General Politics Discussion (XI) [ARCHIVED] World • Page 786

Boomers aren't selling their houses to Gen Z. They're selling them to corporations who will turn around and rent them out for twice what they're worth.

 

When is the housing market going to completely implode? It has to be soon right?

 

Probably not. There's still a housing shortage from the last time the market crashed and new construction basically dropped to zero. With interest rates expected to start falling relatively soon, unless there's a broader economic downturn, the housing market will likely continue cruising right along.

 

Got this email from the Foundation President and had to write him back a critique.

 

I've been hearing that interest rates are going to fall for the past year and all they've done is gone up and up lol

 

Yeah I’ve heard for 2 years interest rates are going to fall

 

I have a HELOC that has climbed all the way to 9.25 gtfoh with the “they’ll be falling any minute now” line

 

The fed has not increased interest rates in nearly a year, I believe, and the mortgage rates have fluctuated but they're only about a quarter percent up from where they were last year, after jumping much higher at the end of 2023.

Even still, unless interest rates spike super high, they're unlikely to have a chilling effect on the housing market because demand is still much higher than supply.

 

That's . . . not anything close to what I said?

 

I was commenting more on the general idea that has been spouted for months upon months that interest rates are going to drop soon, not about anything you specifically said.

that said, if you feel like it’s directed to you, I would be more than happy for you to get me out of this adjustable rate interest only HELOC and into something better! #helpme

 

Yeah people have been expecting the Fed to lower rates for nearly a year now because employment slowed a little bit and inflation is back down in the 3.5% range, but the Fed seems hell bent on getting back to 2% inflation so here we are

 

Is this something voting harder can fix?

 

It is still wild to me that even with mortgage rates where they are at, when you look at the last 30 year history of rates its kind of wild. Like we are not even at the lowest average rate that was available in the 1980's (like 9%) and then highest it was like 18%. I think my dad's first mortgage was in the 8% range if I remember correctly from what he told me.

My guess is that your purchasing power was higher back then and that the cost of a house has far out paced wage growth.

 

How hard are we talking?

We're still nearly a full percentage point lower than the average mortgage rate over the last 50+ years. It's just that rates had been historically low since the great recession and then spiked very suddenly from the lowest ever to the highest in a generation.

 

Exactly, though I don't quite understand/comprehend how from 2000 onward there never was a spike of any significance until recently. That does not track at all with the rate history before that period from what I am roughly looking at.

 

Also,,,,,,, they were buying a $100k house at 8-10% vs. today it's about 8% and that same house is now $500k

 

From what I am seeing and this is just roughly looking, when using the Case-Shiller Home Price to CPI Ratio and looking at say like 1990. You had rates around 8%-10% while that Home Price ratio was like .53, while today its up over 1.

 

Yes, because Trumps proposed economic and immigration policies are super inflationary so if he wins the Fed is gonna have to raise rates somemore to combat it which will either lead to higher loan costs or a crashed economy where you may lose your job. So your best bet for lowered interest rates+still having a job that allows you to take advantage of those is probably 4 more years of Biden

 

purchasing power overall was probably higher, especially before Volker killed the economy, but the bigger trade off is homes got bigger/we slowed down building in recent years. So you’re getting more house but there’s less of them to go around right now

 

Wages haven’t kept pace at all.

In 1980, the median home price was about $47k and the median family income was $21k, so your house was about 2.2x your gross yearly income.

Today the median home price is about $495k and the median family income is $101k, so your house costs almost 5.0x your gross yearly income.