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Started By
Message
re: Fed hikes rates again, plans to get up to 2.5% or higher by 2020.
Posted on 6/18/18 at 11:59 am to cokebottleag
Posted on 6/18/18 at 11:59 am to cokebottleag
There are a host of issues that can (and likely will) affect the credit market in the next 2 years in addition to or preceding an American credit bubble bursting.
1. A large scale military conflict in Iran, Korea, Crimea, etc. Anywhere near a large population center and involving a major geopolitical power.
2. The housing bubbles in London or Toronto burst due to legislative action against Chinese investors, natural disaster, or massive scandal or uncovered fraud.
3. A major scientific breakthrough spurs a large majority of firms to dump offshore and securely held funds into investment and job/wage growth.
4. Good stewardship of local economies and forward thinking action protect the most important and volatile markets, limiting the damage to isolated areas (obviously this is the least likely).
My favorite solution to housing/rent crunches are for cash heavy companies (Amazon, Google, Apple) to buy up abandoned commercial real estate in low COL areas - think abandoned shopping malls - and refurbish them into live-in satellite campuses in return for reduced wages.
Instead of hiring 100 programmers and paying them 150k-250k/yr to make a modest living in Oakland or Silicon Valley, I'm going to hire 300 of them at 75k/yr and give them free housing in downtown Cincinnati, Columbus, Detroit, Huntsville, Baton Rouge, etc where they can live like a king. These satellite campuses would be a magnet for local investment as firms would salivate at the thought of getting a bite of young tech professionals' paychecks. This would spur revitalization of previously undesirable real estate and grow tax bases.
1. A large scale military conflict in Iran, Korea, Crimea, etc. Anywhere near a large population center and involving a major geopolitical power.
2. The housing bubbles in London or Toronto burst due to legislative action against Chinese investors, natural disaster, or massive scandal or uncovered fraud.
3. A major scientific breakthrough spurs a large majority of firms to dump offshore and securely held funds into investment and job/wage growth.
4. Good stewardship of local economies and forward thinking action protect the most important and volatile markets, limiting the damage to isolated areas (obviously this is the least likely).
My favorite solution to housing/rent crunches are for cash heavy companies (Amazon, Google, Apple) to buy up abandoned commercial real estate in low COL areas - think abandoned shopping malls - and refurbish them into live-in satellite campuses in return for reduced wages.
Instead of hiring 100 programmers and paying them 150k-250k/yr to make a modest living in Oakland or Silicon Valley, I'm going to hire 300 of them at 75k/yr and give them free housing in downtown Cincinnati, Columbus, Detroit, Huntsville, Baton Rouge, etc where they can live like a king. These satellite campuses would be a magnet for local investment as firms would salivate at the thought of getting a bite of young tech professionals' paychecks. This would spur revitalization of previously undesirable real estate and grow tax bases.
1
Posted on 6/18/18 at 11:59 am to RogerTheShrubber
quote:
Mortgage rates reached 18% in 1981.
my parents mortgage was 13% when I was a kid. They bitched about it non-stop.
Posted on 6/18/18 at 12:00 pm to buckeye_vol
Ok fair enough. 
Posted on 6/18/18 at 12:01 pm to cokebottleag
so that 50 cent that lady got per week on her check....
I wonder if Paul Ryan is going to check back in with her now.
rising consumer price from tariffs
fed rates rising
gas prices higher
housing prices up
2 trillion to the national debt
man those Trump tax scraps for the middle class really going strong now.
I wonder if Paul Ryan is going to check back in with her now.
rising consumer price from tariffs
fed rates rising
gas prices higher
housing prices up
2 trillion to the national debt
man those Trump tax scraps for the middle class really going strong now.
Posted on 6/18/18 at 12:03 pm to Cruiserhog
Man it really doesn't impact your mom too much, the check into cash rates won't change.
This post was edited on 6/18/18 at 12:06 pm
Posted on 6/18/18 at 12:03 pm to Cruiserhog
quote:
Cruiserhog
The economy is performing pretty well right now.
Posted on 6/18/18 at 12:04 pm to Muthsera
quote:
My favorite solution to housing/rent crunches are for cash heavy companies (Amazon, Google, Apple) to buy up abandoned commercial real estate in low COL areas - think abandoned shopping malls - and refurbish them into live-in satellite campuses in return for reduced wages. Instead of hiring 100 programmers and paying them 150k-250k/yr to make a modest living in Oakland or Silicon Valley, I'm going to hire 300 of them at 75k/yr and give them free housing in downtown Cincinnati, Columbus, Detroit, Huntsville, Baton Rouge, etc where they can live like a king. These satellite campuses would be a magnet for local investment as firms would salivate at the thought of getting a bite of young tech professionals' paychecks. This would spur revitalization of previously undesirable real estate and grow tax bases.
I like. I've often wondered why more didn't.
This post was edited on 6/18/18 at 12:05 pm
Posted on 6/18/18 at 12:05 pm to cokebottleag
quote:
No solution that I’m aware of. Just ride it out and don’t buy a house if you’re planning to sell in the next 5 years. We’ve had too long of a period of 0% interest.
So glad I just built my forever house at 4.25% and will never have to worry about selling ever again. I was legitimately worried the bottom was going to fall out 1.5 years ago, especially with the uncertainty around the past presidential election
Posted on 6/18/18 at 12:05 pm to cokebottleag
So would you suggest that people who just sold should rent and sit the market out a while?
Posted on 6/18/18 at 1:22 pm to cokebottleag
quote:
My main point here is to point to mortgage rates and how they’re affected by the fed rate, and oh by the way, how we’re cruising for a housing crisis that’s going to have unpredictable effects (mostly very bad).
I disagree. Housing is red hot in many areas. While privately-owned housing starts in April 2018 were below estimates, they were 10.5% above April 2017 starts. According to one report I heard there are areas where housing sales are sluggish only because there are so few for sale and not enough can be built fast enough.
If the sub-prime bubble taught us anything it's that we need to be wary of the housing market over-heating.
Posted on 6/18/18 at 1:24 pm to Cruiserhog
quote:You have absolutely zero clue about the average amount saved by a typical middle class family
man those Trump tax scraps for the middle class really going strong now.
Posted on 6/18/18 at 1:28 pm to Cruiserhog
To paraphrase Sam Kinison, if you can't make it in America when we're under 4% employment and the economy just grew at 4% for the last quarter, WHERE THE HELL DO YOU EXPECT TO MAKE IT?
Posted on 6/18/18 at 1:55 pm to cokebottleag
quote:
2.5%
does not mean
quote:
9%
mortgage rates.
Get a fricking grip.
at 2.5% (and we're not there yet), you are looking at a spread of mortgage rates from 5.15 TO 6.5%
Posted on 6/18/18 at 6:03 pm to cokebottleag
quote:The last time mortgage rates were around 9% was between 10/94 and 02/95 with a 5 month average of about 9.06%.
9%. It’s coming.
30-Year Fixed-Rate Mortgages Since 1971
Since mortgage rates tend to follow the 10 year treasury, and its 5 month average during that time was about 7.75%.
10 year treasury rate by month
Since the 10 year is currently at 2.92%, it would have to incease by 165% for mortgage rates to likely incease to 9%. It’s almost 150 year average is 4.57% and median is 3.85%. So we’re far closer to the average and median currently than the 7.75% that would correspond to 9% rates.
This post was edited on 6/18/18 at 6:08 pm
Posted on 6/18/18 at 6:24 pm to udtiger
quote:And the fed rates don’t have as much impact on long-term fixed rate mortgages anyways:
mortgage rates.
Get a fricking grip.
at 2.5% (and we're not there yet), you are looking at a spread of mortgage rates from 5.15 TO 6.5%
How Federal Reserve rate hike will affect mortgages, auto loans, credit cards
quote:
Have a home equity line of credit, adjustable-rate mortgage, or credit card?
quote:
Then you'll face higher borrowing costs if the Federal Reserve bumps up its key short-term interest rate Wednesday as expected.
All are revolving loans with variable rates that are directly affected by the Fed’s action.
quote:Of course short term rates and yields aren't independent of one another, and the yield curve is an important indicator if economic stability of instability.
Any effect on 30-year mortgages and other long-term loans would likely be subdued.
However, if we're going the economic impact of short term rate increases and long term fixed loan rates, then it may be a good idea to understand the rates that impact the fixed rate loans before arguing some economic bubble burst.
Posted on 6/18/18 at 6:29 pm to NikolaiJakov
quote:Well we don't know how much it grew yet, but a 4% quarterly growth converted to an annualized is actually 0.985% quarter over quarter. Besides individual sector performance can vary greatly, especially quarter to quarter. So would need to have a longer duration and consider individual sector differences between generalizing they down to bussinesses and individuals within these sectors:
economy just grew at 4% for the last quarter, WHERE THE HELL DO YOU EXPECT TO MAKE IT?
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