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I have a hunch that they may, and if they do then buyers will likely flood the market to buy while rates are low given there are probably many potential buyers out there who are holding out for rates to drop. The adverse affect is home values will surge once again making it even less likely for the little man to purchase. The little man gets screwed over either way unless more housing inventory comes online, atleast.. housing inventory that is not bought up by a corporation.
Based on economic conditions, Fed policymakers may have an opportunity cut the current policy rate by 25 bps some time in late 2024, hardly enough by itself to cause a surge in housing prices.
Will they cut more and sooner based on the needs of political theater?
No, I don’t think so, but wouldn’t be surprised if they did.
I have a hunch that they may, and if they do then buyers will likely flood the market to buy while rates are low given there are probably many potential buyers out there who are holding out for rates to drop. The adverse affect is home values will surge once again making it even less likely for the little man to purchase. The little man gets screwed over either way unless more housing inventory comes online, atleast.. housing inventory that is not bought up by a corporation.
The FED likely will cut rates in an attempt to help Biden, I doubt it will be enough to help Biden's election effort.
One thing I have not understood is why dems do not correlate the high interest rates, along with inflation and high government spending (mostly towards things that will not impact troubled areas of the American economy) as a contributor toward the mass layoffs.
I have a hunch that they may, and if they do then buyers will likely flood the market to buy while rates are low given there are probably many potential buyers out there who are holding out for rates to drop. The adverse affect is home values will surge once again making it even less likely for the little man to purchase. The little man gets screwed over either way unless more housing inventory comes online, atleast.. housing inventory that is not bought up by a corporation.
if they do, and at present a hike seems almost a given in a week, the drop would be perhaps the 25 basis points this hike will be. KJP will spin this as some sort of VE day style victory, while mortgage rates STILL climb.
BTW - that inventory. no builder is building less than 300-325K homes. aint no money in it. Even manufactured housing (mobile homes) licks 100K for entry level, and we are not talking the parking space.
they are still building "stalins" for corporations/govt to own, but that tends not to be attractive to most americans AND the rent is higher than a mortgage.
mebbe they can get the same deal on tents they buy for the rioters.....
I have a hunch that they may, and if they do then buyers will likely flood the market to buy while rates are low given there are probably many potential buyers out there who are holding out for rates to drop. The adverse affect is home values will surge once again making it even less likely for the little man to purchase. The little man gets screwed over either way unless more housing inventory comes online, atleast.. housing inventory that is not bought up by a corporation.
I've got some news- home prices, for the most part, have remained quite elevated, despite very high interest rates.
We are in the process of buying three houses at this time- we pay cash, so we are not concerned about interest rates. High interest rates USUALLY decrease home prices, as nearly everyone takes out a loan to buy a house. When rates are high, demand decreases and prices fall. This time, we have an unusual situation. Home owners who secured loans when interest rates were approaching zero are reluctant to SELL their home and give up those rates. And so the INVENTORY of houses is markedly low EVERYWHERE which has propped up house prices.
It is unlikely, given the above effect, that a marginal fall in interest rates will do anything to free up those homes secured with very low interest rates.
One of the houses we are buying is our retirement house, which will be back "home". House prices for what we want (we can afford it, but simply refuse to be "taken") are out of control where we want to live. And so, I have simply identified a few nice, Victorian mansions within 60 miles and I am going to have the house moved where we want. It costs about $300K ($200K for the move and $100K for the new foundation and lot), but it totals out to be $650K for a $1.2 million house. Odd times require unique approaches.
My oldest son (a former accountant and now a paramedic) is buying a house in Denver. We are paying for it. It is amazing- crappy little 1400 sq ft houses are $450-$500K. I am sure such homes are even much higher in hotter markets. No wonder younger people cannot afford homes. Until we started looking for my son, I had no idea how bad the housing market was in larger urban areas.
Something has to give. One of my pals, who does commercial real estate, believes these new prices and trends will be the end of the "McMansions" and usher back the 1,000-1,500 sq ft homes that people used to live in when I was a kid. The homes were so small that you just wanted to sleep there and spent most of your time outside of the house.
I doubt it. It would be an admission that the economy is slowing down and needs some help. The rest of the government is lying to us about low unemployment levels, low inflation, etc., so it would be hard to justify an easing of interest rates.
I've got some news- home prices, for the most part, have remained quite elevated, despite very high interest rates.
We are in the process of buying three houses at this time- we pay cash, so we are not concerned about interest rates. High interest rates USUALLY decrease home prices, as nearly everyone takes out a loan to buy a house. When rates are high, demand decreases and prices fall. This time, we have an unusual situation. Home owners who secured loans when interest rates were approaching zero are reluctant to SELL their home and give up those rates. And so the INVENTORY of houses is markedly low EVERYWHERE which has propped up house prices.
It is unlikely, given the above effect, that a marginal fall in interest rates will do anything to free up those homes secured with very low interest rates.
One of the houses we are buying is our retirement house, which will be back "home". House prices for what we want (we can afford it, but simply refuse to be "taken") are out of control where we want to live. And so, I have simply identified a few nice, Victorian mansions within 60 miles and I am going to have the house moved where we want. It costs about $300K ($200K for the move and $100K for the new foundation and lot), but it totals out to be $650K for a $1.2 million house. Odd times require unique approaches.
My oldest son (a former accountant and now a paramedic) is buying a house in Denver. We are paying for it. It is amazing- crappy little 1400 sq ft houses are $450-$500K. I am sure such homes are even much higher in hotter markets. No wonder younger people cannot afford homes. Until we started looking for my son, I had no idea how bad the housing market was in larger urban areas.
Something has to give. One of my pals, who does commercial real estate, believes these new prices and trends will be the end of the "McMansions" and usher back the 1,000-1,500 sq ft homes that people used to live in when I was a kid. The homes were so small that you just wanted to sleep there and spent most of your time outside of the house.
It is pretty crazy. Even starter homes here are 2-3x what they were in 2021. As soon as the government started printing that covid money, one of my physician clients went binge-shopping on median-tier homes (they did the same in the aftermath of the 08 recession when prices fell by 50%). Now approaching retirement (the doc in question is almost 70), they've been selling off the past two years and raked in millions. Aggressive developers are pestering the daylights out of my friends with farms, too. My business partner has four properties that combined total just under two square miles of land. Some of his neighbors have already parted with 100-300 acre plots, and at 1/10th or less of what they'll sell for once the county rubberstamps the developer's rezoning requests and the cookie cutter homes and/or apartment complexes go under construction. The locally born working and lower-middle classes here will never own their own homes unless they inherit assets from their boomer or GenX parents, and the pool of intergenerational bequeathals will shrink over time.
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