Seems the housing market is peaking.

Apr 16, 2022, 10:46 AM

Interesting article. Interesting that by the fed raising rates from 0% to .25%, mortgage rates have climbed from 3% to 5%. You're seeing the PRIVATE debt market taking inflation into account without the fed making the impact. The 30 year rate is tracking where the fed SHOULD have rates, not where it currently has rates. The problem in the future will be in 10, 20, 30 years, these mortgages like mine (locked in at 2.125%) will be a huge albatross for lenders, who will lose money on those loans. Those losses will have to be offset, and that's the move we're seeing in rates, far beyond the fed's intervention. The fed can't raise rates to combat inflation because they have so much debt leveraged at sub 5% rates. The biggest of these debts isn't just the housing market, but the debt of the United States government. Consumers buy more house than they can afford with low rates, and likewise, politicians buy more votes than they can afford with low interest rates. And deflationary policies are failing because....well, anyway. For those invested in US debt, well, you buy that debt knowing the payment source, the US Treasury, doesn't have the income to service 8% interest payments.

Without using tools to slow inflation, it feeds on itself and can become hyperinflation (that's your dollar collapse). If the debt of the federal government "shall not be questioned" per the 14th Amendment, then that takes away the tool of increasing interest rates by the Fed. Because at interest rates of 6%-8% and CERTAINLY at 10%, that debt WILL BE QUESTIONED. We may see a managed system where private sector lenders raise rates, while the Fed stands put to keep the federal government solvent. That would slow the economy, and bring inflation down. But at the same time that creates an imbalance between public and private debt and no one knows how that turns out.

Personally, I don't blame Biden for this, or Trump, or Obama, or GWB. I don't blame republicans or democrats. They are all complicit in creating this system, and they will be complicit when it capsizes. Really, it's us for electing poor leaders and a uniquely American irresponsibility to refuse to accept less or sacrifice. If a politician gives us more, we vote for them, if they give us less, we vote for the other guy, who will give us more. This is our problem, played out for 4 decades now.

Interesting article.

https://dnyuz.com/2022/04/16/the-sky-high-pandemic-housing-market-finds-gravity-does-exist/

The Sky-High Pandemic Housing Market Finds Gravity Does Exist

Luis Solis, a real estate agent in Portland, Ore., marked a milestone weekend late last month. It was the first

flag link

military_tech

thumb_down

thumb_up

out was the brief blurb about about the fed raising rates and mortgage rates, as if that's going to impact the inflation. It won't, as the article quoted someone as saying.

What concerns me the most is the widening gap between the Fed rate and inflation/private lending rates. I had a feeling the fed would never raise rates enough to cool inflation, because they can't. The federal government's debt payments are tied to the federal lending rate. But with inflation, and the fed doing little, the private debt economy is taking unilateral action raising rates. And the federal government can service rates up to a certain amount. 2-3%, sure. 5%, little harder. But we're at 8.5% inflation. If the fed lending rate went to that, the federal government would be insolvent. It technically is, but 8%+ interest rates makes it very obvious.

People are not spending 8% more on new stuff. They're not buying 8% MORE stuff now than they did. I'm not, that's for sure. They're paying 8% more for stuff they have been accustomed to spending on. Food, clothing, rent, furniture, just normal stuff.

Interesting if you look at charts..... When the fed lending rate approaches the private lending rates, we have a recession. But here's the kicker. We've never had a scenario where private lending rates, AND the fed rate, were BOTH BELOW levels of inflation, and chasing it. And interest rates on 30 year mortgages are SKYROCKETING (relatively....), they're at 5.3% now with perfect credit. This shows that control of inflation has been lost when mortgage rates and the fed lending rate are both significantly below inflation levels. The problem is so much broader than just housing and mortgages though.

So expect inflation to continue until something is done about it that causes pain.... so expect inflation to continue.

Seems the housing market is peaking.

I was going to post about this

Yep. But most interesting thing the article pointed

Re: Yep. But most interesting thing the article pointed

Technically, they don't do HELOC's anymore.

Pretty sure they still do.

Re: Seems the housing market is peaking.

got slum lord house under contract april 2

Re: Seems the housing market is peaking.

Banks still paying no interest on deposits

Elections are a charade. Don’t blame yourself.

TigerBoard POTD