house, when those choices are not readily available to a huge percentage of people today.

          it’s one thing to recognize that you got lucky. it’s another thing to be arrogant about it and think that fed largesse and the credit bubble is all one’s own brilliance.

        • Wolf Richter says:

          Jake W.

          1. I agree with your #3 paragraph. What the Fed has done – creating the biggest wealth disparity ever – is causing a huge amount of societal problems. And some beneficiaries are gloating about it.

          2. I’m tired of generation bashing. A few years ago, millennial-bashing was a thing, and I had to stamp it out. Now it’s boomer-bashing, and I have to stamp it out. Generation bashing is ridiculously clueless, no matter what generation gets bashed. Even the whole modern concept that people born in a specific 20-year period are a monolithic bloc is silly.

          3. I’m surrounded by millennials that make huge amounts of money. Michael Gorbach, who comments here and is an author on this site, has two millennial daughters. I know that at least one of them, and her husband, are making huge amounts of money. Millennials are running companies and are becoming millionaires and billionaires.

          4. Yes, this is a shitty world in many respects for many people, and there are huge problems, and there have always been huge problems, but it was a shitty world for boomers too, and they were just born into it and had to deal with it, and boomers agitated in the streets to make it a better world. Many many boomers are essentially impoverished with no retirement funds and just a small amount of Social Security that they paid into all their lives. Many live on the streets. Boomers weren’t born with a silver spoon in their mouth.

  19. Alba says:

    Where I live just outside Denver, we still have such a massive imbalance between the number of buyers and the number of houses for sale, that anything half-way decent continues to goes under contract in under a week at well over asking. I suspect we’ll need several more rate hikes, and/or 2x the inventory to seriously dent demand and prices. Will be interesting… as I’m looking to cash in my chips at the RE casino and geo-arbitrage by relocating to Mexico, which appears to not have a housing bubble (outside of a couple of gringo-centric locations).

    • ru82 says:

      One issue is the supply of housing is still at a deficit. Sure a lot of condos are being built but not enough Single Family Homes because of various reasons. Realty track said there 1.4 million zombie homes. (homes that are empty for one reason or another) Even if all those home hit the market, that supply would be gone quickly. I read about 6 million homes are sold per year.

      With inflation higher than current interest rates it entices wall street to buy homes too.

      Plus you have a population growth of about 1.5 million to 2 million a year. Add in another 200k to 400k illegal immigrants. Since most homes average 2.3 people, we need about 860k new living units per year. The last 8 years have been below that number and thus inventory keeps decreasing. Wolf has had some good articles and charts on the number of new homes being built each year.

      Example of inventory issues. In my metro of 2 million people, in 2014, there were 14k homes for sale in the month of January. In January 2022 there were 2200. That is over an 80% drop. I did notice in March the number of homes for sale has jumped up to 3500 which will be interesting to see if this inventory trend continues.

      Crazy.

      • Apple says:

        Aspen is full of empty houses and condos in the summer time.

        • Old Ghost says:

          Wisconsin is full of empty houses and apartments in the Winter time.

          I imagine Florida must be full of empty housing units in the good ole Summertime.

        • VintageVNvet says:

          and same for florida for ever apple!
          back in my ”pre-teens” and subsequent, we kids could walk down the waterfront and swim in dozens of swimming pools that had functioning equipment, but no owners or occupants present for most of the months between march and late fall/early winter…
          it WAS a ton of fun,,, but mr. carrier ruined it all when the ”central air” came to most florida houses, and the results today indicate cleary what a totally clustered arrangement proceeded since
          some of us native floridans used to consider making it a law for all ”seasonal visitors/residents” to go home at the end of march just like they used to do before central air,,, and now, of course, most of us have totally welcomed ALL the folks coming from where they do not have caps on property taxes, etc…
          so far, from what I have seen/read recently,,, MOST of the folks coming here to the flower state have at least SOME understanding of what it means NOT to have GUV MINT ”’TAKING”’ everything they can from WE the PEONs

    • gametv says:

      This is all about psychology. People think that housing prices will only go up. I think that the problems in the stock market have actually caused many people to put money into real estate instead. The problem with putting money in real estate is that it is much less liquid and prices are leveraged. Even if you dont use debt to finance a property, all the demand comes from buyers who need to borrow debt, so prices will be driven by higher interest rates.

      It is only a matter of time. But it might take much of the summer before the inventories finally build to the place where prices begin to drop.

  20. Michael Engel says:

    1) NDX weekly, for entertainment only : There was an uptrend from Mar 23 2020 low to Nov 22 2021 high. The current plunge is : 38.2%. The first reaction might end between 38.2% and 50%.
    2) Next week NDX might close the Feb 16/17 gap and move down.
    3) The 5y/10y is zero. It inverted last week.
    4) UST10Y – DET10Y = 1.77%, in the middle of a one year trading range.
    5) If JP in 2022 raise interest rate by 1.75% (7 x 0.25), gravity with Germany will pull him down, before JP baby steps will be completed.
    6) This week SSEC breached it’s BB : 3,049.11/ 3,404.33 and bounced back up. US + Canada RE prices are still great, but China RE & SSEC are plunging fast.

  21. Crush the Peasants! says:

    Sell now, or be priced in forever!

  22. Depth Charge says:

    “…and suddenly here come the new listings…”

    To be fair, that’s a pretty paltry uptick. Look at the historic inventory and then look at where we are – way too few houses for sale, STILL.

    • historicus says:

      No supply where I live.
      People hold onto their homes with both arms….it is their most valuable asset in a hyper inflation.
      Speculators might be selling….pyramiders…….but its still musical chairs here.

  23. Michael Engel says:

    7) Don’t trust JP/MI6 bs.

  24. Phoenix_Ikki says:

    As a parody, I am going to say it…”Not here in SoCal” still not seeing a whole lot of inventory and what’s available is grossly overpriced and I am still seeing sold for over asking on Redfin but that might just be funny business by RE agents.

    The non parody part of me say let this market crash harder than last time. Even trained my 5 yr old too say Housing market crash hard and J Powell suck…

    • Prophet says:

      Perhaps it is different in other states, but in Oregon, I see all the interesting stats on Zillow: listing date and price, sale-pending date, price and date sold. Not only am I interested in sold vs. listing price, but also the time span between sale-pending and sold dates. Houses selling over list are very nearly the norm right now with the exception of houses listed by Zillow. I see many homes that close within two weeks or so after sale-pending. I’m not a realtor, but a closing date within two weeks of pending makes me think these are cash sales, though I really don’t know.

      • Pea Sea says:

        Very likely “cash.” Meaning, the buyer is leveraging outside the traditional mortgage lending system.

        • gponym says:

          The “cash” created (intentionally) by Fed excesses and predicted stock market response since 2008 (or 1994). That “cash” is gonna find a home somewhere.

        • Michael Gorback says:

          Or as in my case, I had cash. Paid cash for my house, car, and recent getaway property in the boonies.

          Some of us don’t borrow from the future.

        • Enlightened Libertarian says:

          Where I live [PNW] I see some houses listed and SOLD [closed] the same day. Often houses are still selling for 10-20% over list.
          Houses often close in 30 days. Mist pending in less than a week.
          I wonder if buyers are borrowing against their stock portfolio to pay cash and then financing after the purchase?
          I also wonder how long it can keep going.

      • Hal says:

        Not sure that would explain it. I don’t see much difference in the transaction whether I have my checkbook out or a banker has his. Seller still gets cash.

        • El Katz says:

          @Hal:

          “Cash” purchases don’t have to meet banker requirements (income to loan, income verification, length in current position, etc.), survive an appraisal (which can cause a marginal buyer to have to scramble to make up the difference – if they can), and often have most – if not all – contingencies removed. A normal sale can take 60 days and the buyer can walk with only the risk of losing their earnest money. A lot can happen in real estate in 60 days.

          A cash sale? Can sometimes be done within days, which eliminates a lot of variables.

      • Prophet says:

        Here is another real-time Zillow stat:

        Sold on 3/18 for 8.5% over list.
        Time between pending and sold: 10 days
        Time between list and pending: 4 days

        Another stat I keep track of is price per square footage sold. This house sold for $456/sf. It is a smaller home. I believe this an all-time high for this area (for SFRs) but is still dirt cheap compared to SD, LA, SF and Seattle metros. Portland is in the “cheap seats” when compared to the other west coast metros.

    • Pea Sea says:

      It’s no funny business. There’s still nothing for sale in SoCal, and still a ton of idiots who “have to” buy.

  25. Kunal says:

    My thoughts on how RE will change is below:
    1. Rents are going up rapidly. This means that cash flowing multi unit rental properties will continue to appreciate as their prices are normally a multiple of rents. Single unit properties are often not cash flowing but those that do will benefit too. Also these rental investment properties are usually bought all cash (institutional or leverage money) so they are not as affected by mortgage rate.
    2. Residential properties owned by home owners will take a big hit because they are directly dependent on mortgage rate and number of listings. They are also negatively affected by high inflation as owners will have less money left to pay mortgage and property taxes.
    3. In places like Bay Area, owning has become significantly more expensive that renting, which must reset to historical norms as economy gets back to normalcy. This will cause more downward pressure on the owner occupied property prices.
    4. So in a nutshell, positive cash flowing multi unit rental properties will keep appreciating with inflation and growing rent, while cash flow negative units and single family homes and condos will take a huge hit.

    • Depth Charge says:

      “Rents are going up rapidly.”

      Not even remotely sustainable. They’ve already gotten ahead of themselves. Wages determine rents, landlords don’t.

      • Jake W says:

        these fools never have an answer to my question “where do you think the extra money for the increased rents you’re gloating about is going to come from?”

        • Gattopardo says:

          Everyone seems to assume that buyers/renters have static preferences. No. When times get tough, buyers/renters reduce step down. IOW, rents go up enough, then plenty of renters will rent smaller places, to stay within their means. So the median rental has a LOT of room above it for downward compression tenants while raising rents. In theory, this means only stuff at the top gets cheaper.

        • Beardawg says:

          DC and JAKE

          People have become accustomed to 2BR apartments for 2 people or 3BR homes for a small family.

          Dwellings are larger today than they were 50 years ago AND families were larger then.

          Multi-gen living in a McMansion or workforce singles living 3 or 4 in a 2BR Apt might become a normal thing again like it was 50 years ago.

      • historicus says:

        I said this in jest a while ago…
        but I don’t think it is out of the question in an election year

        INFLATION COMPENSATION CHECKS to be dispensed…and the blame for the inflation will not be the Fed and the federal govt…it will be Russia.

      • Kunal says:

        Well you don’t understand RE.
        Prices have grown even faster than rents and in Bay Area owning is way more expensive than renting now.
        My neighbors home just sold for 5.2M ISD and is now for rental at 9k per month. How does it all add up.
        Well there are tons of people with tons of money and tons of earnings and they can easily afford to own or rent these homes which are 2x more expensive now than before pandemic.
        Do you know that M2 money supply has grown by 50% meaning there is way more money now and it’ll result in 50% inflation in the end.

        I know you will repeat it’s not sustainable but in Bay Area home values are growing at 20% per year for 10 years now almost quadrupling in many areas. And it’s not slowing any time soon. All bears have been crushed.

      • Gomp says:

        Yes, DC. You must have a willing & ABLE Buyer. Wages stagnating. Prices rising. Payments (interest rate rising). Unsustainable!

        • Beardawg says:

          GOMP

          I stated in this thread earlier, but bears repeating:

          “…Multi-gen family members in a McMansion or workforce singles living 3 or 4 in a 2BR Apt might become a normal thing again like it was 50 years ago…”

    • Enlightened Libertarian says:

      I have noticed cap rates on multi-family dropping, over the last few years, from 5%-5.5% to 4% or less.
      Someone must be thinking rental property is a good investment.
      Property values [multi-family] up 10%-15% a year for the last 5 years.

  26. Prophet says:

    A single observation, from the west coast “trophy” city of Portland, Oregon:

    Zillow, just this past week, adjusted SFH Z estimates, upwards. For the past 30 days, the new Z estimate on my home caused a 6.9% increase. The new Z estimate is now in line with recent sales of a similar homes.

    A prediction: if the housing market gets into trouble, mortgage moratoriums will return, across the country, for people living in their primary residence, offsetting any supply created by those trying to sell investment homes.

    Yes, there is something for nothing.

    • To paraphrase from what a wise man once said, ‘with all due respect, and remember I’m sayin’ with all due respect, Zillow zestimates ain’t worth a velvet painting of a whale and a dolphin gettin’ it on.’

      Sellers use Zillow to value their homes until they hire a RE agent. Assuming they find one who knows the local market and prices accordingly, they will price on comps, not zestimates. And once the first buyer inspection finds major structural issues, the price will likely drop, fire market or not, elsevthe house will sit. Contrary to all the reported hype, the zestimate-priced homes are all still sitting there collecting days on the market.

      I’ve been in the trenches of home buying for about 2 years now. The timing couldn’t be more horrid, especially since I’m in that picky demographic scouring the MLS for a no-frills, healthy home in the $2-300k range in the farther reaches of the NYC suburbs (aka: where half of Brooklyn fled in the last 2 years) that’s 1) also not an appliance box or 2) 60+ year old molded, water damaged Zillow-priced total reno.

      Getting an accepted offer at or over asking hasn’t proved that difficult, but having the house be financially worth it after inspection is the real challenge. Some things Zillow can’t estimate, mainly the cost of repair during a lumber and worker shortage.

      • Jake W says:

        are you looking in northeastern pennsylvania or orange/dutchess counties? there are some decent stuff there. i’d stay away form long island.

  27. Scott says:

    4.5% is still low. Just back in 2000, they were 7.75% to 8%. Inflation they reported, I don’t believe them was much lower 3.5% to 4% max. I would not be surprised a 5%+ 30 year mortgage rate in coming weeks, months. First they screwed the CD depositor, US treasuries investor and now it is the home owner, real estate owner’s turn to pay through the nose.

  28. Swamp Creature says:

    Does anybody remember back in 1980 when there was a credit crunch and there were no loans made at interest rates above 10%. I forget what caused interest rates to be capped at 10%. Could this happen again?

    • VintageVNvet says:

      ”If you remember the ’70s, you weren’t there.” Is an often said joking reminder/remembrance of a decade devoted to finding out the limits of the population’s ability to self medicate.
      ”You young boomers” probably don’t remember, eh?
      I don’t remember the interest rates SC, even though I do remember the one for the house purchased in ’78 for $40K was about double the one purchased in ’80 after selling the first one for well over double, with significant upgrades to all components.
      Maybe 18% and 9-10% for the second one, for the first mortgage on both.
      First is now worth approximately 25 times what it was then.

      • Brent says:

        VNV !

        I am of ’65 vintage and still remember Burma Shave ads:

        Hardly a borrower
        Is now alive
        Who took out the mortgage
        AT SEVEN-POINT-FIVE !
        (slightly modified)

        Well,Henry Longfellow’s “Paul Revere Ride” is for highbrows,
        Burma Shave ads derived therefrom are for the rest of us 😁

      • Gomp says:

        Timothy Leary

        • Mad Puppy says:

          He’s not outside looking in, but he certainly is dead! (That’s for my fellow older boomers.)

      • Michael Gorback says:

        I hardly remember any of the late 60s and early 70s due to “self medication”. Good times.

  29. Depth Charge says:

    The FED announced to the world on Wednesday that they would continue to be “light and late” when it comes to addressing inflation. In other words, “let it run hot” is alive and well. That’s why the stock market just ripped up another 2,000, and the speculative crypto fervor continues unabated. Speculators will get more face-ripping rallies, and young non-asset holders will get more ripped off.

    • historicus says:

      Agree.
      The fact the Fed said FF would not be over 2% by the end of the year….regardless of what inflation does…..is just an abdication of duty.
      How can they say that? Models?
      Their own Rules say FF should be 3.25% NOW.

      It seems Powell has more concern for Blackrock, Blackstone, and the Carlyle venture capital deals than the American Citizen. IMO.

      • Wolf Richter says:

        “The fact the Fed said FF would not be over 2% by the end of the year”

        That’s NOT what they said. That 2% was the median projection, with almost half of them projecting higher or substantially higher rates. It was up from 0.9% at the prior meeting in December. Watch what it will rise to in May Meeting. We already heard from Bullard today. He’s above 3%. This stuff changes rapidly.

        • historicus says:

          Point made.
          ” The median projection for the
          appropriate level of the federal funds rate is 1.9 percent at the end of this year,..”
          I made the mistake of believing what I heard on Bloomberg.

          Wolf, with the 30yr mortgage rate ramping up, why is the yield curve doing what its doing?

        • Wolf Richter says:

          The yield curve doesn’t tell you anything right now about the economy because the Fed controls the front end via its policy rates and it controls long end via its trillions in bond holdings.

          The yield curve does roughly what the Fed wants it to do. The Fed could sell its bonds to bring up the long end and steepen the yield curve, no problem. It can flatten the yield curve buy raising its short-term policy rates (which it did), which pushes up the front end, but doesn’t allow the long end to move higher because of the huge holdings on its balance sheet.

        • historicus says:

          It seems peculiar that 30 yr mortgages would go from under 3% to 4.5% and the 30 treasury seems to not be following.
          Understood that the Fed controls both the shorts end and now the long end. ( It used to be held that the Fed only controlled the front end.)
          Knowing Powell likes to control the narrative, and likes to point to the long end and say “See, people arent worried about inflation.”…that seems to be the game he plays.

        • Wolf Richter says:

          historicus,

          A few times in the past, I posted a chart of the spread between the 10-year T note and 30-year mortgage rates. Thanks for reminding me. I’ll drag that chart out again in the near future. Time to look at it again.

          Over the past 20 years, the spread has fluctuated between 1.2 percentage points and 3.0 percentage points.

          Among the things that happened as a result of the Fed’s buying MBS (2008-2014 and 2020-2021) is that the spread narrowed to record lows. Now the spread is widening again due to tapering and end of MBS buying. The spread now is about 2.3 percentage points, so this is reaching the upper range.

          What’s happening to mortgage rates is that the 10-year yield rose about 60 basis points from 1.4% in Sep 2021 to 2.2% now; AND the spread widened. So mortgage rates rose 150 basis points.

    • Jake W says:

      which is why most of my friends can’t buy houses. i hope powell gets pancreatic cancer. i can’t wait to vote for people who will cut these people off from medicare.

      • Hal says:

        You need help, Jake.

      • COWG says:

        Jake,

        What were you and your friends doing 5 years ago… or even 10…

        You can’t bitch today because you weren’t paying attention then…

        A lot of people saw this coming (this blog) and positioned themselves to be in a good spot…

        You should be mad… but be mad at the right person…

        Most , or a lot of this, is a psychological war on intellectually stupid people to separate. them from their money… which, given enough time, will benefit others who didn’t succumb to the stupidity… I plan to be one of them… if not, oh, well…

        Learn, as I had to when I lost my a$$, to not be mad…just be better…

        Not trying to preach, my friend, just a different perspective…

        • Mad Puppy says:

          Ever wonder why the old saying,” Keep your powder dry”, is what it is, and not ,”Keep your flour dry”, or ” Keep your corn dry”? It implies being prepared for really hard times, even really violent hard times. They do come around, often unexpected by far too many people throughout history. I am not a prepped, but the adage does speak to the need to be informed and aware.

        • historicus says:

          COWG
          “A lot of people saw this coming (this blog) and positioned themselves to be in a good spot…”
          IMO, the only people who “saw this coming” are those who knew or didnt think the Fed would raise rates to meet this inflation. If the Fed has stuck to its duties, they would have rates 3% higher than now…
          they would be draining off that overly done money supply bump in reaction to COVID.

          The younger generation is being saddled with tens of Trillions in debt, essentially taking money from their future and having it used to BID UP housing and stocks out of their reasonable reach. Criminal in my opinion.

          It was once incumbent on each generation to “pay its own debts”…..but the game since 2009 has been to STEAL FROM THE FUTURE….$21 Trillion worth to date.

        • Jake W says:

          most of our were in our first jobs out of school…not sure what you expected us to be doing. we didn’t know the sociopaths in our parents’ generation were intentionally trying to ruin us so they could keep living in luxury.

        • COWG says:

          “ IMO, the only people who “saw this coming” are those who knew or didnt think the Fed would raise rates to meet this inflation.”

          h,

          Let me throw a little, tiny BS flag on this one…

          Listen carefully…

          Since 2013, the only people who could not have bought a house are those who couldn’t afford one, or most importantly, DID NOT WANT ONE !

          Who knows why and I don’t care… anybody with a lick of financial sense knew those conditions WERE NOT going to last and conducted their finances appropriately…

          If you didn’t, too damn bad… do better next time…

          The last two years were/ are an aberration, and I agree with you the Fed played it horribly… however, if for the last ten years, if you’ve had your head up the wazoo playing stock market casino, trying to be the next gazillionaire, bragging with your buddies at the bar about how you’re killing it in the market, hopping a jet to Aruba, then you deserve it…

          But don’t come in and say “ I can’t afford a house”, when it is the absolute panic of the Covid Crowd is what was running the house price up initially…

          The damn fools who run down the street screaming , “ I want a house! I want it NOW!” I want to work from home now, I want a yard now, or whatever justification they want to use… “Now” being the operative keyword here… well, guess what… you missed the “now” train while you were drinking with your buddies in the station bar… now you’re going to have to board the “wait” train and it moves far to slowly for the “ I want it now generation”…

          The Fed is totally responsible for the inflation, period…

          However, they are not responsible for the high auto prices, nor the high housing prices… those items are mostly Covid panic maroons driving the prices up… Basic supply and demand… they demanded and got supplied… I don’t fell sorry for them…I drive a 15 year old car… I made money from my 2019 truck… you want it, hey, here you go…

          Inflation got out of control because the fed did nothing to curb panic demand and didn’t believe reality…

          A lot of the inflation was not the feds fault… they were not responsible for the shortages…but the sure could have damped demand with a serious rate increase… they didn’t and it got out of control…

          And truthfully, probably still don’t. But I do think they are getting there…

          It’s kinda like when the Fortune Teller got murdered… when asked, the cops said they didn’t know what happened, but he should a seen it coming… :)

        • historicus says:

          COWG
          you said…
          “The Fed is totally responsible for the inflation, period…
          However, they are not responsible for the high auto prices, nor the high housing prices… those items are mostly Covid panic maroons driving the prices up”
          The Fed bought, ie lent money to, the mortgage industry for 30yrs out at well below current inflation levels. That is not normal. In fact the Fed owned NO MBSs in 2006 and now own 24% of all residentially backed mortgages….and you say they had no impact?
          The Fed Bought MBSs/lent out 40,000 MILLION DOLLARS A MONTH (that’s 40 billion) for two years to house buyers. It is a remarkable thought process that leads you to believe that didnt raise housing prices.

      • kitten lopez says:

        Jake you’re okay by me.

        x

        • Depth Charge says:

          He’s ok by me, too. I feel for him and everybody in his demographic. Jerome Satan Powell is intentionally destroying the young to pad his bank account. He’s up, what, $50 million since his little QE/day trading endeavor?

        • Whatsthepoint says:

          Yes, Jake, generational animosity aside ( cause this boomer missed the RE gravy train due to getting shoved off at the divorce/illness stop), my daughter is in in despair at rising prices outpacing her and partner’s earnings…I feel badly for her and more so I fear what stupid choices might be made out of desperation….

      • Michael Gorback says:

        The penalty for being a stupid corrupt asshole is not death.

        • Michael Gorback says:

          Depth Charge show me where in the legal code being stupid is a capital offense.

        • Depth Charge says:

          “Depth Charge show me where in the legal code being stupid is a capital offense.”

          I just pointed out how treason is a capital offense and then you quickly dropped “corruption” from your wording and are hanging everything on “stupidity.” A “stupid” person would be one who thinks they FED didn’t know what they were doing. They knew EXACTLY what they were doing.

        • unamused says:

          The wages of sin are enormous, and largely tax-free.

        • phleep says:

          DC is throwing around legal terms with beyond-loose parameters. I think we should be very careful about populist-politicizing anything as “treason.” It seems a cure-all that ends up devouring its proponents and everyone else. There was a little thing called the French Revolution where these supposed righteous idealists ended up losing their heads.

          These suffering young you are supposedly championing will come into vast transfers of real estate from dead boomers, beyond the dreams of avarice. Bigger than anything, as a boomer, I could have imagined. And in these awful times, their lives are lengthened to take advantage. Time takes time. Trying to force it is the prelude to most every human catastrophe.

        • LK says:

          Some of them might. But with wealth concentration, I imagine that number dwindles by the year.

          Let’s not pretend everyone has an inheritence to look forward to. Hardship and turmoil is what they (we) will be inheriting.

        • Depth Charge says:

          “DC is throwing around legal terms with beyond-loose parameters. I think we should be very careful about populist-politicizing anything as “treason.””

          It would be up to a court of law, not you or I, to convict Jerome Powell of treason. I happen to think he is guilty of it, as he’s waged a financial war against the citizens of the US, putting the country and its currency in danger of collapse, and he did it for personal financial gain. It’s always comical to hear you asset rich types, who benefited from his corruption, squirm and squeal when things start to get real and people point out exactly what’s transpiring.

          “There was a little thing called the French Revolution where these supposed righteous idealists ended up losing their heads.”

          Right, because it was all the fault of these people, not the policies which led to the blowback. Your cause and effect logic is broken.

      • ‘Old millenial’ here. Couldn’t find more spoiled, ignorant (and by chance, Boomer) parents than mine if you tried. Neither were Nam vets, they never worked so much as retail and their WW2 gen parents set them up cozy. Left me to figure it all out on quite literally on my own. Pushing 40 I’m finally getting to learning about investing and such, but hey, if I’m ever homeless again I’ll fare a hell of a lot better than the ones who scoff my belated knowledge. And not shockingly, my parents aren’t doing so hot now that they wanna retire.

        I get the bitterness. But that bitter taste in your mouth and $2 will buy you a Snickers bar. Generational lines are just another tool of division. Hope you figure out how to let it go, man.

        • ru82 says:

          Well said. It is not generational lines. Many Boomers will be moving in with their kids as their savings the past 10 years have not kept up with inflation due to zero interest rates.

          One…out of many….is how industries are being monopolized. Mom and pop businesses do have a chance.

          Two….Wall Street elite are becoming more rich than kings ever did. They just push money. Take fees from peoples money. Buy assets with other peoples money. They control congress. Good gig if you can get one.

  30. A says:

    I have been curious for a long time to see what happens to this housing bubble once mortgage rates return to their historical 5-6% range.

    This bubble has never had to contend with reality before. But reality always eventually imposes itself.

    • Swamp Creature says:

      Around here, people will still buy at those interest rates. They will just have to scale back what they see as entry level housing. My 1st home was 800 sq feet cape cod with 2 bedrooms, 1 bath. I paid 82K at 9 7/8% interest. I was happy to have my own home and not be renting in some high rise dump.

  31. CCCB says:

    Did anyone here listen to Fed Governor Chris Waller’s interview today?

    He was very clear. The fed IS going to raise rates 6-8 times this year. He admitted they were behind the curve and he personally wanted to raise more and quicker and start reducing the balance sheet dramatically to cool off the two hottest areas of the economy – housing and autos. I believe they will.

    He also admitted that transitory has lasted longer than the fed expected, but within the next 12-18 months they expect supply chain, covid, shipping, oil, Ukraine etc. will revert closer to normal and 8% inflation will drop significantly. He also pointed out that stimulus impact is basically over.

    Time will tell.

    His position didn’t seem crazy to me, but then I’m not a Wolf Street Fed basher. I think the fed, for the most part, actually tries to do the right thing for our economy and country, but predicting the future isn’t exactly easy. If it was, everyone here would have a billion dollar stock portfolios and doing something else besides posting comments. How many of us say “Wheels up, 3:30” every Friday afternoon

    • COWG says:

      CCCB,

      I saw the interview…

      I thought the man was genuine and honest…

      Much better than the chairman…

      • Flea says:

        Jawboneing for stock market,that’s where everyone ,is in the game think 401, pension

    • Bobber says:

      If the Fed has been trying to do they right thing, they have failed miserably and should be held accountable. They’ll blown the biggest asset bubble ever.

      The Fed says bubbles aren’t predictable; they can only be seen in hindsight. Does that give you any sense of comfort in their ability to add value to the economy?

      It’s accountability time.

      • georgist says:

        Housing costs (land costs) have been largely excluded from inflation.
        This has been as clear as day for two decades.
        They are culpable, they did this with their eyes wide open.

      • historicus says:

        “If the Fed has been trying to do they right thing,….”
        For whom?
        Those who somehow knew the Fed would NOT act as they should or did in the past when faced with hyper inflation did quite well.
        Those who expected responsible action from the Fed, not so much.
        And that is why the Fed must have hard and fast rules…too much latitude, too much whimsical action that is systemic shaking….”lets pump the money supply 40%” and see what happens.
        Fed Funds should be tied to inflation.
        Money supply to GDP need for more money…IMO
        Both of these would get Congress off the “what the heck, let’s spend it anyhow” attitude.

    • cd says:

      Pigmen? Really? The same pigmen that helped provide bulk purchases to their PE cronies….the same pigmen that did a libor price fix in housing, which I admit that I thought was impossible?

      The fed is a pigmens lair….nothing else….a HS kid could do the job…

  32. Gabby Cat says:

    For the first time in two years the current “for sale” housing market is in double digits for my zip code. Many of the houses we looked at renting in January are now in the market for sale. Most, obviously poorly flipped, are for sale below previously sold price. While for rent they had been on the rental market for around 100 days. Something is not adding up. However, none of the new house builds have lowered prices. If anything they went up another 2%. We saw one house, that has been contingent twice, back on the market. We found out that is due to asking and bidding price being well over bank appraisal. People are walking away and losing their good faith money. That is what happened in 2007 right before the crash.

    • VintageVNvet says:

      GC: ”Most” SFR deals are made contingent upon financing IF financing is needed.
      That would be all the several dozen I had been involved in as buyer or seller or contractor giving pre-sale estimate(s) to make the house or commercial what the buyer wanted it to become.
      I do not remember how many fell through for lack of financing after the deal was made, but not many, as the realtors I dealt with had many ”back up” financing alternatives available, and likely still do.
      Last I heard, there was tons of ”private money” available for off the books ”purchase money seconds,” etc.

      • unamused says:

        ‘Last I heard, there was tons of ”private money” available for off the books ”purchase money seconds,” etc.’

        That’s the problem with ruthless plunder: eventually they run out of worthwhile places to invest the booty.

        Proving once again that you can’t have it all because you have no place to put it.

  33. THEWILLMAN says:

    Think of all the people who bought at lower prices and higher interest rates, then refinanced at sub-3%. They’re paying 1/2-1/3rd of the monthly payment that they would be if they bought their house today at 4.5% – after only a handful of years.

    The only way they’re moving is if they’re unable to make a payment. My guess is housing supply is going to be a decades long problem because of this dynamic even if it recently went up a bit.

    • historicus says:

      People, in a hyper inflation, tend to hold onto their largest hard asset.

  34. Michael Engel says:

    1) For entertainment only : the weekly DOW great escape from the
    grip of the cloud, above T&K, under ma50, cancelling DM #9.
    Twice the size on the same volume. Something is wrong.
    2) The front end of the weekly cloud have flipped.
    3) Next week the Dow might enter Jan 31 and Feb 7 fractal zone and turn
    back into the cloud. This bear market bull run might be over.
    4) The DOW might reach Mar 1 fractal zone, getting support from the
    bottom of the cloud, escape the bears and the sharks and ==> up to Jan 10 2022 fractal zone, 0.886, or to UTAD, a new all time high..
    5) After completing the monthly DM #13, options :
    6) Perma bulls : higher, it must be higher.
    7) A bearish option : to retrace 62% of the bull run from Mar 2020 low. Or, to 0.38 of Mar 2009 low to Nov 2021 high, testing the highs before starting a real plunge for JP. Why not.

    • historicus says:

      There is a pot full of money that needs to be invested prior to April 15th.

      • Michael Engel says:

        1) SPX, N wave up : Feb 24 low to Mar high = X. // Mar 14 low + X was completed. Momentum might send it to 4500 area. SL tight.
        2) N wave down : Jan 4 high to Jan 24 low = Y. // Y from 4,500, to the weekly cloud bottom.

        • Cd says:

          a wave guy, the worst idea ever….what are they like 99% down….

          here is simple for you, midterm elections first quarters are usually rough, by late summer full on bull moves begin….

          right now XBI is going to find 110 at least 125 not out of question…thru June…sector rotation….

    • phleep says:

      Beautiful eloquence. Sounds like code. I can’t tell if my comprehension signals my mind is ascending or melting. Bravo!

      What happened to Cobalt Programmer?

      • LK says:

        Now imagine if he wrote in a way that was comprehensible to a general audience. Who is this for, people who have their own Bloomberg terminal?

  35. David Hall says:

    A new listing in America stays on the market about 18 days.

    Unsold home inventory is close to an all time low.

    Unemployment is low. Wages are rising.

    The one year treasury rate was 0.91% on March 1, today it is 1.29%. The 30 yr rate is 2.42%. Super low interest rates compared to the CPI.

  36. YuShan says:

    Btw: the BBC refers to house price inflation as “house price GROWTH”.

    • Jake W says:

      yeah, they’re gaslighting us and laughing in our faces. they’re pretending as though inflation is a good thing, by using words like “growth” or “gains.”

      they’re a bunch of evil shylocks.

  37. Michael Engel says:

    1) The inflation cause : US comatose until we know what we don’t know. The symptoms : printing, PPP loans, Shing mums $10K, NDX, commodities, Long Beach…
    2) It’s a system control with negative feedback loop, osc up and down
    wildly, in repetition.
    3) Bubble up/ bubble down.
    4) A global sinkhole under mountains of debt, until the system decay, cleanse itself.
    5) Can we have negative CPI next year : why not.
    6) Can SSEC and Chinese RE send shivers to SPX : why not.
    7) Can AAPL (current equities at $70B/ $2,500B assets) cont to cannibalize themselves go to negative equities : why not.
    8) Can US & Canadian RE decay in real terms : why not.
    9) Can NDX : Commodities turn down : why not. Both might go
    south, but NDX will plunge faster.
    10) The Wimmer inflation might be followed by an Anti Wimmer deflation.

    • Nathan Dumbrowski says:

      I picture that the FED is preparing the party to show success. In their opinion they pulled the rabbit out of the hat. No default. No recession. No bank takeovers or failures. Nobody missed a single payment of any kind. They were able to control the currency through all the impossible. They are getting ready to land on the aircraft carrier with their own banner proclaiming “Mission Complete”. Economy saved and nobody was impacted

      • Jake W says:

        nobody was impacted? that’s sarcasm, right?

        • Nathan Dumbrowski says:

          Of course it was sarcasm. There was financial magic and trickery. There was not actual save. The day of reckoning is coming. They have just thought they solved the age old idea that they could control everything. They even fooled themselves

      • Depth Charge says:

        “Economy saved and nobody was impacted”

        HAHAHAHAHAHAHAHA!!! Tell that to the tens, if not hundreds, of millions who are struggling to put fuel in their tanks, afford shelter, and just plain survive – many on the actual streets and sidewalks.

    • historicus says:

      ” The inflation cause”
      40% jump in money supply
      Helicoptered out the bay doors…
      accompanied by ZERO interest rates.

      It really isnt that complicated. The “bottlenecks” are a inflation DEMAND situation. The ports are moving more product than PRE COVID.

  38. Peanut Gallery says:

    Taken from a bond guy on Twitter:

    The Fed currently earns about 1.67% on a $9T asset portfolio against paying 0.13% on $6T liabilities, generating ~$140B of net interest (mostly returned to the Treasury). Raising short rates to 2.5% will put the Fed in a negative carry position requiring a subsidy from Congress

    And how will they get paid that money???? LOL

    • historicus says:

      The answer..
      The “mostly returned to the Treasury becomes a negative…payback time.”
      How much has the Fed “made” for the Treasury in the past 12 years?

      • Old Ghost says:

        The FED does not work for the US Treasury. They work for the private Central Planners on Wall Street who own the FED. That should be obvious to all by now.

  39. Finster says:

    ““Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases,” the NAR said in the press release.”

    We’ve been hearing this tiresome whining about “housing affordability” for decades. Yet when housing actually becomes more affordable – as it did in 2008-2012 – it’s treated as a crisis that needs forceful intervention to help the housing market “recover”. Then the path back to unaffordability is celebrated as a great “recovery” in the housing market.

    The bottom line winds up being no matter the condition of the housing market, there’s always some excuse for central planners to get involved. Then they wreck it, leading to calls for yet more benevolent meddling.

    But don’t expect the mainstream media to acknowledge this bigger picture.

    • COWG says:

      This is from my comment in moderation jail…

      “ Since 2013, the only people who could not have bought a house are those who couldn’t afford one, or most importantly, DID NOT WANT ONE !”….

      I’ll let the Wolfster take it away….

      https://wolfstreet.com/2019/10/24/despite-ultra-low-mortgage-rates-new-house-prices-drop-to-multi-year-low/

      2.5 years ago…

      In case you weren’t paying attention…

      • Brent says:

        =moderation jail= 😀

        “Take me to the Brig.I want to see THE REAL MARINES !”
        (Gen Lewis Puller,USMC)

        As an early adopter (during Silk Road I) & early discarder ( post-Blockchain Explorer ) of Bitcoin I occasionally visit reddit/btc.

        Comments marked “controversial” are the only ones worth reading.And even controversial comments start with long apologies and assurances that basic tenets of BTC Orthodoxy will not to be questioned.

        • COWG says:

          I’m in there so much, I going to have to make another contribution to the site for bail money :)

        • historicus says:

          Thanks for Chesty’s quote. Good one.
          Reminds me of the Lt Colonel who was recently forced to resign over his comments on the Iraq pull out.

      • Wolf Richter says:

        Yes, funny how $4.7 trillion in money printing and interest rate repression changed the housing market. Who woodda thought?

        • COWG says:

          Ya think, right…

          It gave the people who couldn’t afford or want a house the perfect financial tools to incite the herd panic driving demand and thus prices through the roof…

          Didn’t see that coming…

          Not…

      • Flea says:

        I’m in same cell as you

      • Abomb says:

        That’s only New Homes…

  40. kitten lopez says:

    i’m feeling kind of shy right now and not in the mood for any trollery if Wolf puts this comment through so BE NICE:

    Jake W’s comments are breaking my heart but i must’ve been away waaaay too long because most all the RESPONSES to Jake W are stabbing mercilessly at my heart.

    Depth Charge is right about “treason” and all of my life i’ve been The Loyal Opposition and i’m new to …i’m still floundering looking for words because i no longer want to just take all this.

    i’m reading many books and i left here at the start of the covids because i couldn’t take the daily tally of destruction and feeling so helpless. when i’d look around at others just happily taking it in san francisco it’d go against my vision of The Founders.

    as they were taking down Jefferson’s statue in NYC i realized we were screwed because as complicated as he was, we’re ..STUPID. i’ll keep it short(er) than i used to.

    anyhow, i spend most of my writing time at John Michael Greer’s site trying to get a new vision for me to put all my magical energy behind. i think those of us without kids are trying to figure out how to do hail mary passes FOR THE KIDS.

    for the Jake W’s. because i lose out when we’re all miserable and no one’s got any ideas.

    where i’m going is:

    Wolf Richter has become as important to me as true real family because he keeps pulling me up out of the ditches i keep landing in face down. i’ve no friends in san francisco left.

    everyone’s been evicted or they don’t like my politics or whatever.

    so Wolf and i disagree on recent events but i’m not WE’RE NOT gonna let that mess with whatever we’ve got.

    so Wolf got me to do a podcast with James when KPOO, the radio station i was slated to have a regular show on, got a ton of push back from the other programmers to NOT have me on the air because i’d be… DIFFERENT.

    so this “diversity” thing has been working against my own diversity from jump and as a mixed bougie ghetto girl who’s shtupped men and women i’ve no home except the ones made for me by WHITE MEN.

    no lie. so it’s complicated isn’t it?

    and i’ve been avoiding being back in any public eye because i was cancelled already and i nearly didn’t make it out alive the last time because it’s not enough to take away one’s career, but you’ve gotta be totally ruined financially and discredited.

    hard on the soul to come back.

    but with the likes of my James and Wolf on here and John Michael Greer’s tireless work, i’m hanging in.

    i’ve no answers for Jake W or myself or ANY of us. i just want to use that Free Speech thing we used to supposedly DIE OVER and use it to talk about the Unspeakable and Unspoken:

    has our country IS our country become completely treasonous against its own people???

    and i’d have to say YES.

    where to go with that i know not. but as Opposite Girl as i was before i didn’t realize the government was against most all of us, re-using that line that got Wolf in trouble years ago now:

    “we’re ALL n*ggras now.”

    i’m not playing the race thing anymore. done. gender? more distraction.

    i’m not saying “latinx” and i’ve already long since gone back to “spanish” with a small “s” to mean latins. i hated latin, too.

    spanish was generic back in the day. i’m not running about changing my terms to prove anything.

    that’s the freedom and beauty of failure and not needing to fit in.

    anyhow, this is long. and i’m not sure i should tell anyone about the podcast because it seems that it’s gotten quite rough and tough in here now that the Daddy RD Blakeslees are kinda gone.

    but any Original Gangsters on here who might be interested in the podcast James and i are doing you can sign up on my site (erikalopez) or Record Scratch Radio because they go same place.

    it’ll be hosted on substack because it seems the least likely to deplatform me (us) at this moment.

    my theory is that we the people could have a revolution in plain sight if we set up a de-centralized counter culture and worked together in a way that The Powers That Be could never even IMAGINE.

    i didn’t want to go back online but this is all i’ve got to try and spark Resistance.

    i could be wrong and wasting all our time but what else am i gonna do? what else are WE gonna do? i don’t know about anyone here anymore but it’s not how i wanna live my life, trying to tap dance for scraps when this is a miraculous world outside of finance. financializing everything isn’t working out for us so well.

    so there it is. an update in case anyone cares. (smile)

    x

    • Hal says:

      Not sure what’s up with your life, but hang in there. Yes, the government will generally work against you, but you can’t beat them. You can only work around them.

      Nothing goes to heck in a straight line. But life doesn’t get good in a straight line either.

      So, it won’t be linear, but I promise you: the harder you work, the luckier you will get. Good luck to you.

      • kitten lopez says:

        Dear Hal-

        re: “he government will generally work against you, but you can’t beat them. You can only work around them”

        but that’s my point: WE are supposed to be We The People and if we’re “working around ‘Them'” then the government isn’t FOR US then is it?

        my point is that we are confronted with the same questions as the original Founders of The United States of America. cue music but after trashing this country out of habit for life as The Loyal Opposition Ungrateful Brat, i’m coming Correct.

        it’s not working for us to avoid and go around the government that is killing us taking from us bleeding us stealing from us.

        this is my only contribution as a former Quaker child who dug the MLK bus boycotts. if something cannot be done peacefully it WILL be hella bloody.

        i don’t want a civil war. people romanticize violence and hunkering down and all this hate.

        my pitch is something else entirely first. it’s economic. self sustaining. a return to Constitutional basics instead of piling on more meaningless crappy reforms. we’re too stupid to come up with anything new any good with the consciousness that exists currently.

        my pitch is back to the bone of this American Experiment because it’s gone awry and we were warned this time would come. we got complacent when we started “working around Them” instead of realizing WE were supposed to be Them.

        it’s not any easier or harder now than it was in the years leading up to the Revolutionary War. history has never been more alive than it is now because if this experiment goes tits up, ain’t no one going around ANYTHING. it’s taking us over.

        thanks for the good luck but it’s just not about Me. when you go back out for another beat down you know’s gonna rival the earlier ones, you’re in another place beyond comfort and recliners and ease. ya dig?

        i’m not bragging. i’m saying i’ve already lost Everything but my health and now i’ve got very little left to lose.

        and that’s when stuff gets crackin’. when more Jake W’s have nothing left to lose and we’re there now.

        x

        • Depth Charge says:

          These filthy, vile CONgresscritters who have been in office 40-50 years are responsible. Both parties. They are the ones who did this. Look them up. They sold the young and their futures down the river for pockets of money, and now here we are with no life raft.

          We’ve got a lot of interweb braggarts who show up here to virtue signal about their shacks they gambled on and their paper gains, or their stocks, crypto, etc., but they are lost in a delusional, myopic, self-centered stupor. Many will lose it all + some.

          The problem is that the jobs were off-shored, and it was all papered over with financial shenanigans and the introduction of large numbers of women into the workforce to help pay the monthly bills which now largely require two incomes. A side-effect was latch-key kids, divorce and a disturbing erosion in morals, ethics and the social fabric.

          The latest “health crisis” laid bare the system we find ourselves in, where oligarchs financially rape and pillage at the expense of everybody else. Did you ever think the central bank would get busted for day-trading and front-running their own policies, much less not even have to atone for it?

          “TOO FAR GONE” is the only term I’m left with. I do not have hope anymore. Every road I see is bloody.

        • Hal says:

          Hoping for a revolution or wishing cancer on people, or anything of the sort will be fruitless.

          It’s easier to live in a 1968 Buick LeSabre than a 1969 Chevrolet Chevelle (it’s roomier). But, either situation will make you angry.

          Anger is energy. Ya gotta redirect that energy where it helps you.

          Use your energy and good health to change the things you can.

          Again, best of luck to you.

        • Depth Charge says:

          “Anger is energy. Ya gotta redirect that energy where it helps you.”

          Exactly, but not where the old, asset rich people like yourself, who benefited from the rigged system, would expect. “Let them eat cake” didn’t work out in the past, and it’s not going to work out this time. Serious blowback is coming.

          For every every Jake W posting on a blog, there are millions more who are not but share the exact same anger. Lotsa scenarios come to mind, including: “So sorry about that Social Security, Hal, but you spent it on countless wars and it’s gone. You thought it was an entitlement but you didn’t think you could actually steal our future but still collect that, did you? C’mon, man!”

        • Hal says:

          The thousand injuries of Depth Charge I had borne as I best could, but when he ventured upon insult…

        • LK says:

          As an older millenial, I see myself shut out of whatever future is being built. I get where Jake is coming from. I get the desire to have some higher power intervene to knock people who are deeply embedded, protected, and seen as a cause of things.

          But I also get how focusing on individuals in absence of the system that spawned them is fallacious. It’s a similar kind of thinking where you want to send someone like Trump or another “hero” in to fight your fights.

          Change is hard. Organizing for change is hard. Hell, I can’t commit to a weight loss plan. Feels like I’d need that pill from Limitless to have an impact.

        • LK says:

          Also excellent point from Depth about how we’re paying the price for past, colossal, misguided blunders, and it’s pretty rich to be told to eat it by the rich.

          I’d like to save for the future. Tell me how to do that in a ZIRP environment. Start a business and play stocks or crypto? Is that the future? The eternal battlefield of finance and day trading, with winner take all, and may those paper warriors be praised for their victories?

          Saw a post on Wall Street Bets where someone surfaced disgust at the loss porn over young people who have hundreds of thousands of dollars and lose it all in a matter of months. Felt honest, like how we’ve normalized laughing at the tragedy of others and people destroying themselves over their own ignorance or lack of guidance.

    • COWG says:

      “ i’m feeling kind of shy right now and not in the mood for any trollery if Wolf puts this comment through so BE NICE:”

      My favorite people are eclectic and slightly illegal :)

    • Shiloh1 says:

      Back from about the middle 80s to about at least 2000 there was a builder in the southwest Chicago suburban / Joliet area — John Leach Homes. Simple brick single family.

      Ads had John Leach saying,

      “I believe in basements” He did; they all had them.

      “You paint the house and seed/sod the lawn and that is your downpayment”. So no money down.

    • Old School says:

      If you are able may I suggest watching YouTuber Itchy Boots as she is currently traveling around the backwoods of Central America. Her visits amongst indigenous tribes take you far away from American life to a different life for better or worse. It is life with modern conveniences stripped away.

  41. Swamp Creature says:

    I don’t know what happened in the late 70s and 80s. I must have been drunk far more often than sober. For those of you were not in that condition, You may recall why interest rates capped out at 10%. I remember a panic to buy a house at a mortgage rate of 9 7/8% just before the credit crunch hit. What was so sacred about 10%.?

  42. Bobber says:

    I did a quick search on two of the hottest areas of East Side Seattle using Redfin data. In Redmond (Microsoft’s HQs), median sales price dropped from $2.2M to $1.75M from January to February. In Kirkland, where Google has a regional HQ’s, median sales price dropped from $1.2M to $838k.

    These are median price drops in the 20% to 30% range, in one month!

    If this is the start of something, it looks to be quick and severe in areas that have appreciated quickly.

    I almost feel sorry for those FOMO buyers that bought high priced homes in January, only to watch the market decrease its median home price by 20% to 30% in February.

    • Alku says:

      But Bellevue is not budging, right?

      • Bobber says:

        Bellevue down only 3% in one month, likely because it did not see the same price gains that Kirkland and Redmond saw in the Nov21 to Jan22 period.

    • Ryan says:

      The median sales price for homes can be distorted greatly by the mix of homes for sale in a given month. In a given area, median sales price means almost nothing to individual buyers or sellers. No need to almost feel sorry for those buyers just yet.

    • Wolf Richter says:

      bobber,

      Handle median prices with care. They’re very volatile from month to month, but that’s not necessarily meaningful. You need to look at them over the longer term, when the zigzag pattern starts showing a change in trend.

  43. kitten lopez says:

    Dear Hal-

    to keep the reply threads from getting too skinny i’ll reply here:

    “Anger is energy. Ya gotta redirect that energy where it helps you.”

    –i’m long past angry; i’m profoundly SAD. Depth Charge is so right when he says: “Serious blow back is coming.”

    i’m trying to run ahead of my own emotional reactions to All This, and help channel energy into new ideas for the future. this is a very long game but i was taught this as in my… shall we say “eclectic and slightly illegal” childhood, by the elder riff raff.

    i suppose i am angry as well as sad. i’m angry that we are so fickle and casual with life and each other and all that is sacred and holy all for …crap. and families breaking up and yeah, “feminism” became a scam..

    but that’s why i hid the last two years because i learned damn near EVERYTHING i thought i was fighting for turned out to be a scam. even the Constitution as it’s played out in the NOW.

    but as a writer an author someone who’s been forced to not abandon my writing out of discomfort because of pay and deadlines, i also realize that i write and sketch out LIFE IDEALS that i strive to reach and fail..

    cast first stone all that stuff, right?

    so i suddenly gave The Founders a belly laugh and a break because they’re just shmucks like ME. a wretch like ME… all the sudden this getting older thing is starting to pay off and i’m understanding and remembering and CONNECTING.

    no, dear Hal… i don’t want to take away the fruits of YOUR labor hustle work sweat time thinking and yes… SACRIFICES… no, i’m not down with this marxist hell that’s being played out in san francisco to my horror seeing small businesses just DIE and how it kills and no honor on upholding law from theft is disrespect to ALL OF US.

    i get all the stuff i thought was EVIL before!

    so i know nothing. i’m STUPID.

    but the Constitution was a damn great idea i’m not quite ready to let go of the dream, don’t wanna cede something paid for in blood, a MIRACLE… all down the toilet because we punked out? no!

    Mr Dear Viet Nam Vet is HERE. what the hell did our folks fight for in the first place? nah. i believe this stuff for real.

    man… i haven’t written on here in FOREVER and now i cannot stop.

    but i feel this for real. we’ve run out of road on this financialization of Everything and it sucks. for YOU, too.

    we have got to find a way to co-exist. we have no choice. this is unbearable.

    i’m going to try and woo the world away from the magic phones so that we may see each other anew and stop with the hell being us all trying to feed OURSELVES with long chopsticks instead of EACH OTHER.

    what is the money for? the girl? the last one with all the stuff but the one being paid minimum wage to wipe your eternal ass is wiping snot on you and you have to take it because the last stroke made it so no one can hear you scream?

    nah. this isn’t a pretty life for any of You, either.

    x

    • Hal says:

      Kitten, I think you’re hurting… I hear it in your words.

      I truly wish you the best.

      I know it’s hard to listen to an old person like me, but you gotta stay positive. There’s a lot wrong in this world. It ain’t nothing new.

      Again… Use your energy to change what you can. The blame game is a waste of time.

      How about we let Depth Charge blame me for the ills of the world, and you arise, go forth and conquer?

      • kitten lopez says:

        (smile)
        x

      • Wolf Richter says:

        Hal,

        “Use your energy to change what you can.”

        Kitten has come up and is putting together all kinds of exciting projects, some of which she mentioned in her comments here a few hours ago, and you can even sign up so that you get a message when it’s live. She is using her energy.

  44. Brent says:

    For you budding Revolutionaries who want to abolish the Fed, utter Primal Scream, return to America as portrayed in Andy Griffith Show etc:

    The French political philosopher Alexis de Tocqueville (1805-1859) describes what form of tyranny or despotism would come to America: it would be relatively mild, retain some of the “external forms of liberty”, but the people would behave like timid “animals” and the government would act like their shepherd:

    Quote
    “After having thus taken each individual one by one into its powerful hands, and having molded him as it pleases, the sovereign power extends its arms over the entire society;

    It covers the surface of society with a network of small, complicated, minute, and uniform rules, which the most original minds and the most vigorous souls cannot break through to go beyond the crowd;

    It does not break wills, but it softens them, bends them and directs them; it rarely forces action, but it constantly opposes your acting; it does not destroy, it prevents birth;

    It does not tyrannize, it hinders, it represses, it enervates, it extinguishes, it stupifies, and finally it reduces each nation to being nothing more than a FLOCK OF TIMID AND INDUSTRIOUS ANIMALS, OF WHICH THE GOVERNMENT IS THE SHEPHERD.

    I have always believed that this sort of servitude, regulated, mild and peaceful, of which I have just done the portrait, could be combined better than we imagine with some of the external forms of liberty, and that it would not be impossible for it to be established in the very shadow of the sovereignty of the people.”
    Unquote
    (from the book “Democracy in America”,written in 1835)

    I am 200% sure that the stocks skyrocketing 8% on odd days and plummeting 9% on even days,house prices going to 4.5x of median family income then crashing to 1.2x is part of that plan.To confuse, bewilder and mentally wear down everybody.

    There will be no Revolution.There will be one f…ng thing after another (like manufactured outrage about non-issue) every f..ng week. And nothing will ever change.Exept for the worse.

    • kitten lopez says:

      maybe so, but what else would you rather DO?
      a writer maybe it was Walter Mosley i don’t remember… said, “when you live outside the law you must live by a code,” and that’s why i trust people on the low more than any bureaucrat any day.

      and when you LIVE by a code it IS it becomes the adventure the story why we indulge our sadmosochisms involved in being ourselves. i see what you say, i live in san francisco.

      but i’d rather fight on my way out. as The Daughter of Rafael Lopez-Sanchez, and Deborah Reese/Ramey, i feel part of a lineage of Fight from both seemingly disparate sides. a blending of the two. of an ideal not fulfilled..

      but the romance is in the TRYING, right?

      no. / and that’s because we are simply out of balance.

      i just ask for the right to exist as i am and let others. it’s the adventure. not the GETTING. i’ve been on both sides and rich people i KNOW are not ever having more fun than the nasty juke joints i ended up as a runaway in.

      i know it’s not more fun there no matter how many crappy endings end up alone with a stranger on a beach with a pineapple drink.

      gotta go. dinner time.

      i just don’t wanna be cattle. i’d rather fight or teach the next young ones who DARE to live and fight, i’d rather go out as my art finally relevant. i have become my art now that art sucks.

      x

    • historicus says:

      While we are quoting DeTocqueville
      “”A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.”

      And the voters have discovered that they can indeed vote themselves “largesse” from the treasury. And who is providing the treasury the “new” money? The Fed, by buying up debt with magic money created from thin air, as the party in power helicopters it out to the masses. Loose fiscal policy? The word Trillion is tossed around Washington DC like a frisbee on campus in the spring. That wasnt the case pre 2009 and QE. So, we meet both the tests Alex mentioned…..voters voting themselves money and loose fiscal policy.

  45. RedRaider says:

    Fed control of the yield curve.

    For total control of the yield curve the Fed needs to be able to raise or lower the short end AND raise or lower the long end.

    The Fed does have control of the short end. There need be no rhyme or reason for short yields going up or down. The long end is a different matter.

    Due to the Fed’s QE purchases of bonds they will have no problem forcing long yields up simply by selling bonds. But the Fed needs to be able to cause long yields down also. The only way they have to do this is continue QE. The Fed has just said they’re going to start QT. If all of a sudden they announce the continuation of QE they’re going to look like fools. I mean even worse than they already look like that. So the danger seems to be the need to lower long yields.

    The Fed will need to lower long yields if they’re going up too fast. A positive yield curve is one thing; a near vertical one is another matter. Everyone seems to be worried about the stock market. Including me. If we should all rush into long bonds as a safe haven we’ll see how near vertical things go. And the Fed will sit and simply watch along with us because there’s nothing they can do about it.

    • RedRaider says:

      nevermind!

    • historicus says:

      The word “moderate” means “not extreme”.
      The Fed is charged with “promoting moderate long term interest rates.”
      Despite never being mentioned due to the “dual mandate” game which intentionally carves out this mandate, it does exist.
      All time lows in long rates are not “moderate”, they are extreme.
      Long rates (30yr Treasuries) 5% below the CPI is extreme.
      The Fed has a balance sheet rife with long term paper, and they can effect the long end now that they are knee deep in it. I suspect the Fed likes the extremely low rates in the long end so they can point to inflation coming down. But it is they who have pounded the long end.
      For example, they own 24% of all residential backed mortgage paper. Why would they do such a thing?

  46. Will V says:

    My question is if the FED walks very slowly on rate increase slowly following inflation (nipping at its heels but never catching), will the “market” really “tank” even if we are at 3% by year end and QT is occurring. As long as real inflation sits at least say 1.5-2% above then won’t the “market” hum along on continued leverage since borrowing costs will still be falsely below “real” inflation and if you’ve got a few billion you can make money on the small difference in rates. Of course it sickens me but hey maybe we should never “fight the fed”. And as long as this trend of JPOW “working hard” to “fight” inflation will the dollar really weaken. As many of you have said the USD is the cleanest dirty shirt. Was shocked the market “jumped” so big this week.

    • Hal says:

      Nothing goes to heck in a straight line.

    • historicus says:

      WIll…
      I think it important to separate the “market” and the economy..
      In 2018 we had 2% Fed Funds ….. the market didnt like it….but there was no recession. Then Trump started jawboning Powell.
      Europe was negative at the time, so the arbitrage was a big factor, and US rates finally succumbed.
      My point…the economy can handle higher short rates, but the market will not like it…so we must ask, “is it the Fed’s duty to support the market of snuff out inflation?”. I think the later. And I think the current Fed disagrees with me.

  47. Enlightened Libertarian says:

    What you are seeing is different mix of housing selling every month.
    I see it in Redmond too. One month it is all 1.5-2 mill houses, next month all 850k-1.2 mill houses. Of course the average is up and down.
    Things to look for:
    Listing price to selling price.
    Listing date to pending date.
    Price per square foot [just saw a 1700 Sq ft house sell for 1.7 mil, $1000 a Sq ft.
    # of houses that have to drop the price to sell.
    I have not seen much, if any, slowing down yet,and I check several times day.
    But the slowdown might be right around the corner.

    • Enlightened Libertarian says:

      Sorry, that was a reply to Bobber.

    • Bobber says:

      Understand, but it’s interesting that two cities near each other both suffered large median price drops at the same time. It doesn’t smell like random variance.

  48. Daz says:

    Curious to see what happens when homeowners that’ve used their homes as ATM’s over the last decade look to refi to pay off debt. Ever since 1980 interest rates have fallen from mid-teens to historic low. So a refi gave many a chance lots of opportunities to pay CC debt and lower payment or keep the same. What happens when those same folks try to refi 2.5% loans and find out that for the first time in 40 years their payments will balloon massively, with +4.5% interest rates? That’s just to refi. Taking cash out in a declining market will be next to impossible. As for the new payment? Horrific!

    • El Katz says:

      Daz:

      Your scenario only matters if they sell. If they can afford the current payment at their current 2.5% loan, it doesn’t matter unless they tap the ATM again (which would be stupid).

      Yes, they could conceivably be upside down in their house but, again, that only matters if they sell.

    • dang says:

      Actually, you nailed the bursting of a second, larger housing bubble, V1.2. The central bank went for door #2, moral hazard, and reinflated the bubble(s) to make the gamblers whole. What is never highlighted is the fact that prudent or conservative investors paid for it.

      To anyone with life experience it was and is crazy. To anyone born with a silver spoon in their mouth the bailout seems like a no brainer.

      • dang says:

        However, at this moment, I think that the problem lies with us and our acceptance of the reduction of quality that is married to low price.

        The GI’s knew that, at some point, the war would be lost if the soldiers weren’t fed and denied the resources required to accomplish the societal goal, which at that time, defeat the fascist doctrine in favor of the democratic socialism that developed, for the good of all during the New Deal, from the sequential disasters of WW1, the great depression, the dust bowl, the fluenza pandemics, etc.

        Now we have the corruption of wealth.

        • dang says:

          A good example of what the entitled have been doing to the unentitled is just one thing that happened in the 90’s when Bill was being convinced that it was in his best interest to deconstruct the New Deal,

          The redefinition of the fudiciary rate of return required to be assumed in the projections for the long term solvency of the funds as well as the level of benefits that pensions could pay out.

          Some say that an extremely religious us senator led the lobbying effort that increased the expected rate of return for pension funds to 8$ from 4% that had ensured the funds for 50 years. Suddenly, pensions were overfunded by 50% so the PE(Bain) capital strategy was to borrow short term money from the Fed, essentially, grab control of the company, grab the pension money, strip the company of assets, etc

          So what. The PE firms grabbed the money from the losers. The saps that actually believe the horseshit about flags and fighting the commies that aren’t doing our former job for less, and, and

        • dang says:

          As I approach the end of this mortal coil, biased by the rejection of my version of life, I proclaim:

          the American lout like me is the gold standard for humanity in 2022.

    • ru82 says:

      Nobody has really tapped into their home equity yet. The average homeowner has $156k in equity.

      Current home equity stands at 23 trillion dollars. In 2007 the total was 11 trillion. Let that sink in. I remember so many people taking out home equity loans to buy cars, take vacations to Hawaii, etc.

      That has not happened yet. They were able to that wit all the covid stimulus money.

      Maybe with inflation and budgets getting tight, we will see people dip into Home Equity.

  49. kitten lopez says:

    BRENT:

    re: “For you budding Revolutionaries who want to abolish the Fed, utter Primal Scream, return to America as portrayed in Andy Griffith Show etc”

    i wasn’t going to answer you back because you did what i said i DID NOT WANT which was trollery.

    you cannot troll me and i will top you because i’m not gonna let you have the last word here…

    my father marched on Pettus bridge in Alabama where his friend Viola Liuzzo was murdered by an FBI informant and her son later became a militia cat so you’ve no need to indirectly condescend to me.

    this is why i think the innerwebs are the devil: they inspire such passivity and …ew. men are pussies now.

    we women helped set that boat on fire.

    but i digress / however not really as all things are connected:

    so your Andy Griffith thing doesn’t play with me. i am a proud Matlock watcher, along with Murder She Wrote, back in the day of reruns while i was doing art with Columbos as my favorite.

    the reason i cannot be bothered by Regular People any longer is because most of them/you are bred to be mice in ONE maze and you have the luxury of indulging your cultural cynicism.

    when you’re running for your life you’ve no TIME for cynicism. you see god. you get as i call it, you go FERAL. you see things in the 5D as clear as the 3D because YOU MUST. or you’ll lose your hymen, your ass, your money, your LIFE.

    THIS is why i wasn’t sure i should go public with my IDEALISTIC idea HERE on Wolfstreet. some of his most idealistic have died off or suicided gone missing or just gone on elsewhere.

    i went to John Michael Greer because he’s a mage he manifests and knows the biggest obstacle to new ideas new ways a new world is a small consciousness that is trapped. that’s what his work means to ME.

    because i’m stuck plumb out of ideas and i’m an artist and thinker and i used to come here to Wolfstreet so damn sure about this or that and the standing rock this and my custom clothes for men at the gym and then …
    BAM–

    all done or a lie or it’s different. everything. like when i was a runaway kid and found all other sorts of people who can see the 5D LIKE WOLF here.

    he died already. went feral. plus his sister’s got an eye on him.

    and that’s why i didn’t wanna come here. everyone’s here mostly smug or bored some frustrated …but i think the frustrated implode. you can only take so much of Wolfstreet when you’re on the underside of the game, without a way OUT.

    that’s why i took my mind my rantings and ramblings over to John Michael Greer’s open site on the covids. because how do we take this OPPORTUNITY to crack open and show or consider another way?

    this was the role of the thinker artist musician philosopher inventor and things got out of balance and as an artist still here in san francisco one of the last… it’s my JOB to remind you that you cannot afford to indulge your cynicism. this is not a TV show.

    there is no, “oh i should’ve danced with my shirt up at the wedding when i had the chance.” it’s NOW or never.

    i don’t care where you stand on the specifics, none of this isn’t working for ANYBODY and it hasn’t for a long ass time. everyone’s got a piece of the elephant explaining the reason.

    fine. start THERE.

    but we’re not even talking to each other and we’re “othering” each other quite literally to death and i’m calling b.s. on that.

    so as an artist i bypass YOU, Brent, i aim to reach the feral freaks who’re still standing but don’t know they’re The Pretty Ones Now.

    the ones who’ve already died and soiled themselves and been so embarrassed and ashamed that’s not a THING for them anymore. they are the interesting ones. they are not too embarrassed to BUILD be enthusiastic wrong daring silly absurd.

    THAT’s my pitch. i’m trying to sell being human again and daring to live truly live and fight for something. care enough to NOT CARE how you look.

    when you’re cynical smarmy and passive YOU are now The Loyal Opposition. you give me nothing. you bore me!

    so i write this for the little freaks watching on the sidelines waiting for permission for a sign to be more themselves. because people who take punches for love are the romantics i want to pepper the new world with.

    this current dead one SUCKS. i want my money back.

    x

    • Brent says:

      Ms Lopez;

      While posting De Tocqueville quote and making my prediction (which is actually not mine) I had 2 other commenters in mind but absolutely not you.

      Our markets work so well that even the needs of Revolutionaries can be easily accomodated, with new products arriving almost weekly.

      The last I’ve heard “Occupy Wall Street” and “Tea Party” had expired, BLM/ANTIFA is nearing expiration date and the “Convention of States” is the New New Thing.Oh,and COS needs your donations more than ever 😀😀😀.

      As a former military I was thinking about joining “Oath Keepers” but they suddenly folded like pierced Goodrich Blimp.Still can’t figure out whether they were genuine.At least my bank accounts remains unfrozen (thanks God)

      Mr.Trump turned out to be a Judas Goat… And everything is abso-f… lutely hopeless.

      BTW-my prediction is taken from the article:

      “Tomorrow’s Rebellion Will Be Mass Entropy”

      Regards

      • kitten lopez says:

        you’re stuck in the binary, too. that’s why i’m trying to shake things up open minds. we’re trapped.

        i’m not a Jesus freak (yet) but i’ve always believed that line about you can imprison me i’ll be free being TRUE and without you having to go insane to be free.

        as an artist and creatives and entrepreneurs are the same- we have been isolated – everyone’s been even before covids.

        i want to start the conversation but if you came at me with that “it’s hopeless” crap i’d turn you away for real. you can’t START conversations that way / that’s how you END them.

        there are too many sidelined Petunias and me’s coming online again. we’re lousy with talent. Petunia won’t pay attention until i’ve got something.

        i’m just starting the conversations. going first at being wrong screwed up or IDEALISTIC.

        my friendship with James, and now Wolf, has me believing ANYTHING can work out with time and understanding patience. all that.

        we’re out of balance. no one’s having fun.

        and thank YOU FOR YOUR SERVICE.

        don’t be such a dick with me because if you did that “Eyore Forever!” in battle i’d hit you over the head to shut you up.

        you almost got me. ALMOST. but Wolf’s words were fresh still in my head, “Don’t ask anyone for permission! DIY!”

        i don’t know. but be cool. when i’m here and shy and vulnerable don’t come back at me with “it’s hopeless.”

        yeah. i feel that way, too. but trump may have been a disappointment BUT HE GOT IN. so anything can happen.

        i’m not into joining groups. i’m an artist. they make me itchy. i’m a natural dictator.

        but we have got to find a way to come up with stupid crazy ideas that just might work.

        and long game, Brent. this is a long game and there’s no one superhero.

        i’m an artist. my parents were Quaker activists i’m used to being at the beginnings of things.

        it’s TIME.

        i came back HERE because it’s ALMOST TIME. (smile)

        i’m all about the Wolf Meets for the same reasons. next time we’re getting Petunia on screen. i hate the innerwebs but it is what it is and we’ll work with what we’ll work with.

        thanks for stepping up proper. thank you for the respect.

        you’re not boring anymore. thank you. boring people are actually hostile vampires. i’m reading Christopher Lasch’s book on The Culture of Narcissism and it’s FASCINATING. anyhow i think he’d concur that boring people are actually quite hostile under the surface.

        that’s where we’re at now. read the Culture of Narcissism. i think our first radio show thing will key off THAT. he’s blowing my mind. he’s writing about NOW.

        thanks again, Brent. that was cool you didn’t get pissy like most innerweb people often do.

        (huge smile)

        x

        p.s. okay Wolf. it’s still cool here. but Petunia didn’t write on this one.

        dinner time!

    • dang says:

      At some point, one would wonder, what is my part in the calamity of confusion, you describe.

      An artist might create in order too destroy the falsification of experience they perceive in others. In the end, that is all they have.

      • dang says:

        What should the Fed do ?

        There seems to be a difference of opinion among the oracles that have been anointed to decide such weighty things, ie; the Ivy League Economists who created the problem in the first place in they’re quest for relevency. Now that junior squandered the fortune, what should we do.

        There are those advocates that recommend a stiff shot of the medicine up front, 1% and five subsequent half shots with a beer chaser.

        Then there is the majority, the society board, appointed for the social payback for accepting their families money. They think that baby steps are better for their Manhattan friends.

        NY was once a bankrupt, crime ridden society. Today, NY is a crime ridden society asking that the Fed please don’t make us bankrupt again.

        • dang says:

          Please continue to make everyone else pay for our lifestyle and fight our wars and pay for our children to be better than yours.

          I sound like Thomas Paine’s “Common Sence” pamphlet :

          Which opens with the following paragraph:

          Perhaps the sentiments contained in the following pages, are not yet sufficiently fashionable to procure them general Favor; a long Habit of not thinking a Thing wrong, gives it a superficial appearance of being right, and raises at first a formidable outcry in defence of Custom. But the Tumult soon subsides. Time makes more Converts than Reason.

        • dang says:

          A modern day poet, Mike Tyson, is cited as saying at least two tidbits of lout philosophy. ” Everyone has a plan until they get punched in the mouth” and

          ” If you wanted it you had too steal it” in regards to his growing up on the streets of the bankrupt NY city of the 70’s.

        • dang says:

          The right thing to do is an immediate two percent increase in the interest rate, followed by 3 half percent increases in the FFR and stop paying the criminal banks interest on the reserves the Fed owns. Sheesh.

          Reduce the level in the punch bowl. Inflation is destroying The savings of all Americans by 10% per year, more than the
          Fed is saying. For the benefit of a small group of oligarchs.

          The recipients of the 4.5 trillion $ the fed pumped into the bank accounts of the wealthiest 1000 people in this land of fools

          This morning was the right time for a wopper of a recession for 89% of America. We’re used to it for the past 30 years.

        • dang says:

          Recession is just like yesterday for most Americans, paying for walmart’s low prices. XI and walmart and the right kind of communism, slaves.

  50. Michael Engel says:

    From zombies (US comatose) to backwardation (TP, dishwashers, RE, Savanna..) and back to zombies, in repetition, until the system decay, have no pulse.
    The Fed cannot revive the zombies with mouth to mouth.

  51. Michael Engel says:

    Wolf, 1H clock backwardation.

  52. Swamp Creature says:

    J Powell is not stupid and is not evil like some are saying here. Powell is suffering from some form of mental illness. As a former Federal worker who worked for James Clapper in one of the 3 digit Intel Agencies, I ran into a lot of people like J Powell both on the gov and ctr side of things. About 35% or more of the mangers there had the same symptoms as J Powell. They beleived their own lies, no matter what facts are presented before them. Anyone who disagrees or doesn’t recite the prescribed talking points is dismissed and cancelled. It is very dangerous to have a man like this in charge what amounts to the fourth branch of government.

  53. Big G says:

    The only way to solve issues like this and many others is sound money. Gold Silver Bitcoin or some combination or something that is the peoples money and not controlled by anyone. All troubles across the planet are due to central banks. They fund our troubles.

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