Posted on 09/03/2023 10:11:44 AM PDT by Kaiser8408a
Under Bidenomics, there is still too much Fed monetary stimulus in the form of >$8 trillion on its balance sheet. While the biggest surge in Fed activity occurred with Covid, The Fed has added 10% to its balance sheet under Billions Biden.
Despite not backing off the assets purchases by The Fed, conforming 30Y mortgage rate is still up 155% under Bidenomics.
Yes, The Fed is raising its target rate to cool inflation, but doing little with its balance sheet.
The Case-Shiller national home price index is up 32% under Vacation Joe!
It seems prices are out of control and The Fed refuses to trim its balance sheet. But don’t worry, Vacation Joe is probably on yet another vacation while Maui and Flordia suffer and The Ukraine war is seeing bodies pile up. Meanwhile, he still hasn’t visited East Palestine Ohio like promised.
(Excerpt) Read more at confoundedinterest.net ...
It’s astonishing that home prices keep increasing at such a high rate. Is money that once chased equities going into residential real estate? Is it foreign investors? Blackrock?
It’s astonishing that home prices keep increasing at such a high rate. Is money that once chased equities going into residential real estate? Is it foreign investors? Blackrock?
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We’re still in the biggest inflationary cycle in US History.
The cycle started post WW2 and hasn’t had any substantial deflation.
It’ll be interesting over the decade or two, as Boomers die off if this can be maintained.
“Time will tell.”
At least part of the rise in reported home sale prices is probably due to the rise in mortgage rates.
Low and mid range buyers who need a mortgage are priced out by mortgage payments. Likewise for would be low and midrange sellers who would need a new mortgage were they to move ... so they don’t move and don’t sell.
High end real estate is less affected by mortgage rates. High end real estate is more likely to be bought and sold in cash. No mortgage. Buyers who have enough cash to buy houses outright tend to be well off, and to buy higher end properties.
So while the total number of sales drops, the sales that do occur tend to be high end, so the reported average sale price goes up.
This has been the case before previous real estate drops / corrections / capitulations, and therefore may precede a future real estate price drop for those low to midrange properties bought by people who need a mortgage.
Good analysis. Thanks. I’ve observed the same thing as have real estate broker friends. All-cash deals are common at the high end.
One needs to look at median price changes rather than average price changes to sort that out.
Maybe I can help you out, as I’ll be one of the “dying off” over the decade or two.
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