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Am I stupid for not buying a house now???
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mpr



Joined: 06 Jun 2009
Posts: 344

PostPosted: Wed Mar 21, 2018 10:48 pm GMT    Post subject: Reply with quote

[quote="Anonymous"]
Quote:

People think the Fed alone set the rate. While this is true for the short term rate, it is not for the long rates. Those are set by the market, and with 21 trillion new issues annually and our unwinding, the market will push yields higher.


This is only partly true. The market sets the long rates by arbitraging the expected path of short rates. In other words, if I think the long rate is above the expected path of short rates over the longer period, I can make unlimited money by arbitrage.

The only reason long rates would rise is if investors expected short rates to rise, and the only reason that would happen is if there was inflation or the economy was very strong. Rising long rates are about inflation expectations, not outstanding bond issues.

Of course that could happen, but there isn't much sign of it, and in the scenario where the economy was strong you would not expect falling house prices.
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PostPosted: Wed Mar 21, 2018 11:03 pm GMT    Post subject: Reply with quote

Supply is also a factor. I forsee alot of owners clinging onto their homes just to retain the crazy low mortgage rate.

Most recent buyers look to be buying to actual live in their homes and have their kids go to the local schools.
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PostPosted: Wed Mar 21, 2018 11:23 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:

Ten years ago, everyone was so certain (and hopeful) that the recession would precipitate a big price drop in the high end towns. It didn't. Prices probably softened or stagnated a bit. But there was no noticeable crash. Washington is not going to allow interest rates to spike, thereby causing another housing crisis. Interest rates will tick up gradually over a period of time.
Of course I may be wrong


Property in high end towns did correct here 10 years ago. Agreed, it was only about 10%, but the market was stagnate and listings took months/years to sell.The reason it wasn't a complete crash was due to a decade of low rates and years of manipulative bond buying to suppress rates. So, in part your correct. However our debt was 7-8 trillion 10 years ago. Since then all the bond buying and Government policies drove that to now 21 trillion. This is compounding because it is now significantly higher than our GDP can support. The Fed has already stated they will not repurchase current bonds and are 1 Year into a 3 Year rate rising cycle. The combination of these two monetary tightening will at some point cause a correction to begin. This time however dropping the fed fund rate will be much less effective than in 2008. This time we have 21 trillion in debt to sell each year and the Fed will soon be unloading 50 billion per month more as they unwind from the previous buying. People think the Fed alone set the rate. While this is true for the short term rate, it is not for the long rates. Those are set by the market, and with 21 trillion new issues annually and our unwinding, the market will push yields higher. Next time, the Fed won't be able to suppress rates as much. My projections tell me a 30 yearcould spike as high as 9% in the early stages of the next correction. When the Fed kicks in, they will be unable to get this down as much. They will try, but with so much debt and low GDP my analysis suggests that even if they drop the fed fund rare back to zero, the long end will demand 6%-8% higher.
Of course, I may be wrong


Complete bullshit. Japan has shown you can borrow up to 3x gdp and still have negative rates because the high paying manufacturing jobs are never coming back. The high rates of the 70s to 90s we're only possible when most people were making good wages before NAFTA and outsourcing to China. We will see all rates go back down to record lows when the next recession comes.
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PostPosted: Thu Mar 22, 2018 2:00 am GMT    Post subject: Reply with quote

Quote:
in the scenario where the economy was strong you would not expect falling house prices


The 2008 financial crisis was triggered by house price declines that started in 2006. The economy was fine until then. The chicken doesn't have to come before the egg.
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PostPosted: Thu Mar 22, 2018 3:24 am GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
in the scenario where the economy was strong you would not expect falling house prices


The 2008 financial crisis was triggered by house price declines that started in 2006. The economy was fine until then. The chicken doesn't have to come before the egg.


Subprime lenders didn't require a 20% down payment and income verification. With deregulation happy Trump, this could happen again.
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PostPosted: Thu Mar 22, 2018 3:40 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
in the scenario where the economy was strong you would not expect falling house prices


The 2008 financial crisis was triggered by house price declines that started in 2006. The economy was fine until then. The chicken doesn't have to come before the egg.


The financial crisis was started when the subprime loans started to default and the investment banks ran out of suckers to buy their subprime mortgage backed securities. Without subprime mortgages, the egg will definitely come before the chicken.

https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008
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PostPosted: Fri Mar 23, 2018 7:32 pm GMT    Post subject: Reply with quote

Quote:
The financial crisis was started when the subprime loans started to default and the investment banks ran out of suckers to buy their subprime mortgage backed securities. Without subprime mortgages, the egg will definitely come before the chicken.


The subprime loans wouldn't have been in default in real estate prices weren't dropping. Loans are only a problem if people can't pay them back, or sell their asset. This time will be different. The downward economy will be triggered by the implosion in the bond market which will also destabilize stocks. The next recession will start this way. Real estate will lose its value after, contrary to being first, in 2006. Real estate will devalue as people lose their jobs when the recession starts. Interest rates will rise. Housing will bust. It's really very easy to understand. I am perplexed at to how anyone can not see this.
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PostPosted: Sat Mar 24, 2018 1:44 am GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
The financial crisis was started when the subprime loans started to default and the investment banks ran out of suckers to buy their subprime mortgage backed securities. Without subprime mortgages, the egg will definitely come before the chicken.


The subprime loans wouldn't have been in default in real estate prices weren't dropping. Loans are only a problem if people can't pay them back, or sell their asset. This time will be different. The downward economy will be triggered by the implosion in the bond market which will also destabilize stocks. The next recession will start this way. Real estate will lose its value after, contrary to being first, in 2006. Real estate will devalue as people lose their jobs when the recession starts. Interest rates will rise. Housing will bust. It's really very easy to understand. I am perplexed at to how anyone can not see this.


Many of the subprime loan borrowers just couldn't afford the mortgages, but the banks gave them loans anyway. They were able to get 125% loans. Basically, the banks gave people and extra 25% to pay for their mortgages. Once they ran out of money, they defaulted.

The bond market will not implode. Stop listening to the conspiracy idiots. The government will convert Social Security/Medicare into a welfare system and roll back to Clinton era taxes in order to pay back the debt.

The next housing bust will be smaller than the last one because there's no overbuilding unlike the last boom. Unless you get a foreclosure deal, you will only get 15% off peak prices and we're not at the peak yet. Maybe in the next few years. When the bust happens, people will be paying 2017-2018 prices several years from now.

You are perplexed because you don't understand how the economy works and don't understand why prices have risen since 2013. It's very simple. People get jobs, house prices go up. People lose jobs, house prices go down. When people start to lose their jobs, then you will see prices go down.
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PostPosted: Sat Mar 24, 2018 2:39 pm GMT    Post subject: Reply with quote

To all of you people who are so smart about how the economy works: Can you just please tell us when this big correction will happen, and by what percent
will the housing prices drop?
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PostPosted: Sat Mar 24, 2018 3:58 pm GMT    Post subject: Reply with quote

Quote:
To all of you people who are so smart about how the economy works: Can you just please tell us when this big correction will happen, and by what percent
will the housing prices drop?


Sure. I believe real estate will flatten out in late 2018..By late 2019 I expect interest rates to be much higher, and we will see a stock crash by then leading to reduced GDP and some layoffs. Real-estate will begin it's decline over the next 3 to 4 years that follow at 5-10% per year. My prediction would be a 30-40%.correction over 4 years.
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PostPosted: Sat Mar 24, 2018 4:26 pm GMT    Post subject: Reply with quote

Now I can plan.
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PostPosted: Sat Mar 24, 2018 5:57 pm GMT    Post subject: Reply with quote

The correction will begin when your neighbour or friends are laid off from their jobs. This is cycle was driven by people buying to live rather than flip. They will hold on as long as possible
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PostPosted: Sat Mar 24, 2018 6:00 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
To all of you people who are so smart about how the economy works: Can you just please tell us when this big correction will happen, and by what percent
will the housing prices drop?


Sure. I believe real estate will flatten out in late 2018..By late 2019 I expect interest rates to be much higher, and we will see a stock crash by then leading to reduced GDP and some layoffs. Real-estate will begin it's decline over the next 3 to 4 years that follow at 5-10% per year. My prediction would be a 30-40%.correction over 4 years.


30 to 40% for the speculative and bad locations such as medford, malden, chelsea. Top school towns about 15%
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PostPosted: Sat Mar 24, 2018 6:13 pm GMT    Post subject: Reply with quote

Quote:
30 to 40% for the speculative and bad locations such as medford, malden, chelsea. Top school towns about 15%


I agree that top school towns will fall less, but I still believe they will reduce at or over 20%
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PostPosted: Sun Mar 25, 2018 2:20 am GMT    Post subject: Reply with quote

Anonymous wrote:
Quote:
To all of you people who are so smart about how the economy works: Can you just please tell us when this big correction will happen, and by what percent
will the housing prices drop?


Sure. I believe real estate will flatten out in late 2018..By late 2019 I expect interest rates to be much higher, and we will see a stock crash by then leading to reduced GDP and some layoffs. Real-estate will begin it's decline over the next 3 to 4 years that follow at 5-10% per year. My prediction would be a 30-40%.correction over 4 years.


I don't know what you mean by "much higher" interest rates. Mortgage rates have been below 5% for the last nine years.

http://www.freddiemac.com/pmms/pmms30.html

I've been reading this message board for quite some time, and it's been a
common prediction that rates are about to pop soon for years now. The
Fed isn't going to spike interest rates all at once. Washington does not want to cause another housinng crisis that can be avoided.
Rates will inch up over time, allowing the market to adjust and absorb the effects.

I'm not a realtor, and have no agenda in trying to get anyone to buy a house.
Prices may very well come down. I'm just not sure it'll happen they way you predict and by the amount you think.
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