Posted on 09/23/2022 12:35:01 PM PDT by NeverCheney
Real estate investors have largely done well for the past few years. But with higher interest rates, things could be about to change.
The U.S. Federal Reserve raised its benchmark interest rates by 0.75 basis points on Wednesday, marking the third such hike in a row.
Higher interest rates translate to bigger mortgage payments — not good news for the housing market. But cooling down housing prices is part of what needs to be done to bring inflation under control.
“For the longer term what we need is supply and demand to get better aligned, so that housing prices go up at a reasonable level, at a reasonable pace, and that people can afford houses again,” Fed Chair Jerome Powell said on Wednesday. “We probably in the housing market have to go through a correction to get back to that place.”
“From a sort of business cycle standpoint, this difficult correction should put the housing market back into better balance.”
Those words might sound scary, especially to those who lived through the last financial crisis — where the housing market went through a very, very difficult correction.
But experts say there are good reasons to believe that regardless of how things play out, it won’t be a return to 2008.
(Excerpt) Read more at yahoo.com ...
Seriously, I saw homes barely selling in 2018 for 189k going for 275k in 2021. 1100 sq/ft!!
I sold my rental earlier this year. Price was ridiculous. Covid shutdowns and money printing was/is a disaster. I agree with what Powell is doing now, think he was a year late in doing it though. Stupid stock market be damned, we need asset prices to align with wages. We’d be in way better shape now had it not been for the transitory nonsense for a year.
the housing market?
NOT the inflated cost of materials and labor... OK!!!
good luck wi that
>Last year homes in this hood were selling above asking price sight un-visited.. people saw pictures and videos and bought.
That’s gonna hurt. Upside down.
Fed gov and the fed itself have screwed all americans one way or another by devaluing the dollar consistently for the last 50 years. I dont care which markets go cold, or what’s hot, the simply fact is the value of the dollar is shit thanks to their actions.
Maybe get the price of oil down first. Plastic pipe, shingles, vinyl siding, nylon carpet all made with oil. All needed in a house. All the materials shipped in with diesel or gas.
But hey let’s go after the fairy godmother to get it under control.
I and some others I know refuse to buy after the ridiculous run up in house prices over the last two years. I’m waiting for a lot of the air to go out of that balloon before I buy. In a year or two I’ll be able to get a much better value than I could now.
My first mortgage was nearly 14% and I was glad to get it that low. The next one was 11%, the next 9, then 7.5, then 6.
I have not figured out why any sane person would loan money at 3% but that was the market and this is now.
You just have to drop the price of the house until someone can make the payment. I’ve seen that many times before.
Embrace the suck.
Lets destroy the young because the old don’t like inflation.
1988 had a 10.75%
Refided in 92 to 6%
Cut 15 years off the loan
If Powell and the rest of the half wit pundits, and politicians shut their mouths the economy would be fine.
#21 Try $800,000 for a single story home in California.
No basement, small yard with fence to keep the dust down and the snakes out.
PricesMedian Home Prices
Southern California
Existing Detached Homes by County, 1990-2022http://www.laalmanac.com/economy/ec37.php
800k for 1000sq/ft?. I’m a humble man. That’s beyond my comprehension.
icymi ,those selling short are the ones jumping for joy now that the market is down. Insiders make money off us daytrader idiots with the market up or down. They have computers that buy and sell faster than you.
I see that you are correct but that idea is so foreign to me I don’t even think of it in the calculus. I also keep not remembering the margin calls.
The insiders are way ahead of anyone else, the best an outsider can do is get lucky or be a fast follower. The retail investor has no choice.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.