2022 Real Estate Observations (versus, retiree, offices)

[yesmaybe]

Originally Posted by timberline742

The Fed has a difficult job. One that is rarely done well. They have a mandate that really doesn't include making sure the markets are high (for some like me this market is great as its a good buying opportunity, for others, not so much), but instead achieve relative price stability (low inflation) and near full employment. Easy to second guess their actions, in hindsight.

Bull sheet. The Fed has spent the last 14 years propping up the stock market with an ungodly amount of money.

They aren't raising rates because of inflation. They are raising it because people are refusing to go back to the office and all the "Great Resignation" talk. Unfortunately to break them means crashing the stock market.

[msRB311]

A lot of people had more money in 2020/21 from the government and people were just staying home not going on vacation, out to eat or anywhere really. Now things are pretty much back to normal.

Maybe some people prefer the lockdown lol.

[newenglandgal123]

Originally Posted by yesmaybe

Bull sheet. The Fed has spent the last 14 years propping up the stock market with an ungodly amount of money.

They aren't raising rates because of inflation. They are raising it because people are refusing to go back to the office and all the "Great Resignation" talk. Unfortunately to break them means crashing the stock market.

Why go back to the office when the same things can get accomplished with WFH? Anyone who says because of teamwork and company culture is full of bs. Who in their right mind wants to waste ~2-3 hours a day in their car and then be confined to sitting in a cubicle or office (maybe even without a window or stepping outside all day) when they don't have to? Who says you can't be productive and also get a load of laundry done or take your dog for a walk in between teams meetings or emails? WFH is here to stay. Rising rates aren't scaring me into going back into any office.....ever! There's more to life than keeping a regimented 9-5 and enduring a daily commute to an office. Sorry if companies are now scared they'll have to fulfill lease obligations for a half empty building but many are realizing and accommodating this re-balance to include WFH which in many cases= happier and more productive employees for them.

[simplexsimon]

Originally Posted by newenglandgal123

Why go back to the office when the same things can get accomplished with WFH? Anyone who says because of teamwork and company culture is full of bs. Who in their right mind wants to waste ~2-3 hours a day in their car and then be confined to sitting in a cubicle or office (maybe even without a window or stepping outside all day) when they don't have to? Who says you can't be productive and also get a load of laundry done or take your dog for a walk in between teams meetings or emails? WFH is here to stay. Rising rates aren't scaring me into going back into any office.....ever! There's more to life than keeping a regimented 9-5 and enduring a daily commute to an office. Sorry if companies are now scared they'll have to fulfill lease obligations for a half empty building but many are realizing and accommodating this re-balance to include WFH which in many cases= happier and more productive employees for them.

I agree with your feelings about WFH but don't believe that the Fed is raising rates just to force people back into the office. The Fed certainly wants to tamp down demand, but they don't seem to care how it happens.

[porterhouse]

Originally Posted by yesmaybe

I think you are premature...

Nope. I get that we just hit 6% 2 weeks ago, but here we are. Between interest rates and the equity markets it’s no longer a question of if housing will be impacted, but rather how significantly.

[timberline742]

Originally Posted by simplexsimon

I agree with your feelings about WFH but don't believe that the Fed is raising rates just to force people back into the office. The Fed certainly wants to tamp down demand, but they don't seem to care how it happens.

They have limited tools to work with. They care, they're trying to do something that has rarely been done, slow down an economy without a recession. Depening on the ex Fed Governor you listen to, that's been accomplished once in history, to a few times, depending on what you consider a "soft landing" (I believe it was Volcker that hated/refused to use the term? Been awhile, but there was a chair that hated it.). In retrospect (everything is easy in restrospect) they should have started raising rates earlies and slower, but totally understandable with the supply chain fragility and covid why they didn't. This stuff is not simple. The best and brightest minds in economics will disagree (and no wonder, the mixed signals in the different regional areas are confusing). Internet warriors aren't going to figure out. They will second and third guess though.

[GeoffD]

Originally Posted by timberline742

It really only can get worse. The economy was so on fire with record job growth, full unemployment, wages raising, inflation (in part due to high demand, but also supply chain issues), etc that they've had to try to put the brakes on it to cool it off. Soft landings are incredibly difficult, and rarely pulled off, so at least a little recession is likely. Can't be on fire like that forever.

I’m laughing at the typo.

We juiced the economy for 14 years with artificially low interest rates and deficit spending. There was always going to be a hangover from it. It’s unclear how this impacts metro Boston real estate but the rest of the state is going to have housing prices linked to interest rates and median household income. Where I live, oceanfront and behind a gate at a summer community will probably hold value since it’s a scarce resource. A middle class house is bound to correct to reflect the local economy and qualifying for a mortgage. Mortgage rates are still below the 50 year average.

[r_p]

Originally Posted by timberline742

They have limited tools to work with. They care, they're trying to do something that has rarely been done, slow down an economy without a recession. Depening on the ex Fed Governor you listen to, that's been accomplished once in history, to a few times, depending on what you consider a "soft landing" (I believe it was Volcker that hated/refused to use the term? Been awhile, but there was a chair that hated it.). In retrospect (everything is easy in restrospect) they should have started raising rates earlies and slower, but totally understandable with the supply chain fragility and covid why they didn't. This stuff is not simple. The best and brightest minds in economics will disagree (and no wonder, the mixed signals in the different regional areas are confusing). Internet warriors aren't going to figure out. They will second and third guess though.

There cannot keep raising rates. Both the Yen and Pound have been hammered in recent months. The Japanese (largest foreign treasury securities holder) have already started selling treasuries to defend the Yen and the more they dump the sooner the Fed will have to act. UK is already in pretty bad shape.

[porterhouse]

Originally Posted by GeoffD

Where I live, oceanfront and behind a gate at a summer community will probably hold value since it’s a scarce resource.

Prime locations will always fare better. However, many of the so called cash buyers are looking a lot poorer than they did 6-12 months ago. It will be interesting to see where things go from here.

[yesmaybe]

Originally Posted by newenglandgal123

Rising rates aren't scaring me into going back into any office.....ever! There's more to life than keeping a regimented 9-5 and enduring a daily commute to an office. Sorry if companies are now scared they'll have to fulfill lease obligations for a half empty building but many are realizing and accommodating this re-balance to include WFH which in many cases= happier and more productive employees for them.

I imagine your attitude will change once the layoffs start. I think the Fed was hoping that tanking the stock market would be enough. But clearly it's not.