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Fed Reserve and Interest Rates
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Real Estate Guy
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PostPosted: Tue Jan 24, 2017 3:41 pm GMT    Post subject: Fed Reserve and Interest Rates Reply with quote

It looks like the plan for the Fed is to raise rates approx. 3 times per year at about 1/4 point each time with a target of hitting a Fed Fund Rate of 3% by the end of 2019 ,......over another 3 years! This will prolong the agony by avoiding a massive correction, but letting air come out of the bubble they created slowly. As inflation raises(and they continue to lie about how high it really is), their goal is to have salaries come up enough to meet a soft pull back in prices. Basically, this continues to punish the people who did the right thing by saving money by rewarding those that over extended in 2002 -2008. Most "savers" wealth has(and will continue) to take the hit via inflation and low rates by the over stepping Fed to save the reckless buyers and the Wall Street bankers that funded them. Now, over the next 3 years, buying real estate will be like trying to catch a falling knife as prices stubbornly hold on and SLOWLY retreat. No one know how much they will correct(15%, 20%, 30%), but they WILL correct. My advice would be to stay patient, don't over pay or leave your financial principals or intuition. Now is the time to use caution more than ever. I am a developer, investor and have been in real estate for over 25 years. The Fed has destroyed the market not only by inflating the biggest bubble in history, but their efforts have also created a "top heavy" market in Boston where inventory(for builders and new buyers) is non existent. Their policies have created a wealth divide in this country and our area that is nothing short of criminal in my opinion. The faster the rates come up the better. Be an advocate by boycotting realtors and seller's and let's hope Trump's policies do force rates up higher whether that's the intended consequence or not. It's time to take our country back.
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victorgbishop



Joined: 03 Oct 2016
Posts: 25

PostPosted: Tue Jan 24, 2017 4:35 pm GMT    Post subject: Re: Fed Reserve and Interest Rates Reply with quote

Real Estate Guy wrote:
It looks like the plan for the Fed is to raise rates approx. 3 times per year at about 1/4 point each time with a target of hitting a Fed Fund Rate of 3% by the end of 2019 ,......over another 3 years! This will prolong the agony by avoiding a massive correction, but letting air come out of the bubble they created slowly. As inflation raises(and they continue to lie about how high it really is), their goal is to have salaries come up enough to meet a soft pull back in prices. Basically, this continues to punish the people who did the right thing by saving money by rewarding those that over extended in 2002 -2008. Most "savers" wealth has(and will continue) to take the hit via inflation and low rates by the over stepping Fed to save the reckless buyers and the Wall Street bankers that funded them. Now, over the next 3 years, buying real estate will be like trying to catch a falling knife as prices stubbornly hold on and SLOWLY retreat. No one know how much they will correct(15%, 20%, 30%), but they WILL correct. My advice would be to stay patient, don't over pay or leave your financial principals or intuition. Now is the time to use caution more than ever. I am a developer, investor and have been in real estate for over 25 years. The Fed has destroyed the market not only by inflating the biggest bubble in history, but their efforts have also created a "top heavy" market in Boston where inventory(for builders and new buyers) is non existent. Their policies have created a wealth divide in this country and our area that is nothing short of criminal in my opinion. The faster the rates come up the better. Be an advocate by boycotting realtors and seller's and let's hope Trump's policies do force rates up higher whether that's the intended consequence or not. It's time to take our country back.


Thank you for the advice - what really sucks in being in between. 2 multi degree professionals with a 20 mo old and expecting in May. We live in Boston and rent a 2 bed 1 bath apt. We've been looking for a home for over a year, but keep getting priced out. We are thankfully looking at Boston (Mattapan, HP, Dorchester, Rozzie, WR), Canton, Dedham, Quincy and Milton. We are AA and grew up in Boston, have family and church etc in Boston. We've lived in Brockton for 6 years and vowed we'd never do it again because of the awful commute. She works in Boston and I off 128 in Newton. We make literally just over the income threshold for any sort of assistance in purchasing and have only been preapproved for mortgage of 430k with a30k+ downpayment. Apartment condos are too small for us - we need a SFH.


What advice would you give me and my family?
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victorgbishop



Joined: 03 Oct 2016
Posts: 25

PostPosted: Tue Jan 24, 2017 5:14 pm GMT    Post subject: Looking for advice Reply with quote

Looking for honest and helpful advice on what the board thinks on my previous post
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PostPosted: Tue Jan 24, 2017 7:19 pm GMT    Post subject: Re: Looking for advice Reply with quote

victorgbishop wrote:
Looking for honest and helpful advice on what the board thinks on my previous post


If you make 'just' over the limit for assistance, there might be ways to lower you effective salary?

I'm not familiar with the process, but could you increase 401k to drop your effective income, give money to your kid each year? etc etc?

The only real option if you don't want to wait is to consider a fixer-upper and use sweat equity to make up the price inflation. I would not advise buying a much smaller place (such as 1 bedroom) as these are the first the get hit when the downturn occurs.

If Trump is successful is decreasing tax rates to 25%, could buoy current prices for a while. Most middle income folk get 10k in their pocket instantly each year assuming 30% rate.

If you can control the emotions, best thing is to wait.. but it could be a loooong wait
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PostPosted: Tue Jan 24, 2017 8:12 pm GMT    Post subject: Re: Looking for advice Reply with quote

victorgbishop wrote:
Looking for honest and helpful advice on what the board thinks on my previous post


I don't know if there's any magic bullet here - I just bought a SFH in Waltham last year, and paid at the top end of my budget for something that is solid but needs work (new furnace, A/C, etc.). And I paid well over 460 (your budget) for it.

I think your best bet is to widen the area in which you're looking. I saw a lot SFH on the market in Dedham/Natick last year in your price range. Not the best commute to Boston, but workable (especially if you can make the commuter rail work).

Personally, I don't see prices falling significantly unless the economy tanks. Fact of the matter is that population in the Boston area is increasing, and the number of SFH isn't growing significantly. Demand is still present. Even in the "off" season of real estate, homes and condos are going fast.

In my opinion, housing won't go up at the same insane rate as it has (~20%) since the market is used to the low interest rates. I think housing will instead go up at slower growth (1-2%) as interest rates slowly climb. I think the big wild card is the economy. If we get large economic growth and inflation like some folks think, that will definitely push housing higher. But if we get large trade wars, economic sluggishness might keep housing prices in check.

Best of luck - house hunting hasn't been fun this past year. Keep your eyes on the prize and you'll find something eventually.

- MStar
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PostPosted: Wed Jan 25, 2017 12:39 am GMT    Post subject: Re: Fed Reserve and Interest Rates Reply with quote

Real Estate Guy wrote:
It looks like the plan for the Fed is to raise rates approx. 3 times per year at about 1/4 point each time with a target of hitting a Fed Fund Rate of 3% by the end of 2019 ,......over another 3 years! This will prolong the agony by avoiding a massive correction, but letting air come out of the bubble they created slowly. As inflation raises(and they continue to lie about how high it really is), their goal is to have salaries come up enough to meet a soft pull back in prices. Basically, this continues to punish the people who did the right thing by saving money by rewarding those that over extended in 2002 -2008. Most "savers" wealth has(and will continue) to take the hit via inflation and low rates by the over stepping Fed to save the reckless buyers and the Wall Street bankers that funded them. Now, over the next 3 years, buying real estate will be like trying to catch a falling knife as prices stubbornly hold on and SLOWLY retreat. No one know how much they will correct(15%, 20%, 30%), but they WILL correct. My advice would be to stay patient, don't over pay or leave your financial principals or intuition. Now is the time to use caution more than ever. I am a developer, investor and have been in real estate for over 25 years. The Fed has destroyed the market not only by inflating the biggest bubble in history, but their efforts have also created a "top heavy" market in Boston where inventory(for builders and new buyers) is non existent. Their policies have created a wealth divide in this country and our area that is nothing short of criminal in my opinion. The faster the rates come up the better. Be an advocate by boycotting realtors and seller's and let's hope Trump's policies do force rates up higher whether that's the intended consequence or not. It's time to take our country back.


If you think the housing bubble is big, wait until the stock market bubble pops and you lose more than 50%. Now is the time to think about rotating into cash.
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Real Estate Guy
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PostPosted: Tue Jan 31, 2017 3:08 pm GMT    Post subject: Interest Rates Reply with quote

Rates have been manipulated by the FED BANK to zero(or now near zero) for over 10 years to bail out their bank partners all while doubling our debt and crippling our economy! Who authorized their power to commit such acts against our sovereign land? Congress did in 1908 as a sign of the first time big money and big banks bribed and took control of our corrupt politicians and as a result our country's money system, and hence our economy and markets. What could possibly go wrong as they normalize?? Yellen, Bernanke and Greenspan should be prosecuted in my opinion for their attack and destruction of the American economy and real estate market. When will Americans stand up, revolt and put an end to such an entity that has crippled us and is bleeding the typical American dry? Are their any other Americans here that have had enough???
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PostPosted: Tue Jan 31, 2017 9:41 pm GMT    Post subject: Same old, same old Reply with quote

No interest rate hike for now. What a surprise:

http://www.marketwatch.com/story/fed-to-hold-interest-rates-while-congress-debates-stimulus-2017-01-30
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Real Estate Guy
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PostPosted: Wed Feb 01, 2017 12:43 am GMT    Post subject: Same old is right Reply with quote

Thanks for posting the link. Isn't it dreadful that they can do this to the American people and its economy without any possible recourse? How much do we as Americans have to loose before something gets organized to repeal this PRIVATE BANK that has destroyed our markets, our economy and ours(and our children's) future. Would love to hear ideas how to dismantle that filth.
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Joined: 14 Jul 2005
Posts: 1794
Location: Greater Boston

PostPosted: Wed Feb 01, 2017 12:57 am GMT    Post subject: Re: Same old is right Reply with quote

Real Estate Guy wrote:
Thanks for posting the link. Isn't it dreadful that they can do this to the American people and its economy without any possible recourse? How much do we as Americans have to loose before something gets organized to repeal this PRIVATE BANK that has destroyed our markets, our economy and ours(and our children's) future. Would love to hear ideas how to dismantle that filth.


You could move your assets to something that's not US dollar based, such as government bonds from other countries or index funds for foreign markets. Note: I'm not recommending for or against this, I'm just brainstorming one way to side step The Fed.

- admin
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PostPosted: Thu Feb 02, 2017 12:07 am GMT    Post subject: Re: Same old is right Reply with quote

admin wrote:
Real Estate Guy wrote:
Thanks for posting the link. Isn't it dreadful that they can do this to the American people and its economy without any possible recourse? How much do we as Americans have to loose before something gets organized to repeal this PRIVATE BANK that has destroyed our markets, our economy and ours(and our children's) future. Would love to hear ideas how to dismantle that filth.


You could move your assets to something that's not US dollar based, such as government bonds from other countries or index funds for foreign markets. Note: I'm not recommending for or against this, I'm just brainstorming one way to side step The Fed.

- admin


If the belief is that the dollar is at a peak- it is historically quite high- emerging-market local-currency debt has a large yield and would benefit from the dollar weakening. Oil also tends to be inversely correlated with the dollar, so MLPs (good yield) might also be a reasonable option.
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PostPosted: Thu Feb 02, 2017 3:26 am GMT    Post subject: Re: Same old is right Reply with quote

Real Estate Guy wrote:
Thanks for posting the link. Isn't it dreadful that they can do this to the American people and its economy without any possible recourse? How much do we as Americans have to loose before something gets organized to repeal this PRIVATE BANK that has destroyed our markets, our economy and ours(and our children's) future. Would love to hear ideas how to dismantle that filth.


Agree with you. Not sure what if anything will happen. I believe most people feel powerless to do anything and now with Trump in power, and the billionaires in his cabinet, the rich will only get richer.
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Real Estate Guy
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PostPosted: Wed Feb 15, 2017 2:51 pm GMT    Post subject: Bubbles Reply with quote

How can buyers be so stupid? Bubble signs are EVERYWHERE in stocks and in housing. Interest rates are rising and even the Dovish FED Bank is confirming they will now CONTINUALLY raise rates. Are human beings actual this stupid? The mentality seems to be "hurry, hurry...better buy before the rates go up"?? Are you kidding me? Why on earth would somebody want to "rush to buy" at ALL TIME HIGH VALUATIONS when it's certainly going to come down? Notwithstanding, most of us were alive 10 short years ago when this just happened??? This is why I had no sympathy for the fools who bought in 2005-2007, and this is why I can't wait to scoop up all the foreclosures from people who bought 2015-2017/2018. Even the ones who stay put and don't get foreclosed, it will be fun to hear stories about how they bought their house in 2017 and hopefully by 2030 they can break even. Sounds like fun. A wise quote:: "Be fearful when others are greedy, but be greedy when others are fearful". Good luck to those that don't know the difference.
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PostPosted: Wed Feb 15, 2017 3:40 pm GMT    Post subject: Reply with quote

Maybe people read the below 1/24/17 Boston Globe article.

People need places to live and renting is still frowned upon, the pressure to "own" in this country is relentless, not to mention in greater Boston we are witnessing stupidly high rents, especially for one bedrooms. Having a 12 month or more lease makes it difficult to jump in and outbid all those other homebuyers. Seems like a lose-lose situation:

"Possibly the most defining feature of the local home market remains just how few homes there are to buy. December marked the 59th straight month of year-over-year decreases in the number of single-family homes for sale, the Massachusetts Association of Realtors said in a report Tuesday. It was the lowest inventory of homes on record in 12 years, said Paul Yorkis, president of the association.

“That is not a good situation because the supply, instead of keeping pace with demand, is falling further and further and further behind,” Yorkis said. “There’s a real concern in the realtor community on what 2017 is going to look like. . . . We’re experiencing a real serious problem.”

With interest rates continuing to climb, potential sellers who have locked in historically low rates might be reluctant to list their homes and join the buyers’ fray, Gulden said.

“I’m seeing people renovating instead of moving,” he said.

This is bad news for buyers who, in the hopes of becoming more competitive, feel under pressure to make concessions ranging from waving contingencies to expanding their search area when they find themselves priced out of their initial target community, Gulden said."

https://www.bostonglobe.com/business/2017/01/24/mass-home-sales-rise-but-hot-market-still-tilts-toward-boston/Mjy5rHcExG23222FrFY2gJ/story.html#comments

There are three comments, note the first one.
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PostPosted: Wed Feb 15, 2017 4:09 pm GMT    Post subject: Reply with quote

The Housing Bubble blog (run by a guy in Arizona named Ben Jones) mentions Boston in the first paragraph:

"Fear of an Overheated Market Hitting the Wall"

http://thehousingbubbleblog.com/?p=9996

http://www.winthroptranscript.com/2017/02/10/real-estate-prices-up-around-the-region-in-2016/

Interestingly, this piece about Ben Jones was on Salon.com in June 2016. His blog pointed out a possible flaw in a 2006 Harvard study about the U.S. Housing Market that was "bullish". Of course, we all found out the reason for the crash in 2008:

http://www.salon.com/2006/06/13/thehousingbubbleblog/
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