re: US Median Home Prices Crashed -7.4% In Q2, Worst Decline Since Recessions Of 1970 And 2008

quote:

---

The desired result of increased interest rates is to drive down inflation, i.e., prices.

---

Not prices, inflation. Prices will remain high, capturing the inflation of the last two years. That is a permanent tax.

I read where Texas is only off .4%, I wish they'd decline further.

I get what you're saying but I don't think home sales are the best indicator as home values were the result of continued low rates rather than the active push for more sub-primes we saw leading to the Great Recession fiasco.

There are a lot of people who bought over-priced homes but at lower mortgage rates. They might be screwed for a loooooong time if they were hoping to sell for a profit, but unless we see staggering job loss they should be fine. The flippers who were caught mid-flip are going to be a bit more harder pressed. All that said, because of the origin of our current economic woes, I don't think we see the massive fall of the real estate market like we did in 2008.

However... the issue we've been facing is the ramification of injecting trillions of dollars into our economy in just a handful of months and then trying to pull all of that out while the federal government keeps trying to replace it with more money (through a different avenue). This has meant inflation has been sticky while Congress still spends and nearly record deficit amounts. That Congressional spending is what's killing us, through both watering down the value of the USD (through over-saturation) and starting to concern current and potential investors (those buying US debt).

We can see that expressed through the inverted yield curve as that's a measure of what time length of securities are in demand. Investors buy these as they have very low risk, but the other side of that low risk is low reward. Investors normally take the shorter-term securities, so their return rate is lower (thus longer terms are usually higher). Of the last half-dozen recessions, all have been preceded by these yield curves inverting (investors getting more into longer-term securities and less into shorter-term ones, thus longer-term rates drop and shorter-term rates go up). We've been in an inverted yield curve since July 2022 and the disparity between shorter and longer rates has generally increased. The last time we've seen rates invert for this long was from 1980-1981 except that we didn't see them staying so far apart for so long. LINK

quote:

---

This is realtor speak. Translation- "Everywhere was selling great, now only a few desirable places are selling well. Everything is fine."

---

I guess it’s not fine if your house is in a slum.

Either way, the PT board is going to be pissed. Housing prices drop and the Millenials and Zoomers are going to be happy that they might be able to afford a house. Meanwhile, the Boomers will be screaming "but muh equity!". Gen-X will take it in stride like we always do.

quote:

---

Yep, Paul Volcker stepped in and took rights close to 20%. Lots of people lost a lot of money and property but, as the Fed loves to say, IT HAD TO HAPPEN!!

---

And it wrecked farming in the US. The problem was, it did indeed have to happen in order to beat down inflation. I believe that issue was a reason for JP to more modestly increase rates. Unlike JP though, Volker didn't have to compete with the absolute fricktarded level of deficit spending we've seen since FY2008 keeping inflation sticky.

For those who may be saying "but inflation..." Adjusting everything to FY2012 Dollars...

Total deficit spending 1977-1987: $3.135T
Average annual deficit 1977-1987: $285.027B

Total deficit spending from 2008-2022: $16.415T
Average annual deficit spending 2008-2022: $1.094T

In other words, after adjusting for inflation, we're averaging annual deficits just under 4x of what they were during Volker's fight.

SE Denver suburb

Values didnt crash 7% and they wont be going down

When rates drop next year they are going up 20%

quote:

---

When rates drop next year they are going up 20%

---

Rates may not even drop next year, but even if they do, we aren’t shooting up 20% from these levels

quote:

---

Prices aren’t crashing and won’t. The data is showing people aren’t buying. Which is due to high interest rates.

---

So if this people aren't buying thing due to high interest rates persists, and the normal dislocations in terms of ownership continue (moving, default, moving up/down), what will happen to prices?