Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
First paragraph said Fed dropped short term interest rates to near zero but it would not have much of an effect on long term mortgage rates.
Next you said "Lo and behold mortgage rates didn't rise, they FELL."
So then the Fed lowering short term rates DID lower long term rates...just as expected.
no that is not what i said .
when qe2 ended and the fed stopped buying bonds the fact the fed dropped out of the bond market had no effect as far as fed action influencing the bond market . investors bid rates to all time lows while the fed hoped with out their meddling bond rates would start to rise . bill gross bet the ranch that without fed intervention anymore in the bond market that bond rates would go way higher .boy was he wrong .
the feds actions on short term rates dont always have the bond market following .
.
my point is just because the fed controls short term rates does not mean they control the bond rates and hence longer term mortgage rates . investors control those .
even when the fed tries to influence the bond market by buying bonds or not buying them as they did in the qe's , if investors don't see it that way they will not follow the feds wishes .
over the last 3 years short term rates rose and bond rates are lower
Last edited by mathjak107; 09-28-2017 at 02:10 PM..
when qe2 ended and the fed stopped buying bonds the fact the fed dropped out of the bond market had no effect as far as fed action influencing the bond market . investors bid rates to all time lows while the fed hoped with out their meddling bond rates would start to rise . bill gross bet the ranch that without fed intervention anymore in the bond market that bond rates would go way higher .boy was he wrong .
the feds actions on short term rates dont always have the bond market following .
.
my point is just because the fed controls short term rates does not mean they control the bond rates and hence longer term mortgage rates . investors control those .
even when the fed tries to influence the bond market by buying bonds or not buying them as they did in the qe's , if investors don't see it that way they will not follow the feds wishes .
over the last 3 years short term rates rose and bond rates are lower
Greenspan was celebrated for keeping interest rates so low. If interest rates were higher, not only would it be more difficult to finance new construction projects and mortgages, the stock market would be lower and that too would effect real estate in NY.
And when I said extremely high real estate prices, I was not speaking of 25 million dollar condos. Blake made that up. I was speaking of the insane rental market that makes even ghettos too expensive for working class people. $1300 to live in a studio in the Bronx is extremely high, when in the 1990s one could have gotten a studio in Manhattan for under $1000.
it still does not change what i said . the fed has very little to do with the rates on mortgages and bonds . the worlds investors take those wherever they see fit whether up or down ,despite the fed action . investors move bond rates based on perception of inflation over the life of the bond ,greed and fear .
raising short term rates is usually good for bonds because it puts pressure on inflation .bond investors like that . the last 40 years show that to be true as you can see in the chart i posted earlier . only 1996 had bonds fall when the rates on the short end went up more than 1% in a year .
if that was true the low rates we saw and fed stimulus should have had real estate soaring instead of plunging deeper through the years right after 2008 .
so there is a whole lot more involved in real estate prices especially location . the house we sold in 2012 in the pocono's is worth 65k less today along with every other home in the area falling . .
the coasts have been the wealth centers no matter what the fed does .
you guys are trying to pin to much on the fed without really understanding what they can alter and what they can't . the coasts have been wealth centers as far back as i can remember and for all different reasons ..
the coasts have been the wealth centers no matter what the fed does .
you guys are trying to pin to much on the fed . the coasts have been wealth centers as far back as i can remember .
No, we aren't. There are specific reasons why the fed keeps interest rates so low. If they raised interest rates, the stock market and related wealth would go DOWN in coastal areas, and so would real estate prices.
The outrageously high prices affecting working class people are the result of public policy. Starting at the fed, and federal and state tax credits don't help either.
no that is not true .read my posts .there is no direct link between rates and real estate values . they move opposite more than they move together. rising rates are a sign the economy is getting stronger .rates don't rise in a vacuum . that is why all these reports and statistics about the economy are weighed and measured .
there is little correlation between rates and stock markets falling as long as rate increases are slow . markets don't like fast rate increases . markets have gone up nicely when rates are raised ,the economy is growing and a line held on inflation by rising rates . i think you guys need to do some research on this stuff .not until rates get way way higher do they suck to much money out of the economy and weigh things down .the greatest appreciation has been with mortgages in the 6-7% range .
are you forgetting 2006-2007 had almost 7% mortgage rates when we were in that bubble and values were soaring .
when i bought my first investment property in 1987 real estate was hot here . i was happy to get a mortgage at just 7-7/8%.
rising rates mean we have a rising economy .
anytime someone tries to give a simple answer to a complex issue it is likely going to be the wrong answer . people try to pin things specifically to a political party or the fed all the time.
i love how the wanna be economists attempt to fix the ills of the world with hardly a thimble full of knowledge and really even ever understanding the big picture .
i consider myself pretty far above average with this stuff but i would never try to predict or guess what changes in rates would ever do . if bill gross and the most knowledgeable ,brilliant economists on the planet can't predict what hope do you guys think you have .
Last edited by mathjak107; 09-28-2017 at 05:21 PM..
The fed rates heavily influences the stock market which heavily influences the wealth effect which heavily influences real estate pricing pressure
Or does all of the later influence the prior.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
