It’s funny because Americans own real estate all over the world. But people want laws like that. That wouldn’t even solve the problem. Most investors are homegrown.
Yall do know the federal reserve is the main cause of the inflated housing market right?
- Thread starter Ethnic Vagina Finder
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It’s funny because Americans own real estate all over the world. But people want laws like that. That wouldn’t even solve the problem. Most investors are homegrown.
UpAndComing
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Socialism: The Epilogue 
MasterOfAllHeSurveyz
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You're about three months late on the news. Zillow overpaid for all those homes and are selling those homes at a loss. Their stock took a 75% haircut (it's high was $199 last year and it closed this Friday at $46), lost over half a billi due to their fukked up home bidding AI, laid off a quarter of their Offers workforce for that fukkup and plan to shut Offers down. I don't care what kind of bankroll you have, you're not going to dip your toe in the house flipping market without experience and connections made with reputable local contractors.
Zillow "outsmarted" themselves and got raped.They broke rules 1 & 2 when it comes to flipping.
"Rule #1 - You make your money when you buy. Rule #2 - Don't assume appreciation when you buy." - Michael Zuber
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Correction: It wasn't the AI algorithm that caused everything, it was humans overriding the algo's price suggestion for properties due to an internal program called Project Ketchup (devised to take market share from Opendoor). Sounds familiar . . . like the stock market when human emotion always makes bad decisions.
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Json
Superstar
I’m not late. I was referring to the Zillow situation.
The person I was responding to was saying regular Americans were going to get caught with houses they can’t afford like in 08. I was saying Zillow and these other companies like Blackrock have been buying up all the houses this time.
Is the Fed going to allow them to go under water? They aren’t upping the interest rates that fast. These companies have time to unload these homes and take a smaller hit.
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Maybe OP meant
"Rentier capitalism is a term currently used to describe the belief in economic practices of monopolization of access to any kind of property (physical, financial, intellectual, etc.) and gaining significant amounts of profit without contribution to society.[1][2][3] The origins of the term are unclear; it is often said[by whom?] to be used in Marxism, yet the very combination of words rentier and capitalism were never used by Karl Marx himself."
Rentier capitalism - Wikipedia
and its adjunct Rentier state - Wikipedia
Yes. Folk were happy about getting a cheque from the government but didn’t think about the impact of all that money printing. This was explained to people at the beginning of the pandemic. All that money would find a home. Assets like housing.
This. All my complaints about living in Chicago evaporated when I realized how much tech money I can make while still enjoying a world-class city for reasonable costs.
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Rubbish
Let's say for example interest rates went negatve i.e. the bank pays you to lend money.
Ceteris-parabus what would happen to prices?
example: There is "demand" for high range sports cars but there is no shortage and that is because of affordability. Triple everyone's salary and demand (execution demand) goes up because the afffordablity problem wll have been partitially mitigated.
If you lower the price of money then demand and prices go up. That is the principle behind monetary policy in the first place.
That is basic economics.
"Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply"
"Expansionary policy occurs when a monetary authority uses its procedures to stimulate the economy. An expansionary policy maintains short-term interest rates at a lower than usual rate or increases the total supply of money in the economy more rapidly than usual. It is traditionally used to try to reduce unemployment during a recession by decreasing interest rates in the hope that less expensive credit will entice businesses into borrowing more money and thereby expanding. This would increase aggregate demand (the overall demand for all goods and services in an economy), "
Monetary policy - Wikipedia
Modern monetary policy (pre MMT I mean) in the west is based on theories attriburted to John Maynard Keynes.
"Originally trained in mathematics, he built on and greatly refined earlier work on the causes of business cycles.[3] One of the most influential economists of the 20th century,[4] his ideas are the basis for the school of thought known as Keynesian economics, and its various offshoots.[5]"
"He argued that aggregate demand (total spending in the economy) determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment, and that labour costs and wages were rigid downwards, which means the economy will not automatically rebound to full employment.[6] Keynes advocated the use of fiscal and monetary policies to mitigate the adverse effects of economic recessions and depressions."
"However, the advent of the global financial crisis of 2007–2008 sparked a resurgence in Keynesian thought. Keynesian economics provided the theoretical underpinning for economic policies undertaken in response to the financial crisis of 2007–2008 by President Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom, and other heads of governments"
John Maynard Keynes - Wikipedia
The problem is that near-ZIRP has been maintained throughout the last "cycle" leadng to a (non-MMT) so-called "massive bubble of everything".
Not to menton that ZIRP leads to masive misallocaton of capital away from the real economy and certain areas of the real productive economy.
You also need to understand the inflationary impact of this and why it happens but I am not going into that now.
And saying all of that you have Austrian and MMT economics. But we don't practice Austrian in the West and MMT is largely unproven in practice.
Crying about rates now when the real damage occurred over the last 2 years!
All countries around the world printed unprecedented amounts of money and people talking about rates. Rates take a huge backseat to the money printing
rates will go up but y’all will see they won’t stop affordability issues. And I’d folk think rates are going to shoot up or hit double digits you haven’t bring paying attention
All countries around the world printed unprecedented amounts of money and people talking about rates. Rates take a huge backseat to the money printing
rates will go up but y’all will see they won’t stop affordability issues. And I’d folk think rates are going to shoot up or hit double digits you haven’t bring paying attention
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Printing money using QE started back in 2008. Via debt markets since a CDO/MBS explosion around 2004. Why are you talking about 2020 when the problem has been going on for much longer than that?
Just because you don't know about it it does not mean that it was not happening.
This from the ECB for example:
"On 2 July 2009, the Eurosystem launched its first covered bond purchase programme (CBPP1). The programme ended, as planned, on 30 June 2010 when it reached a nominal amount of €60 billion. The Eurosystem intends to hold the assets bought under this programme until maturity."
"On 10 May 2010, the central banks of the Eurosystem started purchasing securities in the context of the Securities Markets Programme (SMP), with a view to addressing the severe tensions in certain market segments which had been hampering the monetary policy transmission mechanism. Following a Governing Council decision on 6 September 2012 to initiate outright monetary transactions, the SMP was terminated. The existing securities in the SMP portfolio will be held to maturity. For details see the press release: Technical features of Outright Monetary Transactions; as well as ECB decision of 14 May 2010 ECB/2010/5 and the press release of 10 May 2010: ECB decides on measures to address severe tensions in financial markets."
"The ECB’s Asset Purchase Programme (APP) is part of a package of non-standard monetary policy measures that also includes targeted longer-term refinancing operations, and which was initiated in mid-2014 to support the monetary policy transmission mechanism and provide the amount of policy accommodation needed to ensure price stability. "
Asset purchase programmes
"The ECB’s pandemic emergency purchase programme (PEPP) is a non-standard monetary policy measure initiated in March 2020 to counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the coronavirus (COVID-19) outbreak."
Pandemic Emergency Purchase Programme
This is just a minor part of what went on.
Lowering rates and money printing have the same effect on asset prces. The reason for this is because we live in a debt monteary society. Money is debt.
This can be overcome by strong deflationary effects in primciple but that didn't happen to the West (yet). See Japan and the lost decades for an example of this.
In the case of the citizen bailouts people got the money first. Normally the money enters the economy through financial institutions and through large businesses.
The 2020 bailout was maily of the Wall Street.
See this video for the detail of that.
Also QE and bond buy-back schemes have been going on since 2008. ZIRP was since 2008. The damage s not over 2 years. It is over the last almost 20 years now.
Because the prices have already gone up. The time where that would have worked is in the past at a different point in the business cycle. Well "cycles" since Greenspan started blowing bubbles.
Also "raising rates" is not supposed to stop affordability problems as much as they are to stop affordability problems increasing.
The only way to return to general affordability is to become hyper-productive as an economy (pushing up wages) or to inflate the debt away (with wage inflation) and then to correct the housing market via fiscal, monetary and housing policy.
BUT saying that this is not the recommended way to do this. Damage has already been done and is baked into the cake at this pioint. There is no guarantee that it could be unwoound, even if that is what they actually want to do.
Did someone say that?
Rate rises are a geared ratio. At low rates the gearing is high. At high rates the gearing is low.
In other words going from .25% to .5% is absolute .25 and %-age-wise 100% i.e. high gearing.
Moving 10% to 10.25% is absolute .25 BUT a much lower percentage due to low gearing.
In even more simplistic terms the percentage rise in the cost to service debt is more extreme at the lower end of the IR scale as rates go up.
In even more simplistic terms the cost to service the debt goes up faster from low interest rates than from high ones for the same basis point increase.
TL;DR you don't need 15% IR's to reign this all in.
Hopefully you understand how the inflation rare is created and the deflationary effects of subsitution, deflators, exclusion. Inflation Rates have been dangerously high for a decade now. For a number of reasons wages have not followed inflation upwards.
This is why poverty is growing all over the West and has been doing so since arond 2004 and more markedly so after 2008.
Watch this NYU lecture and pay attention to the chart on the board.
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Cmon dude. Inflation went nuts the last 2 years and money printing went into overdrive during the pandemic. That is not debatable.
Rising interest rates are a temporary solution. If that's your solution I look forward to our conversation about the same shyt in the near future.
Rising interest rates are a temporary solution. If that's your solution I look forward to our conversation about the same shyt in the near future.
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How does raising rates make homes more affordable when inventory is low? As I said, raising rates are a temporary solution. There will be a shock to the market when things will go back to normal. You also can’t jack up rates either.
2 years of unprecedented money printing single handedly..end result: runaway inflation. Btw, I predicted this in a thread a long time ago when folk were rooting for stimulus cheques and asking for more help.
2 years of unprecedented money printing single handedly..end result: runaway inflation. Btw, I predicted this in a thread a long time ago when folk were rooting for stimulus cheques and asking for more help.
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You don't understand how inflation is calculated dude. In fact it is clear that you have no idea about this topic.
Stop flapping dem gums and read a bit.
For example: talking about housing prices "In January 1983, housing prices were replaced with owners' equivalent of rent because rents are more stable.[10] Because house prices rose and fell more than rents during the housing bubble and crash, housing's effects on inflation and deflation are not reflected in the CPI"
United States Consumer Price Index - Wikipedia
also:
Alternate Inflation Charts
If people knew the actual inflation rate, it would implode the entire system
MasterOfAllHeSurveyz
All Star
Zillow already unloaded it's houses in Q4 '21 to get all those houses it purchased off it's books for the loss to be reported on '21 balance sheet for taxes. BlackRock's RE position is like 60 billion. The state of California's Pensioner's Fund holds more RE assets than BlackRock. That's like a percent of a percent of the overall value of the US housing market which is like 30+ trillion dollars. Hell, most of BlackRock's RE portfolio isn't even in single family homes, it's in rentals.
Rubbish
The inventory deficit is almost four million homes. This is not me saying this. This is Freddie fukkin' Mac. It's just rebounded last year from the lowest it's been since Ronald Reagan was president in the middle of the year and it's heading back down again. The video of the guy I posted warned about this over a decade ago. There should be over 2 million listings but it's around 500K.
Here's a chart from FRED of active listings. It was already on a downward trend. COVID exacerbated it.
This is from David Dayen's article here.
"The previous housing bubble was caused by a surge in demand for mortgages, as loosened underwriting standards and exotic mortgage products gave more people the opportunity to buy a home, including many who couldn’t afford it. Today, we have a problem of supply: there just aren’t enough homes for sale. If no other homes were added to the market, the existing stock for sale in March would have dried up in just two months. That’s a record, and it stands to reason that if you don’t have many homes for sale, prices will shift upward as bidding gets intense.
We should be concerned about the housing market for a variety of reasons, but not necessarily for the same ones that resulted in the bubble.
The reasons for the lack of supply may seem like an artifact of pandemic uncertainty, but the causes go back much further. After the housing bubble burst, home builders grew extremely wary of returning to a business that had imploded so spectacularly. For the first two years after the crisis, housing starts remained below any point in the previous 40 years, and even when they rebounded, as late as the beginning of 2020 they remained at a middling level. At the end of 2020, Freddie Mac estimated a shortage of 3.8 million homes nationwide."