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re: Do experts on the money board agree with what the feds did today?
Posted on 3/22/24 at 8:02 am to I Love Bama
Posted on 3/22/24 at 8:02 am to I Love Bama
quote:
In my opinion, they want real estate to come down.
It's not affordable.
It's significantly over priced compared to every historic metric we have.
I regurgitate this point a lot but its an important one: there are too many pension funds tied up in commercial RE to let it fail, and the home is the biggest single investment for the vast majority of homeowners in the US. What matters for most people is the monthly payment at the end of the day, and you can lower than significantly with lower rates. But if you bring them down too quickly then you'll cause even more inflated prices, because like you correctly stated the market is overpriced, but lower income housing isn't really that overpriced if we have decent rates.
3
Posted on 3/22/24 at 8:26 am to VolSquatch
Asset prices, including R/E, have to remain high. We're running 6%+ deficits/gdp now, not at war, not in a recession. With the wealth disparity we have basically all the govt's marginal tax income comes from cap gains, i.e., asset prices have to remain high or deficits will blow out to double digit percentages of gdp.
Posted on 3/22/24 at 2:22 pm to VolSquatch
quote:
What matters for most people is the monthly payment at the end of the day, and you can lower than significantly with lower rates. But if you bring them down too quickly then you'll cause even more inflated prices, because like you correctly stated the market is overpriced, but lower income housing isn't really that overpriced if we have decent rates.
From looking at various data (housing sales moving back up, median price plateauing, etc), there seems to be a growing assimilation among potential buyers at accepting current rates as the new norm. If this is true, any cut in rates will send the real estate prices rocketing to the moon.
Posted on 3/27/24 at 8:29 am to VolSquatch
They can cut whatever they want, but real rates are market based.
There is so much debt that I’m amazed it has not collapsed yet. I don’t understand crypto, but I get why extra-governmental currency may be a good asset going forward. All governments monetize debt by printing more and more paper money. Inflation is the cruelest tax unless you are hard asset rich.
A billionaire does not care about prices going up 25%. He’s holding precious metals, fine art, raw land, stocks, minerals, and oil.
A working stiff pays full freight on inflation tax. Sadly many people think the government can create wealth for the masses if they just take more from upper 10% of earners to make the sun cool down or heat up more”sustainably.”
There is so much debt that I’m amazed it has not collapsed yet. I don’t understand crypto, but I get why extra-governmental currency may be a good asset going forward. All governments monetize debt by printing more and more paper money. Inflation is the cruelest tax unless you are hard asset rich.
A billionaire does not care about prices going up 25%. He’s holding precious metals, fine art, raw land, stocks, minerals, and oil.
A working stiff pays full freight on inflation tax. Sadly many people think the government can create wealth for the masses if they just take more from upper 10% of earners to make the sun cool down or heat up more”sustainably.”
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