[VegasVicsezhowdy]

Can someone explain how the Fed can drive the housing market when the monetary transmission is broken?



Below is a link to the FED's framework from '07, compare to the results charted above.

Housing and the Monetary Transmission Mechanism
Frederic S. Mishkin
Member
Board of Governors of the Federal Reserve System
August 2007

LINK: http://www.federalreserve.gov/pubs/f.../200740pap.pdf

"By raising or lowering short-term interest rates, monetary policy affects the housing
market, and in turn the overall economy, directly or indirectly through at least six
channels: through the direct effects of interest rates on (1) the user cost of capital,
(2) expectations of future house-price movements, and (3) housing supply; and indirectly
through (4) standard wealth effects from house prices, (5) balance sheet, credit-channel
effects on consumer spending, and (6) balance sheet, credit-channel effects on housing
demand."

[tbill618]

Originally Posted by VegasVicsezhowdy

Can someone explain how the Fed can drive the housing market when the monetary transmission is broken?

"By raising or lowering short-term interest rates, monetary policy affects the housing
market, and in turn the overall economy, directly or indirectly through at least six
channels: through the direct effects of interest rates on (1) the user cost of capital,
(2) expectations of future house-price movements, and (3) housing supply; and indirectly
through (4) standard wealth effects from house prices, (5) balance sheet, credit-channel
effects on consumer spending, and (6) balance sheet, credit-channel effects on housing
demand."

Isn't it pretty obvious that low interest rates are the big catalyst? The Fed cannot spur aggregate demand with low interest rates, or QE, but they sure as hell can pump up asset prices. They are counting on a wealth effect but I think too many have been burned in the last two bubbles and they are hoarding cash. At least that is what I am doing.

[tbill618]

Las Vegas Real Estate Market Update (March 2013) - YouTube

[tbill618]

I saw last week the LVRJ had a chart showing population growth from 2002-2012 for Clark County. It went from about 1.5m to 2m in the course of ten years including the housing bust. I see no reason why that shouldn't continue for at least the next ten years considering the baby boomers are retiring.

If there are 50,000 homes that will hit the market sooner or later, and I think that is correct, that would be about 3 years of inventory for these new Las Vegans. That would stall a housing recovery but certainly not send it into a tailspin. I guess we will see in 2014. If Bryan Lebo is right and we appreciate another 10-20% this year we would still be down by about 1/3 from 2005 levels but not everyone bought at those inflated prices. Any way you slice it the housing market should be on it's feet, foreclosure crisis completely over, in 3-4 years.

[lvoc]

Originally Posted by tbill618

Las Vegas Real Estate Market Update (March 2013) - YouTube

Well he is finally getting the message.

Extrapolating a trend out a couple of months is reasonable. A year is not. Then again you have to warn your client that we may be about to see another 25% year or more.

Shades of 2004. Note that another 20% appreciation will take more than 50% of the underwater homes into positive territory.

Kind of like watching a train wreck from a distance is it not?

[tbill618]

Originally Posted by lvoc

Well he is finally getting the message.

Extrapolating a trend out a couple of months is reasonable. A year is not. Then again you have to warn your client that we may be about to see another 25% year or more.

Shades of 2004. Note that another 20% appreciation will take more than 50% of the underwater homes into positive territory.

Kind of like watching a train wreck from a distance is it not?

My numbers were a guesstimate based on my house. Up 20% to lift 50% of houses out of negative equity would go a long way to bringing things back to normal.

Don't give him too much of a hard time, Lebo did call 2012 as a good year. Also, the stuff I saw in my house hunt was nuts. If we are at fair market value soon I would think that the effects of low interest rates would abate.

[bayview6]

Originally Posted by lvnyc

Complacency At An All-Time High in [Market-Ticker]

"Give me a break. The guy who decides he doesn't need more than 2 hours of sleep a night and starts shoving coke up his nose to achieve that outcome may indeed produce more work with less sleep and appear to be more productive."


Whatever. Works for me.

[bayview6]

Originally Posted by lvoc

Well he is finally getting the message.

Extrapolating a trend out a couple of months is reasonable. A year is not. Then again you have to warn your client that we may be about to see another 25% year or more.

Shades of 2004. Note that another 20% appreciation will take more than 50% of the underwater homes into positive territory.

Kind of like watching a train wreck from a distance is it not?

A train wreck from a distance?

2004 almost 10 years ago and there is a lot of inflation under the bridge. Plenty of houses are still selling BELOW their replacement value, not even considering land costs.

[Clarkcty]

Here we go again.

Nevada's foreclosure starts soar 334 percent in February | Las Vegas Review-Journal

[007 license to sell]

Keep in mind this housing market inventory is being controlled by the banks that are claiming ab284 has forced them to hold back inventory. Which is a bunch of rubbish, the banks started laying off people that work in the banks during the crash and would spout that they didn't have enough employees to do the job to help distressed home owners.

The banks have been foreclosing and bundling the homes again to Hedge funds that have agreed not to sell the properties from 3 to 5 yrs depending on the agreements and those Hedge funds are putting renters in them. There is so much more to the story of what is really going on that it's like an onion you have to peel down the layers to find out what's really there.


You may or may not have heard about hoa's selling liens they have to properties to investors. This isn't a deal that either the ordinary small investor wants to be caught up in or the renter looking to rent a home. The danger of losing the money spent on the investment and additional money to get out could be more than what the investor can afford. And the tenant runs the risk of being evicted soon after they have moved in or told to move without allot of notice after renting for a year or more.

This is definitely a case of buyer and tenant beware.

Shrewd investors snap up HOA liens, rent out houses



http://www.reviewjournal.com/business/housing/shrewd-investors-snap-hoa-liens-rent-out-houses