The Housing Bubble Popped, and the Fed Can Let it Rip

Raging inflation knocked out the “Fed put,” and banks are no longer on the hook for mortgages; taxpayers and investors are.

By Wolf Richter. This is the transcript of my podcast on Sunday, Oct 30, THE WOLF STREET REPORT.

So we have a weird situation. Not weird actually. Just reality. After mind-boggling ridiculous spikes, home prices in most markets are dropping, and in some markets, they’re plunging at the fastest pace on record. And in some markets, they’re going down faster than they’d spiked on the way up. And it’s just the beginning. There is nothing magic about this.

The average 30-year fixed mortgage rate has more than doubled since last year, from less than 3%, to now over 7%, the highest in 20 years, the highest since 2002. But there’s a difference between 2002 and now: The magnitude of the home prices.

Home prices have shot up to ridiculous highs in the era of interest rate repression and money printing by the Federal Reserve. But that era ended earlier this year. Now we have surging interest rates and the opposite of money printing: quantitative tightening.

So now we’ve got sky-high home prices, and I mean ridiculous home prices, and mortgage rates that were normal when home prices were just a fraction of today’s prices.

Over the past two years, we’ve seen spikes of home prices of 30% to 60%. In the Miami metro and the Tampa metro, for example, home prices spiked by 60% in two years, according to the Case-Shiller index. Which is just nuts. And we know how this is going to end and it already ended:

With 7% mortgage rates after a 60% price spike in two years, sales have plunged, and those sales that are taking place are taking place at lower prices.

Over the past 20 years through early this year, home prices in expensive markets have tripled or quadrupled, according to the Case Shiller index. These markets include the metros of Miami, Tampa, Los Angeles, San Diego, Seattle, San Francisco, and others. The Case-Shiller index tracks 20 metros. There have been similar price spikes in other markets.

These price spikes are now getting hit by the 7% mortgage rates. And home buyers are reacting exactly the way they’re supposed to: They’re pulling back from agreeing to pay those ridiculous prices.

And we see that in the numbers everywhere, and they’re pulling back more every month. They’re pulling back because they cannot afford the mortgage payments at 7%; and even cash buyers, including institutional buyers that buy rental properties, they are pulling back; and they’re pulling back faster than regular home buyers, because they see how home prices are now skidding, and professional investors don’t want to buy at the top and ride the whole thing down.

The plunge in sales has just been stunning, and it’s getting worse. The most immediate view on what home sales might turn out to be, the most real-time view of current home sales, is the number of applications by home buyers for mortgages to purchase a home.

And those mortgage applications have collapsed by 42% in the latest week, compared to a year ago. They started plunging in February this year, as mortgage rates were rising, and they continued to plunge. And now they’re down 42% from a year ago.

But compared to early 2021, so that was roughly the peak of the housing frenzy, mortgage applications have collapsed by 52%. They are now well below the lows during the lockdowns in the spring of 2020. They now match the lows in 2015. And beyond that, they’re the lowest since 1995.

And as I said, investors are pulling out even faster.

This collapse in mortgage applications in October is an indication of where closed home sales will be, and when we’ll get this data in November and December, it’s going to be gruesome.

About ten days ago, the National Association of Realtors released the data for home sales that closed in September. And these closed sales in September plunged by 24% from a year ago and by 30% from October two years ago.

Closed sales in September were barely above the two lockdown months in the spring of 2020. But since then, volume, based on purchase mortgage applications, has gotten a lot worse.

Cash buyers and investors are pulling back even faster, and their share of total home sales has dropped further, now down to a share of 15%, from a share in the range of 20% earlier this year. They’re pulling back because they also see what’s going on in the housing market.

What’s going on in the housing market is that the housing market is now freezing up, with potential buyers not even willing to apply for a mortgage, and not even shopping for a home.

So sure, you will hear that the “right home, priced right, will sell,” and that’s nearly always true, but the key here is “priced right,” and “priced right” means priced where the buyers are, and not priced at some aspirational level in the seller’s imagination.

When the market is frozen like this, it’s the result of a standoff. The buyers are either not interested in buying or cannot afford to buy homes at those prices; those buyers are still there, but now they’re a lot lot lower.

And sellers don’t want to sell at prices that they could sell for, and so they don’t put the home on the market, or they pull it off the market after a couple of weeks of no traffic, and they’re muttering to themselves, “and this too shall pass.”

They’re hoping for a pivot by the Fed on interest rates, and they’re hoping for the Fed to restart the money-printing press, and they refuse to see that inflation is raging at over 8%, and that the Fed must get this raging inflation under control, and that the home price spike is feeding into this inflation, and that the price spike must be unwound to deal with this inflation.

So that pivot isn’t happening. The Fed now too sees that this inflation has moved into services, while fading in some goods, and that inflation raging in services is devilishly hard to stamp out, and services is where nearly two-thirds of consumer spending ends up, it’s the biggie, and when inflation in services takes off, it’s a huge mess, and that’s what we’ve got now.

This will take a long time to get under control, it may take years, nobody knows, and interest rates will go higher from here and stay high for longer than people expect because, after many years of global money printing, these trillions of dollars in excess liquidity are still chasing after everything.

For many years, QE and interest-rate repression didn’t trigger inflation. But then the dam broke 20 months ago, and inflation flooded the globe, and it’s even taking off in Japan, and it’s turned into a horror show in Europe, and underlying inflation is raging in the United States and Canada, and just isn’t backing off despite the rate hikes.

So potential home sellers now have a problem.  Buyers have vanished at these sky-high prices, and sales that do take place are taking place at lower prices. Sellers a few months ago got higher prices than sellers today. And those who sell now are getting higher prices than those who’ll sell in a few months. Who panics first, panics best.

The last housing bust took five years to play out. Housing busts are not like crypto trading. There isn’t this sort of instant gratification that you get with cryptos when they plunge 20% while you’re asleep, or 60% or 90% in a few months. The last housing bust continued for years after the Fed started its interest rate repression and QE in late 2008 to bail out the banks. It didn’t bottom out until 2011.

Back then there was almost no inflation. Now there is raging inflation, and the Fed is trying to remove the fuel for this inflation before it becomes a much bigger problem, and the Fed won’t cut rates and restart QE with this kind of raging inflation. This time, there is no Fed put and no Fed bailout.

And this time, the housing bust won’t take down the banks, as it did last time, because the banks no longer own the mortgages. The whole industry has changed. Most of the mortgages are securitized into mortgage-backed securities, by entities such as Fannie Mae and Freddie Mac, which are under government conservatorship, or by Ginnie Mae and the Veterans Administration, which are government agencies, and the government guarantees the mortgages. And these mortgage-backed securities are sold to investors such as pension funds, insurance companies, bond mutual funds, etc. around the globe.

If mortgage credit blows up, if there’s another huge wave of foreclosures, it won’t hit the banks; it’ll hit taxpayers mostly, and investors to a lesser extent.

But we’re not seeing any signs of credit blowing up yet. Mortgage defaults and foreclosures are just now creeping up from the record lows during the pandemic and remain lower than any time before the pandemic. So we’re far from that happening, and if and when it happens, it’ll hit taxpayers and investors, and not banks.

So the Fed, which is in charge of keeping the banking system from toppling, won’t have to bail out the housing market because it won’t take down the banks.

And if it wants to because inflation is still raging, the Fed can just let the housing bust rip.

But we’re still far from that. Where we’re now is the moment when this splendid housing bubble popped. Prices are coming down, and they’re coming down hard in many places, and they’re coming down in most markets across the country.

According to the National Association of Realtors, the median price of all types of homes whose sales closed in September dropped for the third month in a row, and is now down 7% from the peak in June. The 7% decline was the largest drop for this three-month period since what I call “Housing Bust 1.”

There were housing busts before, but Housing Bust 1 was the first national housing bust in this millennium. Now we’re tinkering with Housing Bust 2.

According to the Case-Shiller Home Price Index, which lags reality on the ground by 4-6 months the way it’s structured, well, it’s now showing record-fast price declines in some metros, such as the Seattle metro, and the steepest declines since Housing Bust 1 in other metros. In some metros, prices plunged faster than they’d spiked. All metros in the index are showing price drops, and this was based on deals a few months ago, when mortgage rates were at or below 6%. Now they’re over 7%, and the housing market has frozen up.

I build charts for each of these metros. You can see them on my site Wolf Street.com. You can just Google the phrase, “The most Splendid Housing Bubbles in America.” One chart for each metro, going back 20 years. Those charts are just stunning, including the plunges in recent months. If you haven’t seen them yet, check them out.

So there are still sales taking place, but at prices where the buyers are, and buyers are a lot lower.

The real estate industry is now lamenting that homeowners aren’t putting the home they live in on the market, because they financed it at 3%, and they cannot move because they cannot afford to buy a home at 7% mortgage rates.

But in terms of inventory, this is a fake argument. Because if I buy a new home and sell my old home, I take one home off the market and add one home to the market, it’s a zero-sum game, and ultimately nothing changes. Realtors love it because they get paid their commission on the churn, and that’s why they lament the lack of churn. But in terms of the market, it changes nothing.

According to the Census Bureau, about 10% of all housing units are vacant. In San Francisco, the vacant home issue is such a problem that there is now a vacant home tax on the ballot.

When I buy a home and move into it, but don’t sell the home that I lived in because I want to ride the housing bubble all the way up, that’s when I took one home off the market, without adding one to the market. But eventually, when I want to sell it because now home prices are dropping, and the carrying costs are high, and this isn’t fun anymore, and maybe my stocks are down 25%, and bankers are breathing down my neck, well then when I put the vacant home on the market, that’s when I add a home without taking one off. And when lots of people do that, inventory jumps. That always happens during a housing bust.

But we’re still in the state of a standoff, when the housing bubble just popped, the state where potential sellers are still trying to outwait this, hoping for a Fed pivot that’s not going to come.

The actual sellers, those that put their home on the market and sold at whatever price they could get, well by panicking first, they panicked best. And the longer potential sellers are trying to hold out, the lower the price will be. And then they’ll end up chasing those prices on the way down. That’s what happened last time.

You can subscribe to THE WOLF STREET REPORT on YouTube or download it wherever you get your podcasts.

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.




  293 comments for “The Housing Bubble Popped, and the Fed Can Let it Rip

  1. joedidee says:

    while I believe there is slow down
    2 recent sales say market not quite there
    1 was for dumpy 1,600 SF home central Tucson right on cusp of yuckville
    $349k – 7 showing last week and 2 full priced offers – winner has $120k down and is retired UA professor – about 2 miles from UA
    2 was across street – small 1200 SF home nicely done – good neighborhood 2 weeks on market and inspection is now done at $315k
    multi-unit market very hot yet with all cash california buyers

    • Wolf Richter says:

      hahahaha, same old same old. You have given zero info on how aggressively those houses were priced in order to sell. You price aggressively, you can sell. That’s what this article is ALL ABOUT. Go read the article, it doesn’t bite.

      • Leo says:

        Joedidee, the data is sales averages from case shiller and the data is 4 months old so its way worst now.

        The fact that you have to jump into it clearly shows that you’re desperate to hide the truth. This makes me wonder of you are in RE business. Are you trying to screw over naive first time buyers by misusing the lack of transparency in real estate markets.

        Quoting a single random sale will not make your case.

      • Depth Charge says:

        “Go read the article, it doesn’t bite.”

        With all due respect, Wolf, I think it’s biting a little too hard for some!

      • andy says:

        Wolf , how much time do you spend writing/podcasting/researching? Is this more than a full-time job?
        Great work btw, and thank you for keeping us informed and educated.

        • Wolf Richter says:

          I usually wake up at 5 am (shitty sleep), and work till 11 pm, interrupted by eating, exercising, and a leisurely dinner with my gorgeous wife, accompanied by 1-2 IPAs, well, mostly 2, and when commenters get to me, 3, LOL

          On weekends I follow an even lazier pace, still getting up at around 5 am, because that’s all I can usually do, but I spend more time exercising and doing a few other things. Saturday nights we usually go out, and afterwards, when its quiet around the neighborhood, I might record the Wolf Street Report. I started doing this recently, works really well. During the day, there is way too much racket around here (groups of Harleys going pop-pop-pop-pop up the hill in like 4th gear full throttle in an effort to set off as many alarms as possible, prop planes and helicopters flying by, muscle cars screaming up the hill. You name it, I hear it. Pain in the butt. But it’s quiet at night.

          I spend something like three hours a day on the comments alone — sometimes less if there aren’t that many, and sometimes a lot more. I read every comment and I reply to a bunch. I spend time weeding out spam, porn, trolls, hateful stuff, you name it, I got it.

          I spend about two hours a day on emails.

          Then there is all the administrative stuff, server issues, ad issues, fiascos, debacles, brushfires, and nightmares I gotta deal with. That’s the part I don’t like, but it comes with the one-dude-shop territory.

          Why? Because I love what I’m doing, and I’m having a blast doing it, mostly, and the site is growing and is getting pretty big for a one-dude site, and so this is like being on perma-vacation. Luckiest man in the world :-]

        • VintageVNvet says:

          ”I spend time weeding out spam, porn, trolls, hateful stuff, you name it, I got it.”
          I apologize for yelling,
          BUT:
          THAT IS EXACTLY WHY I READ ALL THE ARTICLES AND ALL THE COMMENTS AND AM VERY HAPPY TO SEND WOLFSTREET.COM $$$ at least twice a year…
          And my sincere thanks once again for your work!!

        • andy says:

          Sounds great, Wolf. And omg how much effort it takes. I saw you in San Fransisco get together once. Great job staying in shape, even with the IPAs.

        • Tight Purse says:

          Wolf, this is definitely a win win situation. I’ve been a reader for years and I’ve always enjoyed your articles.

        • cb says:

          @Wolf – What is an IPA?

        • Wolf Richter says:

          India Pale Ale, a type of beer, usually craft brew, that has a lot of hop for a lot of complexity, that (in my favorites) starts out fruity and maybe a little citrussy and gradually veers into that hoppy bitter flavor that we appreciate. The first few sips of a good well-balanced IPA, where the flavors last for minutes in your mouth, are a pleasure you might get addicted to. Cheap thrill too.

      • Doug says:

        Thanks Wolf, great article. The seller is truly the last to know. Just a quick refresh to those haters out there (sellers).
        5 steps of grief 1. Denial. 2. Anger. 3. Bargaining. 4. Depression. 5. Acceptance. Just saying.

      • Travis says:

        IMO always such great insight by Wolf. I sold my condo that I bought in 2020 before things went parabolic for a 50% gain. I made 50% profit in 2 years in little Bozeman MT! I’m renting now in Carlsbad CA waiting for my opportunity to buy again. My guess is we have another 9 months before we get some good 20-30% corrections in different regions. The mountain west is screwed. Folks there don’t make enough to justify the current market. So Cal might favor a little better, but a 30% correction from the top is warranted. I’m following closely and hoping by the time my lease is up in July 2023 we have some big corrections.

        • Bruce Plesk says:

          Probably won’t happen that fast – be prepared. Real estate crashes are a long, slow implosion. Volume always drops first, then prices. As a commercial lenders, we suspected an end to the party in ’05 and knew it was real in ’06. Most people think of it as an ’08 crash. Recovery didn’t start till ’12 or later. 7+ years.

    • Jerry says:

      As a 30 year professional Realtor, this is one of the dumbest (lack of real stats and figures) I have ever seen.

      • Tonytony says:

        Everytime a realtor makes a comment it’s biased… The party is over my friend, just accept it.

        And no, you were not making lots of money because you were smart. You were simply lucky with the economic conditions the Fed has created.

      • JeffD says:

        I saw only real stats from official sources. Not sure what article you were reading. RTGDFA?

      • Gilbert says:

        If becoming a realtor required an advanced degree I might be sympathetic. But other than lottery winners, the only people I know who made a boatload of money in the last few years were realtors. Hopefully (for them) they have put aside a bundle for the hard times coming.

        • robert says:

          In Canada, it used to cost a few hundred bucks to take the courses and get started after a few months. Now, depending on the region it could be $10,000 to get licenced plus expensive maintenance costs every year. It’s big business now.
          There’s a big flush at the end of every cycle. Half or 3/4 of the newbies and part timers give up, and the pros carry on. There’s also an old expression in commission sales:
          20% of the salespeople make 80% of the money.

        • Mr. House says:

          “If becoming a realtor required an advanced degree I might be sympathetic.”

          You learn slowly don’t you?

      • Bobber says:

        Jerry,

        My neighbor is a 35-year professional realtor, who is highly successful, and he says this is, by far, the absolute worst time to buy a house in his lifetime, which makes it the best time to sell a house.

        I trust him, and the statistics obviously support his view.

      • cb says:

        Jerry said: “As a 30 year professional Realtor, this is one of the dumbest (lack of real stats and figures) I have ever seen.”
        ———————————————-

        provide some stats and figures to make the case the other way …….
        got any?

      • Yerfej says:

        Hahahhaaha you sound like you’re describing piloting the space shuttle, get real.

    • Swamp Creature says:

      I noticed creative financing is starting to come back. Lenders are pushing variable rate mortgages to mitigate the effects of the higher 30 year fixed rate. But what happens after 5 years when the market rate is up to 12% or higher. What are these people going to do when their mortgage payment goes up 50% based on a calander date????

      • Old Ghost says:

        On walks around my tiny corner of Wisconsin, I have noticed that “For Sale” signs on homes are multiplying like rabbits. Some signs have been up since July.

        I don’t follow real estate closely, and this tiny metro is too small to get the attention big cities do. There seems to be no local media coverage of housing either.

        I do believe interest rates will approach 20% before this mania is fully corrected. I suspect pension plans and small “investors” are in for a rough ride.

        • MiTurn says:

          My in-laws bought a house in the Portland area in 1979 at 18%. They eventually refinanced to something more reasonable, but that was the market then.

        • joe2 says:

          I don’t know about 20% rates but I have lived through 13% mortgage rates. Seller financed mortgages were popular. And a combination of bank of mom and dad, high rate bank mortgage, and seller financed components were used. If the seller only has to finance the profit after mortgage payback, it can be a very profitable investment. People were creative.

          I bought a repo from a bank at the time but it’s funny I don’t remember the terms. It was back in the 80s on a corporate relo and the company picked up a lot o the costs.

      • Jones says:

        They will go into forbearance. Ad infinitum. Just like with the ‘student debt’. And any political party that suggests otherwise will become very unpopular, mostly because of the sheer volume of the perpetually distressed.

      • Don says:

        What goes around comes around. Here we are with the variable rates and 5 year arms. If rates stay high and homes depreciate. The owner will be bringing money to the closing table to refinance that home. Additionally, with the higher rates they might not qualify for the loand due to debt to income ratio might be out of sort. I personally saw alot of this in the meltdown around 2010 with the foreclosures. As an appraiser of 25 years I was astonished at the number of professional educated people who had these type of loans.

    • dang says:

      While I have no opinion about your stated BS, just like I have no opinion about the morons that are celebrating the collapse of the housing bubble. The GFC 15 years ago was about the collapse of the first housing bubble caused by the same risk vector established and caused the savings and loan crisis:

      The banks writing and approving loans, collecting fees and points, and passing to the tax payer the risk. We all think that it is our fault, while it isn’t. The game is rigged.

      • dang says:

        The speculative component in the housing market seems to be tamed and the “market” is exhibiting signs of rationality, after a journey into the commercial frenzy of make believe housing prices.

    • GOAT Wolf says:

      Great Job Wolf to see you on Wealthion!

  2. A says:

    All the “smart” successful people I know own multiple properties right now.

    All of them are saying the same thing, “rates are coming back down soon because the Fed won’t let housing prices stop rising.”

    Main street doesn’t believe a word J Pow says, they think it’s all a bluff.

    • Cas127 says:

      Well, 20 years of drug pushing will get you a lot of addicts.

      • Apple says:

        Interest rates to purchase a house were 8% in 2002.

        • Cas127 says:

          And…median prices were half of today’s (or less).

          Funny how that works…almost like math or something.

          (Especially when 80% of the intervening 20 years saw horrible employment growth and stagnant incomes…yet glitter unicorn ZIRP made magic home price doubling/tripling possible despite the immiseration).

      • cb says:

        @ Cas127 –

        brilliantly stated, and rather sad ……………….

        as the crack dealers were the corrupt and evil money lenders and their FED with a complicit government including Congress and Presidents

        the citizens were herded just like a bunch of cattle to the feed pen ….. then to the slaughter house

    • butters says:

      Part of me thinks they are NOT wrong. If the housing crash, Powell’s PE buddies will be taking a huge loss….I doubt he will let that happen.

      But at the same time if the sellers expect the ‘Corona gain’ to stick, that will not happen imo. Powell will most likely put a floor at Dec 2019 prices. Still bubble territory, but he might be ok with that.

      • Leo says:

        There is a 4 month lag in case shiller data. Many RE investors know that they have already missed peak and are looking at 20% below. As bulk layoffs start, they would panic to get 2019 price and realize that the extra house is just:
        1. Losing Value
        2. Gathering mold.
        3. Costing property taxes
        4. Costing maintenance.
        5. Costing utility bills.
        6. Costing HOA.
        7. Costing Insurance.
        8. Would just not sell!

        • DougP says:

          Not every investor buys to sell. Some actually keep long term and build wealth and don’t care about the value of the home. If managed properly your rent covers all expenses and the tax benefits are also nice. Nobody talks about this, but even if you keep the home for many years and the value is the same as when you bought it, you eventually have a free house. Your tenants paid for the house for you, and you still own it. The bonus is that the value over the long term will likely increase which is just icing on the cake.

        • Leo says:

          DougP, In US, most people rent apartments and not houses.

          In last 2 years, House prices went crazy and many people bought a new house to work remote without selling the old one, hoping that it will be a great long term investment.

          These old houses can’t go for rent.

        • eg says:

          Leo, I have noticed a few houses in my neighborhood that were for sale are now advertised for lease — I assume the sellers realized that they are screwed.

          But I’m not sure that they’ll be able to lease them either …

        • Flea says:

          To Doug p there is no price increase in house only devalued dollars = pretty simple

        • crazytown says:

          I received a hilarious email from Better.com (you would recognize them as the company where the CEO laid off a bunch of people over Zoom and got some backlash for .23 seconds before everyone moved on to the next thing to be outraged about). You KNOW they are getting desperate when they sent out drivel like this.

          The outline of the email was as follows:

          Why a crash isn’t in the cards. Worried about the future of the housing market? You’re not alone. Experts say prices may fall, but the housing market will remain stable because:
          1. Default activity is record low.
          2. Demand still far outpaces supply.
          3. Lending is more controlled.

      • Depth Charge says:

        “Powell will most likely put a floor at Dec 2019 prices.”

        You keep moving the goal post, butters. First you said there would be no QT. Then it was that the FED would pivot. Now you’re talking about some imaginary “floor” for house prices that the FED has up their sleeve. Whatever butters says, know that the opposite is coming.

        • electroneuter says:

          The belief that Powell has the mandate or a wish to put a floor under any asset class is astounding. And housing of all things? Mr. Powell will execute QT as planed and raise rates to where the inflation will be extinguished. Whatever the cost might be. Stocks, bonds, housing. It is all going down, but once a wise man put on a mug “nothing goes to hell in a straight line”. I always wondered why it is like that, but now I can see the cause for the friction in the downfall, its the resistance of the investor crowd to have a mental breakthrough and accept the necessity and inevitability of the major asset devaluation. The trashing will be prolonged, multi-pronged, a bit of a slow-mo, but eventually epic in a hindsight. Good luck ya’ll.

      • Ed C says:

        Why would you ever think that Powell “will mostly likely put a floor at Dec 2019 prices” ??? He is fighting inflation. Collapsing housing values are what he wants to see. He’s the Fed chairman, not a RE speculator.

        • Cas127 says:

          Well, you gotta remember…

          Fed has been acting as God of RE Speculators for 20 yrs…

          DC *may* be chastened/scared sh*tless…but they should have been scared sh*tless many, many times in last 20 yrs.

          And they weren’t.

          (Beyond wheeling Geithner out once in 2009 looking like he was going to the guillotine).

        • cb says:

          @ Cas 127 –

          and self humiliating Paulsen ————- on bended knees

          what an embarrassment to himself and humanity that sachs alumni was and is ………………

        • Lisa_Hooker says:

          I was at a “talk” by Tim and Hank in the Auditorium Theater in Chicago hyping Paulson’s new book. They got into such unbelieveable crap that I walked out after about 20 minutes.

      • Flea says:

        Who made foul ball POWELL ,god he’s a puppet of fed ,poor guy doesn’t stand a chance . While other people are pulling the strings to make him dance. By the way do these politicians think there kids,grandchildren won’t be slaves to China

        • phleep says:

          If you don’t like Powell, wait until you meet Xi. He will get his foot in it so bad, for the Chinese, it will make this Fed griping sound lightfooted. Our RE markets look weird, but have you looked at theirs? Imagine every American a captive home buyer under their level of financial repression! They are all subsidizing the busted banks and the Belt and Road.

          Yeah, this inequality effect is de-equitizing the American masses, for now. Then again, the Boomer population will soon melt like summer snow, and those houses will hit the market.

        • cb says:

          @ Flea –

          many of these politicians have sold their soul to the devil
          a faustian bargain
          they avoid looking back or forward

      • Kurtismayfield says:

        Sometimes people post here to convince themselves. This is one of those times.

        It’s a buyers market now. Neighbor had a showing that took 90 minutes yesterday.. and it’s the only one he has had this week.

      • Rosarito Dave says:

        I read this on Fri morning AFTER the Jobs report came out… It only took about 43 hours after Powell’s hammer came down for the drumbeats for a pause to begin again… lol…

        • Rosarito Dave says:

          For some reason the quote didn’t post, so here it is
          ————————–

        • Rosarito Dave says:

          I guess the copy and paste didn’t work, so I’ll manually type it here… This is the OPPOSITE of Don’t Fight The Fed!
          ———————

        • Rosarito Dave says:

          Well, for some reason it didn’t even post when I typed it in manually…. It was from an interview on Bloomberg TV where a CIO said he thinks the Fed is closer to pausing (by Dec or Jan), than the markets are pricing in and the Fed is jawboning even though they are ready to pause…

          It lost A LOT in the translation. No idea of why it wouldn’t post, especially when I manually typed it… Oh well, I tried…

    • Josh says:

      I’m in the Larry Summers camp… But still think there’s a chance that the Fed is still jawboning the market. Faith conditioned us that way over the last 20 years.

    • butters says:

      They are not mainstreet, they are more like speculators.

    • YuShan says:

      Yeah, we are still in the denial phase. Funny how history always rhymes.

      • RH says:

        I wonder how much effect the decline in the mainland Chinese investors’ RE and other assets in China is having on US markets? In Southern California, allegedly, lots of RE was bought through “white gloves” (people pretending to be owners for a fee to hide CCP cadres’ names, which cadres are the real owners.) They may jump and panic if US RE prices were to start to plunge. LOL

        I love the people who just bought into Chinese stock markets, because of a rumor leaked that covid lock downs may end in March 2023. LOL. I will wait for the peak and sell the darn, mainly European stocks mutual fund I hold that foolishly out my money in a few companies there. There IS a sucker born every minute.

        • Evelyn Wood Head says:

          Do you know that a mutual fund only emulates the market that it is named after and that the money that you invested in the particular fund can be used by the fund for what ever investment that they see fit and that if they suffer a loss you are the one that losses and that if the money disappears there is no recourse for you. It’s all clearly spelled out in the prospectus.

    • gametv says:

      It all depends on how inflation reacts. I really cant see them saving the housing market if inflation is too high and then end up with even higher inflation.

      Be First to take action when there is a long term trend ready to unfold. Waiting always leads to a worse outcome.

      • GW says:

        There is good reason to believe that inflation will be hard to get under control for the next few years. The trends in energy and China import prices combined with the need to invest in the electric grid, shifts in trade and manufacturing patterns, again requiring investments all point to an investment boom. Also China and the oil exporting countries have ramped up direct investments i.e. they are not content anymore buying just treasuries and stock. The the baby boomers are retiring tighten the labour market. On the social policy side the Gini index is a high as in the 1920 and rumbling of social unrest can be heard and whoever is in control of the levers will have to take that into account. Inflation is the politically most expedient way for re-balancing.

    • bulfinch says:

      “All the smart successful people“

      …Working title to a lost Bret Easton Ellis manuscript.

    • Jdog says:

      Smart people understand that in economics just as in physics, for every action there is an equal and opposite reaction. What is happening in the economy now, is a result of what happened in the past.
      The FED does not have a magic button they can push and alter the laws of economics.
      Rates are not coming back down because the Treasury Auctions are what set those rates, and they are demanding higher rates as liquidity declines and the demand for money to finance government increases. As profits decline, and the recession continues that trend will get worse, not better.

      • Tonytony says:

        That is exactly what I tell everyone! It truly is like physics… And it helps to think of impacts visualizing it like that.

        Those who thought we could come out of COVID economic pain with money printing without consequences were delusional. Nothing comes for free..

      • eg says:

        Jdog, I would caution you to look to biology rather than physics for analogies where economics is concerned.

        • Motorcycle Guy says:

          eg,
          “Jdog, I would caution you to look to biology rather than physics for analogies where economics is concerned.”

          Why??

        • JeffD says:

          I think he means econmics is purely psychology/behavioral and has nothing to do with reason or physical laws. Very rarely does pricing make any sense.

        • Jdog says:

          No, people may act emotionally, which may influence some of what happens, but that does not change the laws of supply and demand, which dictate all of economics.

        • JeffD says:

          @jdog, but what about when supply and demand are engineered, like Rolex or De Beers? Essentially all luxury goods are not driven by supply and demand, but raw emotion. This includes luxury cars and “high end” washing machines. Why do faucets cost $250, while garbage disposals only cost $90? Pricing is all in peoples heads.

      • cb says:

        “Rates are not coming back down because the Treasury Auctions are what set those rates,”
        ——————————————

        complicit with the FED

      • russell1200 says:

        Biology vs Physics

        We live in an open energy system (aka the sun). There are constraints/limits of a sort, but it isn’t a one-to-one winner/loser ratio. To the extent that economics is based on the world we live in, there should be some of that same dynamics.

    • Yort says:

      Inflation is too high when the public notices it, and notice it they have as midterm 2022 results will soon show that citizens despise financial chaos caused by inflation…when high enough to notice…

      But beware, 5%-6% feds fund rate will ultimately “break something” in a very big way due to the global debt house of cards construct we all exist within currently. So nothing is black or white when it comes to the Fed future rates. I’m thinking they be forced into the “grey zone” and will have to raise the inflation goalpost to 3.0-3.5% which will be much lower than 8%, but not much higher than the old 2%, and thus “not too high” for the public to notice yet high enough to reverse feds funds rate after something gets breaks in a very big way…

      I’m buying MBS at in the 7-10% range so either my best educated guess turns out right in the next few years, or I take a near term hit on a small percentage of my gambling funds as lets be honest, markets are manipulated by both Congress and the Fed, to the point that Vegas is odds are predictable, but not so much our centrally controlled markets…

      • VintageVNvet says:

        Yort: ”markets are manipulated by both Congress and the Fed, to the point that Vegas is odds are predictable, but not so much our centrally controlled markets…”
        agree about the Vegas odds being more predictable, but those also have been manipulated — six decks being dealt at blackjack for instance,,,
        But, ya left out the main masters who actually own almost everything as has been well documented and pull the strings of puppet politicians and FRB
        call ’em oligarchs, 0.01%, etc., and be sure to understand they are of all ”ethnic” groups, nations, etc., and while our global owner group certainly IS fungible as it always has been, the result is also as it always has been, so far.
        USA was and will continue to be a grand experiment in democracy and capitalism, and while WE the PEONs can hope that the errors in our laws and their applications will continue to improve, it should be obvious that sooner and later it will take more periods of immense effort to continue improvements…

      • cb says:

        “will ultimately “break something””
        —————————————-

        a tiresome line …………………
        every “insightful” expert is wearing it out …………..
        things are broken ,,,,,,,,,,,,, they have been broken for a long time

        • Mr. House says:

          “they have been broken for a long time”

          Yep, wonder if the upcoming years will bring back people jumping from high elevations……….

          “What we got here is a failure to communicate………….”

      • Marko says:

        Spot on. I agree that the acceptable inflation rate target will be raised.

      • Seen it all before, Bob says:

        “I’m buying MBS at in the 7-10% range”

        How are you buying MBS’s in the 7-10% range when until recently, mortgage rates have not been above 7% in over 20 years or above 10% in over 30 years. The underlying mortgages are paying far less.
        You must have received a huge 50% panic discount on these MBS’s to get that ROR considering mortgage rates in the last 3 years have been half of your interest return.

        Fire Sale on MBS’s? The Fed is facing uncertain times.

        If my 100K mortgage balance is part of your tranche, I’ll pay you 50K to pay it off. Without doing the math, it may be a win-win for both of us in the long run. :-)

    • Mike R says:

      Interest rates for mortgages will easily hit 10% in 2023, and it will be eons before any Fed pivot.

    • Jones says:

      It IS bluff- JP can be fired by the ruling regime. He is not a scotus judge to afford independence in decision making.
      Remember 2019?

      • Venkarel says:

        The FED president cannot be fired, this is a myth. He is appointed for a four year term that was just renewed.

        On the other hand everyone has pressure points and he can probably be forced into “early retirement” or “have an accident” if absolutely needed.

        • Venkarel says:

          Also in todays day and age he could possibly be impeached, successfully canceled or the FED charter could be changed to allow for the removal of the chairman.

    • polecat says:

      So in other words, the Fed is angling on the fly .. catching many lunkers off guard swimming in their deep pools of dept, thinking those hooks are .. barbless!

      Gonna need a bigger trophy wall, Wolf..

    • RW says:

      The Fed could be forced to pivot if their rate hikes induce a serious recession. If enough businesses that are debt dependent start cutting employee hours and then employees, this will herald in additional job cuts as the loss in demand will affect businesses that aren’t as dependent on debt.

      The year over year inflation numbers are going to start coming down starting early next year, because of the baseline effects of earlier this year. Fed will raise again and maybe one more, then hold rates as the year over year inflation numbers fall quickly (again, baseline effects). Something will break between now and then if it hasn’t already, recession will further crush inflation, and the Fed will be rapidly lowering rates again. If nothing breaks, then the Fed will keep rates high until the inflation numbers approach their target.

  3. Cas127 says:

    And don’t forget the very large number of apartment units under construction.

  4. Green Acres says:

    My neighbor just sold their house (technically it’s in pending) and over the last two years starting November, 2020, it went up about 40%.

    Had they sold in June instead of now, the gain probably would have been 60%.

    I noticed that they placed their home for sale about 7% under the “Zestimate”. This brought out some buying interest and it went to pending quickly.

    They did better selling their house than I expected. I thought it would sit there because of current mortgage rates and they would have to reprice lower. Nope, it sold about 3% higher than they were asking. Surprised me.

    • butters says:

      Every bagholder thinks he got a great deal.

      Suckers are born every minute….

    • gametv says:

      The current crop of buyers are financially naive. Housing markets are based on recent comps, so every couple months there is a fresh set of comps. The pool of people willing and able to buy at these prices diminishes over time, and each successive wave of comps is lower. At some point, the deniers will realize that the trend is firmly down and that will further shatter the market. Home prices are built on the expectation of a future profit, when that becomes an expectation of a future loss, buyers pull back their bids even more. A bottom will happen when many distressed homeowners sell underwater and the liquidation of those homes at prices that cant even be fathomed right now hit the market.

      If inflation doesnt collapse really fast, there will be no Fed interest rate reductions, so the bottom will be much further down than most people think, but this is going to take time.

      The saying that it is not timing the market, but “time in market” will be a negative as home prices collapse. The longer potential sellers take to sell, the worse for them.

      • RW says:

        ^ this

        I would add though that if nothing breaks between now and spring, a second big spike in oil price could be the straw that breaks the economic camel’s back. A crushing spike in oil combined with anemic lending would bring the global economy down and inflation right down with it.

    • Beardawg says:

      Green Acres

      So they made a 40% increase after 2 years? Dang…..still a great profit. If they wait until 2024 or 2025, they would probably break even. When it is all said and done, we will probably be back to late 2019 prices, which, in 2025, is like having had ZERO appreciation for 5 years – which equates to a 15-20% correction compared to normal 3-5% annual appreciation. Over a 5 year period, that can be mentally taxing.

      • Depth Charge says:

        You’re just making sh!t up based upon your own personal dreams and fantasies, irrespective of economic fundamentals.

      • Jon says:

        When all is done I think we’d go back to 2017 prices.
        A lot of people say 2019 prices which I don’t belive and agree

        • BP says:

          A reminder that interest rates are now about double what they were in 2017 or 2019.

        • BP says:

          I also forget to mention we also had QE back then and now we have QT.

        • Flea says:

          In depression housing lost 70-90 % ,and this bubble is BIGGER

        • Zero Sum Game says:

          I can do one better: When all is said and done I think the entire economy will fuse into a tiny ball of aluminum tin foil by 2027, sharply displaying a shiny glimmer of it being free of all debt concerns.

    • bulfinch says:

      It was the same in ‘08-‘09. There’re buyers who have situational drivers or emotional investments who are not so much dissuaded by broader matters of dollars & sense. Desire is powerful/deadly stuff.

      An old pro once told me something that I’ve held onto for almost 30 years when it came to buying at auctions: If you’re in a hurry, be ok with overpaying.

    • Thunder says:

      Green Acres,
      Houses rot in the Sun and fixture decay at about 2 % pa. That is if you do not continually repair and replace for 50 years the improvement on the land at that future time is zoned D7.(dozer removal)
      A rise of 60% in two years in explained only by interest suppression not by any increase in the value of the home. It remains the same home + improvements – depreciation.
      Total madness of the FOMO was the driver of people offering over ask. Now they cry because they paid 60% over reality and want to be bailed out of their own stupidity.
      House are sold for numerous reasons and these are fixed reasons and a handful only like divorce, retirement, new job ect. Buyers are basically two types, All Cash , normally downsizers and the Mortgage Restrained, from starter buyer to upsizes who need to borrow to bridge the ask.
      Homes will always sell for the agreed price dictated by the type of buyer and the needs of the seller. There is only 2 rules I use.
      You are the buyer, you have multiple choices for the money you have. The Buyer has a fixed asset and desperately wants what the buyer brings to the table, the Freedom of the cash released from the sale after costs to give them multiple choices in lifestyle changes.
      rule two – The inflation is only in the land / square area and the improvements are a millstone that comes on it. Not ever an investment only a security.

    • Here it comes says:

      I’d wait to see if it closes. In my area there are still homes going pending (not too many, but enough), but almost nothing closing.

      When the rubber meets the road right now, deals are falling apart in large numbers.

      • MiTurn says:

        “When the rubber meets the road right now, deals are falling apart in large numbers.”

        Wanna-be buyers can’t qualify?

      • Gilbert says:

        Agreed. Many ‘pending’ sales here never happened. They are listed again at the same price and will sit there until the seller realizes that they missed the boat.

  5. phleep says:

    This is historic. The rug is being pulled, after so much foolishness. We’ll see when and how the new housing plunge protection, if any, kicks in. The boomers are aging out and becoming sellers. big pieces will move around, with big disruption and opportunity.

    Thanks Wolf for your clear, up-to-the-minute window on this.

    • Cas127 says:

      First of the Boomers turned 65 in…2011.

      Every home price boom since then has been built on demographic sand.

      (The price boom before that was based on not-my-problem underwriting and outright fraud…which continue apace post Bust 1.0.)

      But who coulda knowed?

      (Major eyeroll)

      • Bruce Plesk says:

        Disagree. Boomers (I am one) are very much still in the market.

        And mortgage guidelines are nothing like they were (or really, weren’t) prior to Bust 1. In short, you do have to qualify now. Lenders are scrutinized by the Feds, as are appraisers, title companies, and realtors. Sales are reported to the IRS.

  6. Gabriel says:

    Perhaps interest rates need to stay high for the unforeseeable future. If Americans continue to buy based on what their monthly cost is versus the purchase price of the commodity then ridiculous interest rates is the only solution.

    • YuShan says:

      Powell literally said that he wants positive real interest rates. He also said that he doesn’t see any slowdown in inflation yet, which is still raging at 8% or so…. And as Wolf already said: it has crept into services now, which is really sticky.

      Don’t count on a “pivot” anytime soon. The markets (all of them) are still largely in denial. Interesting times ahead. And pretty scary too. Even the well prepared are going to get hurt, because there is really nowhere to hide. But it is unavoidable, because it has been baked in the cake when they didn’t normalize monetary policy after 2008.

      • Flea says:

        Gold should turn around first ,but will take a beating alongside all other inflated assets,going to take awhile to deflate a 40 year balloon= bond market

        • andy says:

          I feel gold is about to break down to new level around $1,400. I think there will be huge support at $1250. Coins would be under $1500 then. But I never bought gold outside of gifts for girlfiends so what do I know.

        • Mr. House says:

          FLEA:

          You’re not looking at this properly. If the system was going to continue like it has, then yes gold or at least the paper price would get shelacked. The next ten years isn’t going to be that and i think you’ll be surprised by the opposite reaction. This crisis isn’t like the last, unless you go back to the last loss of a reserve currency………

      • andy says:

        YuShan, if the Fed really wanted positive real rates, and their target is 2% inflation, wouldn’t that mean they would keep rates above 2%?
        Unless they are telling us there was deflation all around for the last so many years to keep rates at zero. Or maybe they are full of it as their credibility now indicates.

        • cas127 says:

          They are scared of heroin-withdrawal death…just like 95% of the time since 2002 when they first shot up America – to hide the patent decline in American real goods economy/productivity.

      • crazytown says:

        If they are going to tamp down on inflation, and do so via interest rate increases, cash will be a place to hide. Plenty of 4.5% 6-month brokered CD’s available on Schwab/TDAmeritrade/Fidelity/etc. right now. Yes that is not 8%, but it’s not .05% like my credit union is offering. And it’s better than -80% that a lot of stocks have done lately as Wolf has shown.

        • cb says:

          @ crazytown
          @Yort
          @Wolf

          Yort said in an earlier comment that he’s buying MBS (mortgage backed securities) at 7 to 10%.
          ————————————————

          1. is that any riskier than a 4.5% 6-month brokered CD?

          2. how much safer is a 4% 6 month Treasury than a 4.5% 6 month brokered CD?

        • Wolf Richter says:

          #2. just about the same if the CD is FDIC insured and the holder is within FDIC limits.

        • crazytown says:

          cb,

          I think there is a good deal of duration risk with individual MBS. At least on TD Ameritrade, the Yield to Maturity (the real number that matters, not the coupon rate) of 1-3 year remaining MBS is around 4.5%, not enough higher than CD’s or treasuries to be worth the hassle and additional risk of an MBS. The 7% coupon rate and yield to maturity seems to be all 10+ year MBS. I see one with a 7% yield to maturity that matures in 2037. Good rate, but you have to keep it through 2037 to get it.

          Knowing how 2007-2022 has gone, I cannot imagine having purchased a security in 2007 and sat on it all the way through 2022 and been comfortable with it (that period includes an implosion of the housing market). If you have balls of steel, it could work, but I’ll be boring and take CD’s and treasuries and keep a pretty short-duration portfolio so I can be nimble in this environment.

        • cb says:

          Thank you crazytown. Very insightful. I suspected duration risk with MBS and perhaps other risks. Like you, I will stick with the six month or less Treasuries and CD’s, preferring treasuries personally. Remember no state tax on treasuries.

  7. kramartini says:

    It is correct that a homeowner with a 3% mortgage refusing to sell his old home and buy a new home with a 7% mortgage will not result in a net reduction in overall housing supply or demand.
    However, if that buyer had intended to “trade up” from a starter home, but was deterred from doing so by the interest rate differential, the result would be a reduction in supply at the lower end of the market coupled with a reduction in demand at the higher end.
    Thus, the interest rate hikes may skew the market, with tight supply relative to demand at the low end and the reverse at the high end.

    • butters says:

      “Thus, the interest rate hikes may skew the market, with tight supply relative to demand at the low end and the reverse at the high end.”

      Nobody knows how it’s going to play out for sure. The thing is by lowering interests rates for so long, we have skewed the market beyond imagination. It will take some time play out.

      As for people making their life decisions based on interest rates, only the speculators do so. Life happens, people will buy/sell/move/downsize/upsize regardless of the interest rates. Prices will come down significantly and rates will adjust, so the ‘howmuchamonth’ crowd will still be able to buy homes.

      • butters says:

        We are only starting right now.

      • ru82 says:

        Not only lower interest rates for a long time, during the really low rates of 2020 and 2021, there were record refinancing.

        We may see refinancing in the future but it will be for the homeowners who are tapped out and need to pull out some their home equity. Even if it means refinancing at a higher rate.

      • kramartini says:

        “As for people making their life decisions based on interest rates, only the speculators do so.” Wrong.

        Normal people who are faced with an increased monthly payment from higher interest rates will (implicitly) take those interest rates into account when deciding whether to upgrade their living arrangements. To say that people ignore monthly payments defies common sense (and observable reality).

    • Seen it all before, Bob says:

      Anecdotally, my friends, family, and I view having a 3% 30 year mortgage similar to renting a strict rent controlled apartment that cannot increase for the next 30 years (with the added bonus of getting the apartment for free after 30 years). It is true that if you own, you have to fix things yourself and taxes/insurance will go up but historically these increases have lagged rent increases within 10 years.

      In large cities, rent controlled apartments are in such demand that some are inheritable. Nobody gives them up unless they die without heirs, divorce (even then, someone keeps the apartment), or have to move out of the area.

      I’m sure the churn rate is affected similarly with both. My friends and family will not give up their 3% 30 year mortgage payment easily.

      My friends and family may be atypical since we all view a house as a place to live and not a short term investment. Though I admit, we all like to have a clear unblocked escape door, so even if we enjoy living in the house, we’d prefer not to be underwater at any point in our lives just in case of emergency.

      • Seen it all before, Bob says:

        The reason for these beliefs are likely how we were raised.

        1) My parents purchased their house in the 1970’s and lived and enjoyed it for almost 50 years. They passed away into the great CA sunset while living in that house.

        2) Both of my grandparents purchased their houses in the 1930’s and lived in them for over 60 years until they passed away.

        3) My grandparents’ families never had the chance to own a house in the US since they fled economic hardship and political persecution in Europe in the late 1800’s. They gave up land owned by their families for centuries to escape to the US.

        Times have changed.

  8. butters says:

    40-yr mortgage to the rescue?

    • Depth Charge says:

      If you actually did a little research, you would find that the difference between monthly payments on a 40 year vs a 30 year are not enough to move the needle much at all. So no, that gimmick’s not going to work either, butters. Give it up.

      • Cookdoggie says:

        “you would find that the difference between monthly payments on a 40 year vs a 30 year are not enough to move the needle much at all”

        For those who are curious about this, I checked.

        $800,000 loan, 7.25% interest rate, 30 years: monthly payment $5,457; total interest paid over 30 years $1,164,668.

        $800,000 loan, 7.25% interest rate, 40 years: monthly payment $5,117; total interest paid over 30 years $1,478,140.

        • Cookdoggie says:

          Sorry… total interest paid over 40 years $1,478,140.

        • Cookdoggie says:

          Christ…total interest on the 40 year loan is $1,656,330. I’m leaving now to get a Whisky Sour.

    • Cas127 says:

      Maybe that…and an American Rentenmark (wikipedia it, kids) with Zimbabwe Ben Bernanke’s face on it.

    • Swamp Creature says:

      How about 100 year Mortgages. Didn’t Argentina try that? How did that work out?

      • russell1200 says:

        Japan did back in the late 1980s. I don’t think they are still on offer, but the British were talking about 50 year mortgages

        Without being an expert on Japanese mortgages, it looked like a way to keep up with an ever escalating market that no longer was necessary.

      • Lisa_Hooker says:

        A 250 year mortgage.
        No payments for the first 85 years.

  9. Seba says:

    Interesting, who owns mortgages in Canada? Are they also securatized like in the US?

    • Wolf Richter says:

      Yes, in Canada too, many mortgages are securitized. The CMHC (a state-owned entity, or as they call it, a “crown corporation”) guarantees MBS against credit risk. Investors around the globe — from insurance companies to bond funds — buy and own the MBS. The BOC owns a small portion of them too.

  10. Shiloh1 says:

    There have been flat-fee real estate services out there for quite some time. $600. MLS listing and professional sign. Some can take/screen the calls for showings, too. Sold a small apt building in 2017 and house a year ago that way. Both Chicago metro burbs. Realtors are an absolute nuisance by the way on apt building transactions.

    What is the function of ‘the banks’ for the mortgages then? Why not have kiosks and drive throughs at McDonalds for loan applications and originations?

    • Depth Charge says:

      Realtors are a nuisance period. They are mostly found lurking around title companies, waiting for a check.

      • MiTurn says:

        THAT is funny!

      • Swamp Creature says:

        I’ve used Realtors a half a dozen times since I’ve been a homeowner, for selling, buying, etc. In every case there was one common thread with all of them:

        Lazy, Incompetent, & dishonest. I’ve had real bad luck. They were so pathetic that they actually almost killed their own deals. I did have one good Realtor who actually talked me out of buying a house on a busy street. She said it was not safe for children.

        The Realtors we deal with in our appraisal business are mostly OK, especially in the lower income areas.

    • Cas127 says:

      What is the function of the banks then?

      Well, since 2002 their function has been to act as fronts/cutouts for DC central management of the economy.

      (Heck of a job, Brownie!)

  11. The Bob who cried Wolf says:

    My mom bought her house in the late 60’s for 20,000 and by the mid 80’s it was well over 100,000. That’s a magnitude of more than five times. There’s plenty of houses close to her that folks bought in the mid 90’s for 200,000 or so that would sell for 800,000 now. 25 years and a quadruple doesn’t measure up to some of the wacky appreciations of the past, but still very respectable.
    Things have slowed down and there’s still plenty of room for correction, but for an investment to triple or quadruple in 20 years is the goal, isn’t it?
    I’m gonna get flamed

    • Jesse says:

      “I’m gonna get flamed” LOL

    • John Galt says:

      I’m not gonna “flame” you Bob, but I will ask some questions.
      Has the use value of your mother’s home increased by that amount in said time period, or has the buying power of the currency just fallen that much?
      We have a completely bs economy to quote Chris Irons, and our “wealth” in this country is not in what we produce anymore, it’s in the ever inflating cost of replacing “assets”.
      I am concerned that this current bout of financial tightening won’t just “break something” but it will shatter the illusion that we can print our way to prosperity. During the great depression, there was a dollar scarcity. Why? The Fed, the president, local governments, everyone was trying to create commerce and industry. It didn’t stick. It didn’t work work because of the one last unexplored frontier in economics: the human mind. When reality is really truly shifted/destroyed, people do weird stuff, like put cash in mattresses, and bury coins in jars out back. What happens when the Fed expectedly runs this ship right past the 2019 highs, then the 2015 highs, then the 2011 lows. . .and the country finds out that since 2008 our gdp per Capita has been in a steady state of FAR below trend, and all our “wealth” since then was just an illusion brought on by cheap debt?

      • The Bob who cried Wolf says:

        It would seem the frothiest bubble my mom saw was after the dollar lost its tie to gold. Nothing has increased in value, it’s just gotten more expensive. Hedging inflation, in my opinion, is a phenomenon mostly seen after the dodo’s on charge kept printing money.
        Inflation, though, is a concept I’ve never heard of until joy reid told me it was all propaganda by the media and right. Go figure.

        • Bruce Plesk says:

          Yes, that was one of the most implausible comments I think I’ve ever heard. Anyone old enough to be employed in broadcasting has heard of ‘inflation’ – many times.

    • Randy says:

      So doubled every 12.5 years. Rule of 72 implies about a 5.8% return (72÷12.5).
      US Stock market returns 9.9% long term I recently read with greater swings than housing.

      Your mother’s home was in a pretty desirable location im guessing though perhaps not as desirable as west coast ?

      Aside quickie: regional markets have taken nasty hits that the nationwide stats obscure. E.g., Texas, Colorado and a couple others in the late 80s early 90s. My home new 89k, sold for 82.5k 10 years later. Nice home, lightly used.
      Now probably 250k but maybe sinking (Dallas area).

      • Randy says:

        Correction: The 5.8% applies to the 200k to 800k houses, not your mother’s house.

    • hillcountry says:

      Westegg.com inflation calculator has this to say:

      What cost $20000 in 1968 would cost $61996.26 in 1985.

      and:

      Also, if you were to buy exactly the same products in 1985 and 1968,
      they would cost you $20000 and $6414.85 respectively.

  12. Not Sure says:

    “mortgage applications have collapsed by 42%”

    That’s it? Only down 42% from near the peak of the most insane housing mania ever?

    I’m watching 2 markets extremely closely… The one that I live in now and the one that I’m going to live in. The one I live in now is very bubbly and the other was hot like most places, but much more subdued. Houses in both markets, especially those on the lower end of the market, are still routinely flying into pending within a couple of weeks. The high end is where the slowing is most profound. Still a very steady stream of closings though. I’m waiting intently for it to stop, but somebody is still buying.

    I don’t know why so many people, and even central bankers, can’t get this through their thick skulls: Interest rates aren’t the right tool. This couldn’t be simpler… We printed way too much GDF money, so we need to remove some of it. Market participants with boat loads of cash slide right past interest rate hikes, at least for a while. If anything, in an inflationary environment, a lot of people are still looking for places to park their wheelbarrows of evaporating cash. Hell, the treasurydirect website has had trouble with intermittent outages because i-bond buyers are flooding in to get out of their cash that’s dissolving at 9%/yr.

    QT is what will bring asset values back to trend, not interest rates. Want lower prices? Easy, remove some money from the system. Make it more scarce. But the Fed is going to eff this all up. They always have and always will. They’ll crank interest rates high enough / fast enough to blow up credit markets, and then they’ll be forced to loosen aggressively in the face of the next GFC. It’s almost like self-fulfilling prophecy for the clowns at the Fed.

    • Flea says:

      Weimar Germany?

      • Cas127 says:

        Weimar America.

        More nudity (sorry, Sally Bowles) and much, much more ignorant/counter-productive screaming on many, many more video channels (sorry, everybody).

        Happiness in life consists of making the right people pay.

        Tax the defined benefit pension of every living politician to zero.

      • Jon says:

        People may not want to sell but would be forced to sell.
        Home prices are defined at the margins.

    • andy says:

      This does not sound right to me. Cash buyers had to compete with debt donkeys who will give up their entire working life for low interests monthly payment. This trend will change perhaps.

    • gary bless says:

      Interest rate is a tool, just like QT. Both will help tame inflation over time.

      Fed is reducing money supply at a fairly strong pace. QT is clear from Fed balance sheet. Nearly $300 Bil removed in a couple of months. Using standard 10X multiplier, almost $3 Trillion of money circulation is sucked out. And it will accelerate.

      Fed has stopped buying MBS and slowed Treasury purchases. MBS run-off will be interesting to watch. Given all the refi’s during Covid (50% of entire housing market) historical MBS principal owned by Fed over last 15 years dropping like a rock with all the prepayments.

      Evidence of this found in rate at which housing prices decline – will probably decline faster than they rose….

      • crazytown says:

        The money multiplier doesn’t work anymore. You can’t assume 10x with the distortions since 2008.

      • Seen it all before, Bob says:

        Maybe I am misunderstanding this?

        “Given all the refi’s during Covid (50% of entire housing market) historical MBS principal owned by Fed over last 15 years dropping like a rock with all the prepayments.”

        Who is prepaying their 30 year 3% mortgage when Treasuries and CD’s are yielding over 4.5%?

        Wolf pointed out that MBS’s are not rolling off the Fed balance sheet as fast as they expected with pay-offs and prepayments.
        The Fed may have to sell their MBS’s at a loss.

        I think many with 3% mortgages have hunkered down and are not selling. After selling, the outcome is high rent or a new 7% mortgage. Other than peace of mind, who is prepaying their 3% mortgage when Treasury savings rates are currently at 4.5% and rising?

    • Jdog says:

      What they don’t say is how many of those applications are actually approved…..

  13. J.M. Keynes says:

    – The housing bubble of the last 2 years was build on a foundation of rising real estate prices since the real estate market(s) bottomed in the years late 2011/early 2012. 2020 & 2021 were together simply the “blow off” phase of that cycle. It happened in other countries as well because in other countries interest rates went down (A LOT) as well.

    • John Galt says:

      A Keynesian. . .funny seeing YOU here 😑

      • J.M. Keynes says:

        – And why is that funny …………………..

        • John Galt says:

          Well I would say that the most frequent commenters here have quite the Anti-Keynesian angle. Lots of Austrian thinkers here it seems. Also, the somewhat preposterous ideas of Keynes have put us in the position that were currently in. A bit of irony I suppose.

        • Lisa_Hooker says:

          Keynes ideas are not preposterous.
          What is preposterous is to use only the deficit spending of Keynes and ignore saving/accumulation he clearly specified. Keynes is not the problem, our Governments are the problem.

  14. Jdog says:

    The thing you have to love about math, is it does not lie.
    People are restricted in what they are able to purchase, based on the payment they can afford.
    When interest goes up, the price has to go down to compensate for that. The more rates go up, the more prices have to come down. This usually causes a severe slow down in sales as sellers either will not or can not lower their prices to meet the new reality.
    In order to move inventory, at some point one side has to capitulate, and there is only one side able to do so….

    • bulfinch says:

      Except, except…whatabout all the big swinging dudes with their All-Ka$h offers?…

      • KeithF says:

        All cash buyers, including the big hedge funds we’re all worried about, are staying on the sidelines too, waiting for better prices. They don’t want to be the bag holders either.

      • Jdog says:

        Not enough of them to impact the entire market……

      • Lili Von Schtupp says:

        Ran into a few declined offers beat out by ‘all cash buyers’ while shopping in the last few years, had sellers later contact me, one was months later, to see if I was still interested (I wasn’t) because their ‘all cash buyer’ couldn’t secure the funds. Agent told me they were seeing buyers borrowing cash to have their offer stand out, and then not being able to pony up. This is at the low end of the market btw, but before the QT and interest rate hikes started.

        Certainly an exception, but have to imagine as buyers got incredibly desperate in the last year or so it happened more than one would think.

    • Flea says:

      Ev most overpriced,for something that might self combust

    • Old school says:

      I read an article that there is already lobbying going on to provide incentives to get housing going in the lame duck session of Congress.

  15. Bobber says:

    I think anybody in a position to cash out their RE or downsize should be thinking seriously about it. I don’t think we’ll see today’s prices for another 15 years, assuming a 4 or 5-year decline, and 10-year recovery after a once-in-a-lifetime bubble.

    • Flea says:

      My home not house won’t be sold ,because if SHTF all kids grandkids could dwell here . Crowded but doable ,this is what my grandmother did in depression on a farm so pretty self sufficient.In a city probably not likely to survive but have been looking at rural property,likely to wait 12-18 months see where economy is

      • MiTurn says:

        In the identical situation, with an emphasis on ‘home not house.’

        But we went rural some years ago, only 10 acres, but usable. Strongly recommend it.

        And even a little bit of prepping…

      • Seen it all before, Bob says:

        I’m not a prepper but I’m not selling my home either.
        I like it too much and even though most of the kids have moved out, there is always room for them to visit with the grandkids.

        Why would I sell and move to a rental with unbounded increases, or buy another house at 7% mortgage rate? I guess the only reason would be to sell and cash out while prices are still inflated and buy a cheaper or smaller inflated house somewhere else. The kids and grandkids would be on their own to pay for the accommodations and/or travel. Or just to time the market if I thought my home would be 50% off next year.

        60 Minutes had an interesting episode on Preppers last night.
        For about $2M, you can buy a nice 3BD pace with a shared pool, workout room, climbing wall, with 1 Year of food supply and and an armed guard with an M-16 to keep you alive for at least one year after everyone else perishes. It was a flipped ex-ICBM silo.

  16. Pants_Relief says:

    An Anecdotal Tale that aligns with the article:

    I’m not a realtor, but I talk to homeowners every day for my small business.

    I ask: “What is your goal for the house, does this market have you considering selling or holding?”

    Sellers: “Weeelllll them Californians & New Yorkers ‘gon pay me a MILLLIONN DOLLARS for my house because of Covid & work from home!”

    Even in November 2022 at 7% rates… the local yokels are still circle-j**king each other to imaginary million dollar offer fantasies.

    Only 6 months ago they could have snapped their fingers & accepted $100k over asking from a desperate horde of cash buyers. Human brains aren’t wired to forget that feeling easily.

    Most of these buyers have enough cash to keep their heads in the sand until the ground opens beneath them.

    • Pants_Relief says:

      Correction of final sentence: *Sellers not buyers.

    • bulfinch says:

      You nailed it, Pants. I hear the same sentiment around Central Austin from the crowds I interact with or overhear. What can be said? I don’t argue because I don’t feel like playing the ice man.

      Comedowns are never easy. Also, denial is innate and ineluctable; you have to actively train people in disaster response training in how to override the initial human reflex to play down an emergency.

    • Cas127 says:

      Wellll…the New York/IL/CA economic refugees will (are) streaming out with wheelbarrows of cash.

      But at 7% those wheelbarrows are going to be much, much tinier.

      (The problem isn’t demand for TX/FL…the problem is that *nobody in hell* is going to pay anywhere near recent NY/CA/IL prices…if they even remotely could at 7%)

      • Randy says:

        You may be right, but Texas climate is no picnic. I lived there 11 years.

        Per accuweather.com data Dallas had about 124 days of 90 plus highs this year, 46 (as I counted anyhow) were 100 or above.

        November with its near certainty of cooler weather was my favorite month while living there. Could not come fast enough.

        Lots of good restaurants for sure but I never adjusted to the length of the heat. A week or two of hot weather is certainly doable.

        Surprisingly where I live now in far Eastern Washington, again per accuweather.com and my counting: 50 days 90 or above last year, 10 at 100 or above; 44 days 90 or above this year, 9 of which were at 100 or more.
        We are 180 miles north of Minneapolis. No joke.

        I’ve lived in 6 states different parts of the country… 90% or more of the US has pretty awful climates unless you are very fit and young or just like hot, cold, humid, wet, etc weather. And there is the smoke that blows in from all directions now August to October where I currentlylive..comes and goes each year.

        • VintageVNvet says:

          NOT TRUE R:::
          Have lived in the following states, sometimes ”back and forth”:::
          FL, CA, OR- very south and Willement valley, CA, FL, AL, TN, OH, TN, FL
          ALL, repeat ALL have plusses and minuses, and to think otherwise is just plain ignorant.
          EVER place is similar, with some being more on the ”great side” in some seasons, etc.
          That is exactly why our owners want WE the PEEDONs to be too ”locked in” to their debt to be able to move around as did our ”early peoples” everywhere before any ”financialization” took away our ability to move with the seasons and crops and other food sources…
          Will WE be able to get back to such a very well globally balanced population of our species before being wiped out???
          Certainly still a possibility, though not looking particularly likely these days.

        • Lisa_Hooker says:

          @VVN – Precisely. The mortgage deductability was designed to prevent labor migrations within the United States. Difficult for the large corporations to deal with.

  17. Bob says:

    I’m always puzzled when the corporate media claims there is a housing shortage when according to the Fed the number of vacant homes in the US is around 15,000,000. To Wolf’s point, how many owners of vacant homes will want to hang around until the market bottoms? And then there are the corporate buyers like Zillow and others. Most have financed purchases either with investor funds or with leverage from institutional credit facilities. Zillow puked 7,000 months ago, what happens when other large corporate owners have had enough and start putting thousands of homes on the market at a time?

    • gary bless says:

      Redfin is already puking…. read latest earnings conf call transcript….

      • Jaylah says:

        Check out open door. I have followed many recent overpriced listings in my market and there was a point where I hit like 5 in a row. They were all purchased 3 months ago and listed open door as the agent. They all started 40k over their purchase price. Then dropped 15k, then 30k, etc. Many are below their purchase price although I’ve heard the purchase price shown is actually 10% above their real cost due to fees and concessions open door collects. I believe I read they lost 1Billion last quarter. This will be fun to watch!

    • @bobber says:

      @bob.

      The 15 million is misleading. This number includes many things. Like houses sold but the new owner has not moved in yet. 2nd home as a vacation home…etc

      In 2010 that number was 19 million so it has dropped over 20% while the population has been growing. Prior to the housing bubble the number was around 15 million in 2004. But we have another 30 million people in the U.S. since 2004. So this vacant number is dropping the past 10 years (-205) as the population is growing. In reality, in equilibrium setting, we should have over 17 million vacant house if normalized to population growth.

      Anyway. In comparison to 2004, there were 15 million vacant houses to 296 million people. In 2010 where 19 million vacant houses for 306 million people. Right now there are only 15 million for 331 million people.

  18. Bob says:

    Regarding the crazy increases in SFR. I moved from the Coachella Valley to Temecula about 3.5 years ago, and recently moving back to the valley. The homes in my old neighborhood were selling for around $350,000 when I move away, until just recently they were selling for around $700,000 to $750,000. That is over 100% increase! However, in just the last couple of weeks, there are now many listings with prices reductions of up to $100,000 – and most of these listings are still way overpriced. After the coming bear market has done its work, it’s time for Congress to address how the Fed operates.

    • Cas127 says:

      Congress/Executive *is* (and long, long, long has been) the forearm up the sock puppet Fed.

      They ain’t reforming themselves.

      • Jdog says:

        It is Congress that spends the money, It does not matter how much the Fed prints, it just sits there if Congress does not spend it.

        Congress has been criminally negligent in its responsibility to keep its spending in budget, and the American people have been derelict in their duty to hold Congress responsible. Lots of blame to go around.

        • Lisa_Hooker says:

          In essence that’s the entire problem.
          Everything else is window dressing.

  19. Finster says:

    We need to remember that house sellers and house buyers aren’t two distinct groups of people. Many are selling one house to buy another. They will benefit from lower prices just as much as suffer from them … it’s a wash.

    The biggest burden for this large group falls on those who had substantial debt on their former house and need to borrow for their new one. Their new mortgage will be much more expensive than their old one. Which underscores that this is less of a housing phenomenon than a credit phenomenon than it may first appear.

    • Steve2wryt says:

      Um, perhaps you should RTGDFA Finster….towards the end (and in many of Wolf’s recent articles on same subject) there are many buyers who did not sell their first house to buy the second. These people now have to make a decision to ether continue to hold on and maybe try rent, or get out while the getting is less bad. Rate increases take a while to work into the economy, and some of the indicators are quite laggy, so we probably won’t see the damage done until spring. As others have talked above how some of these folks bought long ago for much less in completely different situations, so taking a 25-30% haircut from the peak of the mania will hurt, but won’t sink their boat. But, I’m already seeing the 25%…..how low can you go?

    • cb says:

      It has been a money creation and credit creation phenomenon undertaken by the money lenders/FED with their owned and complicit politicians to advance debt slavery.

      You know this.

      • Jdog says:

        It is Congress and the people who spend too much on credit, the FED and the lenders only facilitate them.

        • cb says:

          It is the in the self interest of the FED and bankers to make as many people as they can into debt slaves. The happily buy off Congress and Executives to facilitate this.

          Never give predators a break.

  20. jm says:

    Because in normal residential real estate markets (i.e., without numerous speculative “investors”) few people can do a “move-up” sale without selling their current home, the market is heavily dependent on first-home buyers. According to one source, back in 2017 the typical first-time buyer had $72,000 in income. Another source indicates the average first-time buyer put only 7% down and had to pay mortgage insurance.

    Ballparking, if we figure those buyers got good raises and their income had risen in 2021 to $100k,000, and they were paying 28% of income, they could afford $2333 monthly. Allowing $700/mo for taxes and home insurance, they could make a $1633 monthly payment, so at a 3.5% rate (figuring in mortgage insurance, though the base rates were around 3%) with 7% down they could borrow $360,000 and pay $387,000 for a home.

    So what’s the situation now in 2022 with an interest rate including mortgage insurance around 8% for a similar buyer? Let’s figure the income is now $110,000. Keeping the taxes and insurance the same (though they’ve probably risen), our new first-time buyer can swing $1867 monthly, but can borrow only around $222,000. Inflating the $27,000 for a down payment by the same 10% as income, they can now pay about $30,000 down, but can pay only $252,000 for a home.

    So if our 2021 first-time buyer wants to move up — or is forced to sell by life events — then to sell their starter home to a 2022 first-time buyer they are going to take a $135,000 loss.

    Will the hoped-for decline of rates back to 5% revive the conveyor? Adding in 0.5% for mortgage insurance, the 2022 first-time buyer could pay around $357,000. Still a $20,000 loss for the 2021 buyer.

    • gary bless says:

      A 2021 buyer will probably take a larger loss than 7% ($20,000) if they have to sell. Guessing closer to 15%….?

    • Old school says:

      I just use a simple formula to ballpark it. Cost of money 7% plus 3% for tax, ins. and maintenance. That’s about 10% of the price of the house you have to be able come up with yearly if you finance nearly the whole thing. Too much money for what current house prices are to be a good deal.

  21. Fromks says:

    That 10% vacancy needs a little clarification. It includes homes vacant for sale, and also vacation homes. Frictional vacancy and holiday homes aren’t a reason to stop building more.

    >Housing units are classified as vacant if no one was living in them on Census Day (April 1) — unless the occupants are absent only temporarily, such as away on vacation, in the hospital for a short stay, or on a business trip.

    >They are also classified as vacant if they are temporarily occupied entirely by individuals who have a usual residence elsewhere at the time of enumeration such as beach houses rented to vacationers who have a usual residence elsewhere.

    • Wolf Richter says:

      The top-line vacancy rate by the Census Bureau = 10.7% in Q3. So they’re vacant, no one living in them in Q3.

      Then the Census goes through and deducts from that top-line vacancy rate for the reason of vacancy, such as “Vacant units that were held off market” for a variety of reasons = 5.0% of total housing stock, but they don’t count because there’s some reason for the vacancy. And in the end, after the Census gets through deducting every reason for the vacancy, its bottom-line homeownership vacancy rate is 0.9%, and this number is going to turn negative in about 3-4 years at the pace at which the Census is deducting.

      The whole idea that it says, ok the home is vacant, but it’s vacant for x reason so it doesn’t count as vacant, is just ridiculous. And when the bottom-line vacancy rate turns negative in about three years, we’ll see how ridiculous this is.

      To its credit, the Census Bureau publishes both the top line vacancy rate (10.7%) and the bottom-line vacancy rates after deductions, and people can draw their own conclusion.

      But the media never cover the topline 10.7%, it’s all about the “housing shortage” BS because that makes good clickbait, and because the real estate industry is paying the media to cover it this way (via the lovely channel of advertising funds).

  22. Bs (ini) says:

    This change in mind set takes a bit to work through. Most folks don’t pay any attention to the Mtg rates unless they are buying then check to see what payment they can afford. Then buy .

    • Bruce Plesk says:

      Exactly. I retired from mortgage lending in May. Earlier this year I had a number of first-time buyers prequalified at 3 – 3-1/2%. Many of these just barely qualified (due to payment vs income) and still couldn’t find a decent house. A lot of those folks decided to wait, so now they are ‘stuck’ renting. Some of them don’t know that yet if they haven’t looked since.

  23. Spencer says:

    The suppression of interest rates fueled the housing boom. The accelerated rise in administered rates doused the fire.

    As Milton Friedman said: “inflation is like alcoholism”. “In both cases…the good effects come first, the bad effects only come later.”

    • Bruce Plesk says:

      Inflation helps those with lots of assets; those with very little have no hedge against inflation and only their labor to earn money. The elites most likely are perfectly happy with high inflation but knowing everyone else is not, they’ve started “fighting” inflation. The difference is that if one has assets, those can always be shifted around to make money on whatever’s doing well no matter what the conditions (something ALWAYS does well). They only need CHANGE to make money. So the gap between haves and have-nots grows in bad times and shrinks (somewhat) in good times. Not really an editorial, just fact.

  24. dishonest says:

    The FED could implement policies as imprudent as they wanted knowing the taxpayers, not the banks would be on the hook at a time while they’re dealing with runaway inflation too. It’s rather like having ordinary folks dig their own graves.

  25. Sams says:

    Houses are tradeable. Mortgage backed securities are tradeble. Now, is, or in casy why are not mortgages tradeable?

    At least as part of trading a house?
    A rather simple solution to a market frozen due to high interest rates. The existing mortgage at therms as is get transfered to the new owner of the house.

    Around here that is what happen with leased cars if people opt out of the lease before it expires. They sell the lease (car) and the new owner of the lease (car) step into the lease agreement.

    That should work with houses too. The new owner buy the house and the mortgage. Actyually here it pretty much work that way with building societies if the building society have a large debt.

    • El Katz says:

      Sams: You can assume a car lease just as you can sublet a rental apartment (if the lease allows it)…. but if you own the car, you cannot transfer the loan to another. That buyer has to qualify on his own at the prevailing rate.

      In other words, leases are a totally different animal.

      Assumable mortgages were a *thing* in the dark ages. They went the way of the dodo bird.

    • Seen it all before, Bob says:

      I agree that assumable loans would solve a liquidity crisis. My parents purchased a house in 1975 that had an assumable loan at 6%.

      I was very young but I suspect they did it because:

      1) 6% AM was less than the current rates
      2) They had the cash to pay the buyer any increase in gains on the house.

      I don’t understand:

      1) Why would any lender support assumable loans( other than the original rate or fees were likely higher when the loan was originated for this extra feature)?

      The bank or lender would have to requalify the new buyer and take the hit of a lower than market rate. I suppose they could charge high fees to do this

      Assumable loans loans might make sense to a lender if they charged a higher rate on the original loan.

      I haven’t heard of an assumable loan in over 40 years

      • Seen it all before, Bob says:

        For example, if assumable loans were offered today, I could take out an assumable mortgage at 9% when going rates are 7%.

        It would be insurance that if rates went higher than 9%, that I could sell my house very easily as long the loan wasn’t underwater.

        I would view an assumable loan as an extra insurance policy.

        • Bruce Plesk says:

          Good idea, and I suspect that if it can (could) be done profitably, the industry will come up with it but there are challenges. Lots of low down payment loans these days = higher the risk of loss. We may see these someday though.

  26. gary bless says:

    Powell is not following any script for Private Equity, Hedge Funds or any other interest group. Only mandates are inflation and unemployment. We have full employment.
    Inflation is like lava – once it flows only nature can stop it. Volcker proved that the quickest way to tame inflation is push interest rates above the inflation rate. Powell is not there yet. He seems to believe that some increased rates (say 5-5.5%) plus time (read: nature) will bring the inflation under control. This will probably work over the long-term (24 – 36 months?).
    In the mean time, the one sector dominated by interest rates – housing – is going to adjust – “its about the price, stupid” (to paraphrase a tired & tawdry political slogan.
    Watch and see.

    • Auto-outsider says:

      Volker also had the ‘luxury’ of a commodity bull market doing much of the heavy lifting of slowing business down in the late 70’s. We have energy in a bull market now but probably still in the early stages.

  27. Remy says:

    On a local level. This, marked the top of the market

    1.5 acres, with junk house, tear down, with yard full of old cars and boats, trees not cut down in 30 years.

    Buyer probably spent another $100k tearing down the house and getting rid of junk, cutting trees. So over $400k for a 1.5 acre lot. Way too much for St. Paul burb.

    • Wolf Richter says:

      You’re looking at Zillow like a porn site. It’s ridiculous what kinds of conclusions you draw from this one property. You don’t know if a developer can spend some time and diligence (zoning, permits, etc.) on turning the 1.5 acre property into 20 townhouses, or some bigger multi-family project, both of them worth many millions. This 1.5 acre property was clearly bought for the land, and given the size of the property, it was pretty cheap, and the rusted cars and the shack make no difference if the property is getting redeveloped into 20 townhouses or a multi-family project. That’s how urban (suburban) renewal works.

      • Shiloh1 says:

        Speaking of real estate p n, the old Flip This House show Armando Montelongo episodes were hilarious back in the day. I think at one point he hired ‘dance’ talent from a local club to attract interest in an Open House. Spray painting the lawns green was also a nice trick.

      • Remy says:

        With all respect Wolf I do.

        It could be divided in two.

        I live around the corner. Have for 30 years.

      • Seen it all before, Bob says:

        Ha! I look at Zillow much more than PornHub.

        What is wrong with me???

  28. Michael Engel says:

    1) NDX fell the most. Few of those who stayed in the game for a whole year lost their nerves in Oct/Nov and sold to cut their losses.
    2) Old programmers on contract might preempt before it’s too late, before their house bleed like their stock portfolios.
    3) The pairs buy in 2012/sold in 2022 will send c/s to a new all time, even after cutting prices aggressively. C/S don’t care about taxes, painters, contractors, cleaning ladies, insurance & commissions.
    4) RE investors know that the high tech sector is cyclical. It’s late in the game. Bubbles tend to plunge to their bottoms. Smart investors might sell 1/3 or 1/2 of their portfolio to reach break-even. The rest is cost free.
    5) The high tech headcount cuts might start in late Dec or early next year.
    6) NDX might be in a half a year trading range, before rising to a new all time high. lagging SPX and the DOW. Wall street might reward them for cutting cost, preserving cash, and paying higher dividends, replacing buybacks. The high tech co might become value investments. Small caps will become growth…

    • gary bless says:

      Tech axe is already falling …. (read: Twitter). According to Musk, his buy of a lifetime is losing $4Mil PER DAY. Thus, 50% of company says “bye-bye”….

  29. Lynn says:

    “So the Fed, which is in charge of keeping the banking system from toppling, won’t have to bail out the housing market because it won’t take down the banks.

    And if it wants to because inflation is still raging, the Fed can just let the housing bust rip.”

    Awesome, hadn’t thought about that! And they will. Of course!

    Also, so glad there is a vacant home tax in SF on the ballot. It should pass. That means other cities and counties may consider it as well. It’s overdue. 10% is a huge amount. Imagine if all of those units suddenly came onto the market.

    People also need to someday consider a cap on how many SFHs and condo units can be owned by one entity (and it’s sub-entities). Say 25 at the most. Exclude buildings with 4 or more apartments. This would ensure mom and pop investors could make a living while cutting out large corporations from bleeding everyone else and absolutely killing the American dream. As someone said a while ago (Wolf?) there is no way a country can build enough to accommodate the world’s insatiable wealthy investors and money parkers.

  30. Lynn says:

    Wolf, does the 10% vacant housing units include vacation rentals or vacation homes?

  31. David Hall says:

    The year to year CPI shows 8.2% inflation.
    Wage growth may be close to 6%. A less than 2% drop in the Case Shiller index is noteworthy.

    Cash out refi’s and second mortgages are not as common as in 2021.

    A hurricane destroyed or damaged thousands of homes. Blue tarps everywhere. Contractors ripping people off, or is it construction inflation?

  32. Mark Stoneweapon says:

    “And the longer potential sellers are trying to hold out, the lower the price will be”

    Wolf, don’t get me too excited that my purchasing power is going to explode just yet, this time around could be much different.

    — tight job market
    — the reset of mortgage rates will motivate the labor force to look for better paying jobs
    — reshoring/homeshoring/friendshoring/deglobalization
    — increasing number of family members per dwelling
    — banks have no desire to foreclose on homeowners in droves
    — government moratoriums tested during C-19 are in the toolbox
    — governments taking a larger role in allocating capital, securitizing loans and investing in public-private partnerships
    — cost of building construction and development fees continue to rise with inflation
    — CB rates behind the curve could be feeding inflation for longer than anyone expects.
    —bond yields also way behind the curve.

    Until I see much higher unemployment numbers and panic selling via mass liquidation of foreclosures, I expect the floor under the market may be higher than many buyers are hoping for.

    My contrarian view is the Fed is engineering inflation and eventually the target inflation will be raised to 5%

    Inflate or die seems to be the name of the game!

    • Zero Sum Game says:

      Having the FFR at 5-6%, increasing QT to $150+ billion/month, and hoping inflation settles back to the 3-4% range without blowing up too much financial plumbing seems the best the Fed can hope for at this point.

    • Lauren says:

      It doesn’t matter what the floor is if the buyer can’t afford it.

      • Mark Stoneweapon says:

        Lauren, this is part of my point and why Wolf’s previous post on labor markets will be critical data to follow. The built-in structural inflation targets on the supply side will be undone if labor rate can’t keep up with the rate of inflation. If it does keep up it will put a floor under the housing market, but I think the controversial plan to boost liquidity in the labor market if needed, is why they have CBDC on the back-burner.

    • JeffD says:

      I think many people agree that mass job loses will be a required tipping point for panic selling. For now, people are still voraciously retail spending, it seems to try to spite common sense. Until that comes down, we won’t see mass job losses.

      • Jdog says:

        In my area, we have had a huge boom for about 5 years. Construction here is huge and there are plenty of high dollar construction jobs. Big projects going up everywhere and huge apartment complexes covering hundreds of acres of former farm land.
        According to the local paper, they account for about 40% of all local employment when supporting industries are included. Like everywhere else, home sales are dropping drastically.
        It is now winter, and construction is falling off as it does every winter. What will be different this spring, is if the projects stop breaking new ground and construction jobs dry up.
        Construction is always going on somewhere due to natural disaster, but that means relocating, and that often requires selling your existing home.
        With our area being so construction dependent, and not a lot of really good paying jobs outside construction, I expect to see a lot of McMansions on the market next year, and a lot of apartment complexes struggling to find renters as construction and related workers leave to find jobs elsewhere.

  33. Bobber says:

    How come Redfin isn’t publishing the number of page views on its listings anymore?

    During the frenzy of 2021, I remember seeing some listings were normally getting 5,000 to 10,000 views in a week. There were glad to float that stat. But if the page views have now dwindled down to 1,000 or less per week, maybe Redfin doesn’t want to publish that.

    • Lynn says:

      Anything with 5 or 10K views is getting bots.

    • Jdog says:

      They are not publishing sales prices or even dates. It is an attempt to control the narrative, and make things appear less dire than they are.

  34. Flintstone says:

    As I was reminded the other day when my publicity traded REIT took a 95% 3rd quarter haircut on earnings , prices don’t need to fall , a simple interest rate increase will cause a increase in the cap rate and a decrease in NAV

  35. Harry Hv says:

    While the real interest rate is negative it’s hard to compute the NAV. And if/when JP pivots and real rates are still less than inflation, well maybe we won’t be gloating over house-price-drops for much longer.

  36. Jcohn says:

    Monthly payment
    20% down -1% real estate tax-no mortgage insurance
    House price 650000
    Mortgage 520000-15year-3% interest
    Monthly payment =4132.68

    Housing price 515,000
    Mortgage 412000-15 year -7% interest
    Monthly payment =4132.17

    To equal the same monthly payment at 7% and at 3% , prices need to decline almost 21% .

    • SpencerG says:

      Thank you for doing that math for us!

      • John Galt says:

        I’ll run the numbers for my locale(Santa Clara County California).
        For a cheap home: $1,000,000

        @3% interest rate with 20% down
        P&I: $3773/month
        Total w/taxes & insurance: $4273/month

        @7% interest rate with 20% down
        P&I: $5322
        Total w/taxes & insurance: $6222/month

        When it gets fun is taking into account what a lender has historically considered a “well qualified buyer” which would be 20% down and no more than 30% debt to income on the mortgage.

        30% DTI on a $4273/month payment means a total after taxes monthly income of $14,275

        30% DTI on $6222/month payment means a total after taxes monthly income of $20,750!!!!

        These figures are STAGGERING, and they highlight what a 3% to 7% interest rate does to “affordability” in housing. I don’t know anyone who was making 15k/month in 2021 that is now making 21k/month. That’s absolutely insane. The wild part is when you calculate what prices will have to fall to I’m order to equal the same monthly payment as with a 3% interest rate.

        The answer is $675,000 gets you a ~$4250/month payment w/20% down.
        That’s a big payment for a market segment that doesn’t even reall exist here except on the fringes.

    • Seen it all before, Bob says:

      This is a good example.

      However, with low unemployment, wage inflation is occurring.

      What if your wage is now 20% higher?

      How does this affect affordability?

      I agree that by investing in the stock market, people have lost 20% of their down payment.
      Their dividend income has been flat.

  37. Mark Vincent says:

    Hey there Wolf
    Just a quick question. I live just over the hill from you and am a
    long term renter – sadly.
    Do you think any of this is going to have a spillover effect on rents
    here in S.F.
    Getting hammered because so much of this effects the mindset of
    the landlord class but surely at some point they have to realize that
    as goes housing values so goes exorbitant rents. Just asking

    Mark

    • Wolf Richter says:

      Rents in SF peaked in 2019. SF lost 8% of the population over the past two years. Asking rents dropped again in October. Give it some time.

      But SF will never be cheap. If you’re waiting for cheap, it’s not going to happen in SF. But it will be less horrendously expensive. If you want cheap, move to a place like Tulsa. Housing costs may be roughly 1/4 or 1/5 of that in SF. There are trade-offs tho.

      • Kracow says:

        Friend lived on treasure island in some old officer’s quarters from like 2002 to 2013ish was actually a nice place for cheap.

        They building some hi-rises on part of it now?

      • Swamp Creature says:

        HA Ha, THis is news to me! I spend my last days in the Navy on Treasure Island getting discharged. Went back in the evening to my Officer’s bachelor quarters in Hunter’s Point Navy Shipyard. So, I spend my last days of service with Uncle Sam in 2 nuclear contaminated facilities. I need to find some junkyard dog lawyer to see if I’m entitled to some compensation.

  38. Trucker Guy says:

    Local annecdotal example…

    Previously hot market for California carpet baggers that topped charts last year for yoy gains is seeing consistent 5-10% drop in asking prices over the past 3 or so months. Inventory gaining slightly. Local muttering from locals is complaints of the crime and homeless population. Along with various complaints about the stock market and skyrocketing appraisals/taxes.

    I’m slowly seeing the sub-400k market develop a pulse again from it’s previous flatline. Anything over 600k has sat and sat which is where a lot of the sudden inventory pile up from a half dozen months ago came from.

    The housing market is still a virulent black cloud but there is a shimmer of a silver lining developing. Affordability is still at it’s worst with sticky prices compiled with high rates but it’s going to break unless the fed put comes. They’ll probably hold course versus letting significant inflation take root. It’s either smacking the middle and upper middle classes paper gains or letting the US financial system crumble under inflation. I think I know which group will eat dirt first.

  39. SeattleTechie says:

    Powell has talked about a housing ‘reset’ for months now. It is clear what they want to do. And rental inflation is about 40% of the calculated CPI number. That number will stay high until housing market cools down enough.

    In my part of the county sales are down 57% year over year. It is a high priced area with median house price $900k in 2019. 57% drop doesn’t happen without there being a fundamental problem with the market.

    • MiTurn says:

      ” 57% drop doesn’t happen without there being a fundamental problem with the market.”

      No, rather a fundamental problem with the economy and in a big way.

  40. Bubba says:

    Today I looked up the zestimates of the addresses of a few friends here in Boise, ID. They are down anywhere from 12-20% from earlier this year. Oof!

    • Kracow says:

      I laughed when I read the articles that Boise Idaho had a housing shortage and people over bidding for those homes.

      Going to be some real large bag holders in that city…

      • MiTurn says:

        And as an Idahoan, I’m suffering from an overdose of schadenfreude. With smiles.

        Shake it, shake it baby now, twist and shout!

        :)

  41. Brian Jarrard says:

    I am a Certified Real Estate Appraiser and I CAN ASSURE YOU…..that I am seeing 17-20% drops since APRIL. Look at asking prices placed recently that are 15% below prior recent sales (*closed within 120 days). You see, when the new listings sell next month….GUARANTEED DECLINE.

    This bust will dwarf the last bust because, as Wolf states: “the Fed can let er’ RIP”. The problem is that the GSE’s don’t have the funding to keep paying the coupon on the MBS they created. Therefore, this will require Congress to appropriate funds (BAILOUT) to the investors and there is no mechanism left to place a floor under the market. It could be a 50% decline in bubble markets….EASY.

    • JeffD says:

      Lower prices mean more business for everyone tied to the real estate industry, so this will is great news, supporting a huge number of people who would otherwise lose their jobs. Even better, the vast majority of owners are still sitting on huge gains over the past two years, even with a 20% price drop.

    • Swamp Creature says:

      Brian Jarrard

      We’re in the same business. My observations: In the Swamp and neighboring suburbs, we’re seeing price action similar to Wolf’s Case Shiller graphs that we see on this site every month. They may be a few months behind but there’s not much difference. There is a leveling off of price increases, some small declines in far out areas but nothing dramatic yet. And in the pockets of highly desirable properties, wherever they are, prices are still going up and they are snapped up within few days on the market. These isolated pockets are getting smaller. But, so far, I don’t see anything that resembles 2005/2006. In that period, Days on the market increased dramatically, and was a prelude to the crash that followed.

      • Brian Jarrard says:

        Stay tuned……your preception will change as the data continues to come in. This evolves like a virus….small at first then engulfs the victim.

        All the best,

        -Brian

  42. cb says:

    Wolf said: “There is nothing magic about this.”
    ————————————————

    Oh it’s magical all right …………. It is the cheap slight of hand, smoke and mirrors, back room actions that has bewildered and trapped a population that has been herded to debt slavery by corrupt and evil sorcerers — the bank/money lenders with their complicit FED and Congress and all the debt subsidy actions taken to include Fannie Mae, Freddie Mac, Veteran’s guaranteed loans, the tax code, Bank bailouts, etc.

  43. CK says:

    42 years old. Never owned a home. Perhaps have amassed a lower middle class savings pot, likely due to living like a refugee. Living near one of those popular housing markets.

    I must be in the “top of the loosers” category of folks. Anyhow tempting to buy a 550 sf Co op style condo for between 220-300k with my savings pot. But then would love to see housing prices drop to levels of 10-12 years ago. Do we have 10-20 years left until the boomers die off?

    Rents in the meanwhile don’t seem like they ate going down. Then still living like a refugee in a room rental.

  44. RedRaider says:

    For a different spin on housing watch the movie “burnt Offerings”.

  45. Cytotoxic says:

    “For many years, QE and interest-rate repression didn’t trigger inflation.”

    With respect, I think there’s a lot of unpacking and cross-examination we need to do on that statement.

    For one, there’s a lot of potential issues with how we measure inflation. The price of gold is really the true objective measure of how stable your currency is ie purchase less gold = loss of purchasing power.

    Even if we accept that inflation for stuff off the shelves was low in the QE era, it certainly wasn’t for various assets and commodities. The price of real estate blew up, oil and gold and various others were elevated for a long time.

    And then there’s the previous decade without QE but with lots of interest rate repression and not only was the asset inflation much more severe, with real estate gold and oil all on a relentless upward push until the healing hand of the GFC, but general inflation of the ‘shelf stuff’ briefly came alive before the GFC killed it. People forget now because it was so brief but it was absolutely real go look it up. It was worse in Britain.

    Now we get to fix all this.

  46. John Stotes says:

    Wait, first Wolf says the census data is B.S., and now he is quoting it? Hmmmm. And he failed to mention 10% vacancy rates are at or below long-term averages. Vacancy rates include vacation homes, Breckenridge has 59% vacancy according to the census. I am a housing bear but low vacancy rates are one of the few data points the bulls have on their side.

    https://www.census.gov/library/stories/2021/08/united-states-housing-vacancy-rate-declined-in-past-decade.html

    • Wolf Richter says:

      You just listed a bunch of reasons why I’m saying that the housing shortage is BS — thank you.

      The Census removes units from the 10.7% vacancy rate depending on the reported reason for the vacancy. Let that sink in for a moment!!!

      And when the housing sell-off starts, those units show up on the market. They did last time. And yet, the Census didn’t change much its estimate of vacant homes, and yet the US was drowning in inventory that was vacant that had suddenly shown up.

      The only figure that is relatively meaningful is the top line figure. See my comment on this further up in this thread with more details:

      https://wolfstreet.com/2022/11/05/the-housing-bubble-popped-and-the-fed-can-let-it-rip/#comment-477906

  47. Vadertime says:

    I was highly entertained when I read this article as I am with most of these Wolfstreet articles. However, this housing bubble is very different from the last few bubbles. This bubble got it’s impetus from the pandemic, where many folks were allowed to work from home. Working from home necessitated a larger living space – i.e. having an office at home to work from. I have one and I’ve been working remotely long before the pandemic. Secondly, because people could work remotely from anywhere they chose obscure communities like Boise, Idaho. Near zero interest rates sparked a feeding frenzy for home buyers. This was classic supply and demand since at the height of this madness there was only a 30-day supply of houses. I believe it’s over 60 now. Sellers who missed the crest of the wave where they could have sold for the most amount of money are gritting their teeth. Nothing lasts forever and someone had to take away the proverbial punchbowl – enter the Fed. I grew up in the 70s and 80s when inflation was in the lower teens. Trust me, we don’t want to go back there. Eggs are up over 60% at the supermarket since the beginning of the year. House prices increased even more, year over year. The economy is overheated and it starts with the price of homes and all those crazy buyers outbidding one another a year ago to buy a house, which led to the feeding frenzy and the housing bubble. Now, it may take years to get back to 3-4% morgage rates, but the question becomes is whether or not the houses ever come back on the market. A lot of people bough homes over the past 2 years at rock bottom interest rates. They are not going to be putting their homes on the market anytime soon. So, we are going to have a constrained supply of homes with mortgage interests rates hovering around 7% for the forseeable future. Not a good situation for a prospective home buyer. However, everything changes and it takes time so there is hope. We all just need to get through this trough right now. Cheers.

    • Phoenix_Ikki says:

      “A lot of people bough homes over the past 2 years at rock bottom interest rates. They are not going to be putting their homes on the market anytime soon. So, we are going to have a constrained supply of homes with mortgage interests rates hovering around 7% for the forseeable future”

      Getting really sick of this point as well, I see this as the same brain dead talking points as millennials , gen Z and whatever future generation will need more housing and support the market, we didn’t build enough houses i the last 2 decades, housing is a sure bet against inflation or whatever else flavor of the day counter narrative is..

      As mentioned countless times, many people sell for different reasons, if life operates on what we prefer to do, then we wouldn’t have poverty and everyone will be a Powerball winner. Price is set at a margin, how many time do we have to repeat that?

      • Wolf Richter says:

        People need to back off the claim that it reduces supply when a homeowner doesn’t want to move and put their home on the market. I specifically debunked that in the article.

        When homeowners move and sell their old home and buy a new home, they’re adding 1 home to inventory (the home they’re selling) and they’re subtracting 1 home from inventory (the new home they bought), and the net effect on inventory is zero. Based on this math +1 -1 = 0

        Realtors complain about “homeowners not moving” because they make money on churn. But the overall net effect on inventory of “not moving” is zero.

        There are lots of ways homes actually get added to inventory, such as vacant homes being put on the market, for whatever reason, and homes whose owners have died being put on the market, and new homes getting built, etc.

    • jon says:

      A lot of my friends holding the real estate think the same that there won’t be much inventory and thus prices won’t fall.
      They think all these small price downs are noise and in actuality real estate would be fine come what may.

      Some of my friends, along with me, sold our real estate holdings begining of this year.

      A bunch of other friends are putting their investment homes in the market for selling.

      55% of the short term rentals aka strs are purchased in last 2 years. I am sure over time, all these homes would be put in the market.
      Emotionally driven investors who bought for FOMO would for sure put their houses for sell when the market drops another 20-30%.

      I don’t believe in this limited inventory theory. On top of this, home prices are set at the margins.

      People who can afford their mortgage payment for primary homes won’t sell. But many people would be forced to sell for their personal reasons and these sales would define the price.

  48. Al Cheech says:

    Hello, This is my first read of this site and have it in my favorites. I sold my house in Jupiter FL in early Feb. It was a tough choice as my mortgage cost was very small but the profit was too good to pass up. One thing in your article I definitely concur with is the lending practices are much better than ’06. If it was like ’06, I would have simply taken out a second mortgage to cash out.

    I am looking for one of the 4 D’s as the reason for the person selling: Death, Divorce, Displacement, Default. I almost bought a house being sold because of death, probably should have as the location was amazing across the street from the river in Stuart Fl. and it was in April. It sold for $480K. It was a flip house because it went onto the market a few months later for $800k, and went off in a few days. Zillow then put the estimate to $800k, but I doubt it will sell for anything near that price.
    I’m in no hurry as I have a place to stay

    There may come a day though when the Fed has to pivot (market situation like illiquid UST’s causing a spike in rates and then YCC is implemented.) My question is what are your thoughts on a Fed Pivot (YCC) and its effects on the housing market. TIA Al Cheech

  49. Al Cheech says:

    Way above I saw your comments on IPA’s … seems like there is some good health effects:

    • Wolf Richter says:

      I deleted the link to the Daily Mail. But here is what the article actually said:

      Hoppy beers may reduce the risk of dementia, a study suggests.

      Chemicals which give IPAs their unique bitter flavor prevented the clumping of protein plaques strongly linked to Alzheimer’s disease in lab dishes.

      All beers are made using hop flower extracts, which contain natural antioxidants believed to protect cells in the body.

      Tettnang, a type of hop grown in Germany and found in amber and light lagers, was the best at clearing the clumps of protein.

      But the Italian researchers warn their findings might not justify drinking more beer, as alcohol in excess is a huge risk factor for Alzheimer’s.

      This is because heavy drinking accelerates shrinkage of the brain’s white matter, which sends signals between different parts of the brain, leading to cognitive issues.

  50. Bruce Plesk says:

    When I was in banking in the early 80’s, mortgage rates were in the teens and a lot of our customers used wrap-around mortgages. Say the market was at 14% and they had an old 6% loan. They would sell their home and hold the financing at, say, 9% to facilitate the sale. They would not pay off the mortgage – the buyer would write their mortgage checks to the seller who in turn would deposit the funds to the bank and then have the bank send payments to the mortgage company. The mortgage company couldn’t tell there was actually a new owner making the payments which allowed the seller to avoid the due-on-sale clause in the mortgage. In some cases, sellers actually made money on the interest rate spread. Don’t know if this would work today as it’s simple to check home ownership online.

  51. DanS86 says:

    I thought reforms after 2005-2012 Housing Crisis 1 made mortgage originators hold material equity on any securitized MBS trust to align interests and reduce fraud?

    • Wolf Richter says:

      Quoted from Morgan Lewis law firm:

      The regulations set standards for a category of “qualified residential mortgages” (“QRMs”) that are exempt from the risk retention requirements.

      The rule also completely exempts any securitization with an asset pool containing a single class of qualified assets (i.e., commercial loans, commercial real estate loans and consumer auto loans that meet stringent requirements), and imposes a zero percent risk retention requirement on qualified assets in blended pools with overall risk retention of at least 2.5 percent.

      Other exemptions include two narrow exemptions for resecuritizations, as well as exemptions for seasoned loans and for certain federally guaranteed student loans.

Comments are closed.