Posted on 07/16/2022 6:46:06 AM PDT by Browns Ultra Fan
Housing in the US is simply unaffordable for the middle class and low-wage workers. Combine rising food costs and gasoline/heating costs, and we have an economic disaster on our hands.
US existing home sales for June will be released on Wednesday. But can The Fed kill-off home price inflation?
A preliminary analysis of existing home sales for June is for a seasonally adjusted annual rate of 5.1 million, down 5.4% from May and down 14.2% from last June. As The Fed cranks up its target rate (green line) and eventually shrinking its balance sheet, we will see further shrinking of existing home sales this summer.
But home price inflation remains high (Case-Shiller National home price index at 21.23% YoY, Zillow’s rent index at 14.75% YoY) while the Consumer Price Index YoY is at 40-year high of 9.1% YoY. In other words, home price inflation is 233% of the stated inflation rate from Uncle Sam.
May’s existing home sales report was … sobering. There is still historically low levels of available inventory and median sales price of existing home sales was 14.64% YoY. Of course, the alternative to ownership is renting which is growing at 14.75% YoY. Simply unaffordable.
The gap between REAL home price growth (12.13% YoY) and REAL average hourly earnings (-3.95% YoY).
Consumer sentiment for housing is near the lowest level since 1982.
The Fed seems determined to remove the punch bowl in its efforts to crush inflation. But will The Fed’s efforts also crush the housing and mortgage market?
(Excerpt) Read more at confoundedinterest.net ...
Same thing happened during the Carter inflation. Mortgage rates through thee roof.
If we are homeless,( i.e. ‘landless’), unemployed and unable even to own our future, the we are desperate and without hope. At that point, there will be NO individuals. We will be one immense mass of classless and undifferentiated ‘being’...like mindless cattle.
They can control us more efficiently!
“If we are homeless,( i.e. ‘landless’), unemployed and unable even to own our future, the we are desperate and without hope. At that point, there will be NO individuals. We will be one immense mass of classless and undifferentiated ‘being’...like mindless cattle.
They can control us more efficiently!”
Excellent stuff. What’s interesting to me is that it’s the cities where order is breaking down the fastest. Their theory is that they can force everyone into pods and feed them bugs, but the cities are becoming more lawless by the day.
> Is the fed killing housing to tame inflation?
Hopefully. Home prices are ahistorical now. The main support is the belief that they’ll keep appreciating. That’s what many of the “corporate” investors are banking on. That belief is evaporating. When gone, the next support is ability to make the payment and that is a _much_ lower level.
The Fed seems determined to remove the punch bowl in its efforts to crush inflation.
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Before we know it the Fed will be backing off on its “commitment”. When the market starts showing signs of real stress, unemployment rises, and pension funds/retirement assets start cratering the Fed will quickly reverse course.
Powell is no Volker and our economic backdrop is different now than it was back then. There is no way Powell sticks with the tightening regimen. He will accept an elevated degree of inflation as the lesser of two evils IMO.
What’s interesting to me is that it’s the cities where order is breaking down the fastest.
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That would be THEIR cities.
The main support is the belief that they’ll keep appreciating.
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The cost of labor, land and building materials is steadily rising. As you may have noticed insurance companies are increasing their premiums to reflect higher replacement costs.
It will take a wave of foreclosures to slow down the rise of housing and rental prices. Inventory is still tight in many areas.
They control just about all of the cities. What’s the largest city not under Democrat rule? Even when a larger city elects a Republican mayor, it’s usually a RINO. Rudy was mayor of New York more than two decades ago.
Those cities are getting what they voted for so I have little sympathy for them.
They may not like the crime wave but they still love the policies and politicians who brought them this misery. You can’t fix stupid.
I bought a house during the “Carter inflation”.
The thing to do is not to live in a city.
For example I worked in Seattle, but I did not live there.
I lived 32 miles East of it where it was affordable. It isn’t affordable anymore but timing is important.
Anybody that rents is an idiot.
Learn how to fix cars and commute.
If you can’t or won’t do that you must be a Democrat and I have no use for you.
Nor does “mother nature”.
Compost yourself and don’t screw up my life you shellfish bastard.
This is necessary.
Credit issued is highly inflationary. Contrary to popular belief, banks do not dip into their deposits to make loans — they create them from thin air. Every car loan, every mortgage, and every addition to your credit card is made up of brand new money.
Now, some will insist that since the loan is extinguished upon repayment, that there is no inflationary effect, but the inflation occurs when the newly-cut check is presented to the seller who will then spend it.
This is why interest rates are raised during inflationary periods. Not to reduce business activity, but to cut down on all that new money.
Having an abundant and affordable supply of energy, food and housing will only lead to the yearning of the people to have more freedom and independence. We can’t have that now, can we.
A remember back during the housing bubble that began in the early 2000s, and I was speaking with a friend in Southern California where the housing marker was ver hot.
She said words to the affect of: Sure, my husband and I have a home that on paper is now worth much more than we paid for it starting out more than a decade ago, but now we have one child who recently graduated college and another graduating next year and they are both likely going to still be living at home with us because buying or renting is already out of reach for them. Yes, there is a double edged sword to escalating home prices - great if you are already in the game and very bad if you are not. That is why housing price bubbles burst - 1st time homw buyers leave the market.
The Fed seems determined to remove the punch bowl in its efforts to crush inflation. But will The Fed’s efforts also crush the housing and mortgage market?
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The write seems conflicted. They’re complaining about the sky hight housing prices, then seemingly complaining about the Feds possible efforts which might crush the housing market. The only way to lower the cost of housing is to either increase supply and lower demand. The fed doesn’t build houses, so it raises rates to lower the ability to get a cheap mortgage.
Biden and Powell aren’t in charge.
Black Rock, China, Bill Gates and others are buying up properties to turn us into serfs.
All according to plan.
This is intentional.
This societal ‘restructuring’ that Liberals are forcing on the US citizens is directly out of the ‘Communism 101’ playbook.
It’s SUCH a line for line copy of the typical Communist plan for dominance, that I am embarrassed that I feel like the only person I know who understands this. The globe is littered with the many and very well recorded Communist failures.
Despite whole generations whose lives have been lost and survivors who are socially and culturally stunted, countries where this has been attempted (and failed) remain forever scarred and seem never to fully recover.
He%@ Communism is SUCH a deformed ideology that it has not even succeeded in Russia, where it was invented… AND it has never been successfully exported! The Liberals’ collective ignorance of this basic and incontrovertible fact tells you JUST how ignorant they are!
Prices in the better-run red states aren't going to sink much - if at all. The desire to escape Communism is a powerful motivator across the entire world - now it has come to the USA.
This isn't 2008 - those trillions of new dollars have to go somewhere, and the somewhere is real estate.
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