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
You can post as much shyt as you want. Inflation took off during the pandemic. Why? Combination of money printing and supply chain disruption.
Nothing else matters.
I’m well aware of real inflation and real numbers being more than what we are told. This has been the case for years. That does not explain away what has happened over the last 2 years.
all this copy pasting and you still don’t understand simple supply and demand.
You can post as much shyt as you want. Inflation took off during the pandemic. Why? Combination of money printing and supply chain disruption.
Nothing else matters.
I’m well aware of real inflation and real numbers being more than what we are told. This has been the case for years. That does not explain away what has happened over the last 2 years.
all this copy pasting and you still don’t understand simple supply and demand.
I work in banking. You? I studied this stuff years ago and worked in a bank that got state support and was shut down due to the continuing effects of the 2008 financial crisis.
"Demand schedule
A demand schedule, depicted graphically as a demand curve, represents the amount of a certain good that buyers are willing and able to purchase at various prices, assuming all other determinants of demand are held constant, such as income, tastes and preferences, and the prices of substitute and complementary goods. According to the law of demand, the demand curve is always downward-sloping, meaning that as the price decreases, consumers will buy more of the good."
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.
Zillow homes were sold to another investment firm that is going to rent them out.
So again. My point was that Americans don’t hold most of these homes from this era unlike 08. So what is going to happen to those investment firms holding these homes when the prices drop? They will still be more valuable to just hold them at a loss.
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.
We are talking about a (finite) state machine which had reached its curremt position because of past monetary (and housing policy). Talking about the "current shortages" is not explanatory for the reaons for getting to a "low inventory position", as you say, in the first place.
So for example turning housing into an attractive investment vehicle (even without rental income) exacerbates demand.
So for example ZIRP lowers the cost of financing which exacerbates demand.
Hollowing out the real economy and flooding the economy with asset price raising liquidity means that corporate investment that previosuly would have found a productive home in the real economy flows into assets including housing thus exacerbating demand.
Moving housing into a sure-fire internationally inflation resistent asset attracts overseas money which exacerbates demand.
Excessive liquidity also raises the price of the land on which homes are built thereby reducing the desirability of the manufacture of reasonably priced housing.
Distorting asset markets means that money that may once have gone into the produtive economy (including house building) now can find a better hoome (better returns) in more liquid and cheaper to finance housing speculation. When house prices themselves provide a high return you end up in situations like now where rent is not even required to sqaure the books.
You get demand distortions such as we see now because many entrants are seeking returns which in a high liquidity low IR envioronment are not readily available elsewhere. Why invest in the productive econpmy of building when you can get a better less risky faster (and more liquid to exit) return via property speculation?
If IR's (the base rate) went up to 7% tomorrow this would reduce affordability which would push down demand. Money which now gets a sub 7% + (annual HPI - costs) growth return could get a better return in other homes (like risk free treasuries). Foreign investors would move their money to areas of better returns.
If for example housing prices (and other inflation depressing tricks llike deflators and substitution were excluded) rises in house prices would have pushed up headline CPI inflation years ago. This would (should) have pushed up interest which woul;d have put a break on demand thereby making housing less attractive for the flood of money which would have constrained demand and future expectations of rises. This would in turn for a feedback loop that would have kept prices within a more normal range - even for builders when it comes to land and housing related capital investments. I say "should" because the FED remit says that they should but since Greenspan the FED has been complicit in fudging its responsibilities under its mandate.
Behind all of this you have the general inflationary effects of the real rate of inflation which pushes up prices in many (all) areas of discretionary spending and specialist income thereby further reduciing the disposible income and/or living standards of the population. ZIRP has shifted money away from the productive economy and for financial institutions focused money on more asset rather than business investments - a known phenomenon that distorts and damages the real economy (and thereby further the economic prospects of large parts of society).
And then you have the sharing economy and AirBnB + air BNB clones.
Extreemly low interest rates over the entire economic cycle distorts your economy.
"Since the Great Financial Crisis of 2008, the US Federal Reserve and other Central Banks have kept interest rates low, with the stated purpose of promoting economic recovery. But, writes, David W. Wise, rather than boosting the real economy, these low interest rate policies have artificially inflated financial markets and driven inequality through soaring asset prices."
Saying all of that I agree that there is a housing shortage where we differ is that I believe that in particular the distortions caused by monetary policy over nearly 20 years has led to that. In a more normal environment the housing markets would have developed along more sustainable lines.
There are factors that are more recent but that is where housing policy comes in. Housing should be less of an investment (especially international or for big business) and more of a right.
Germany
Looking at Germany (as an example) just over 10 years ago housing was cheap and flats in good areas of central east berlin were about 100K euros. In the east they were sold at give-away prices of 15 - 20K eur.
Now after a decase of low interest rates, investment funds / companies entering the berlin market there is a local housing crisis. In fact there is a housing crisis in much of germany now yet the populations of some of the most affected cities have remained more or less the same over the last 10 years.
But Germany being Germany they do not let business run wild. They just voted to take back 11% of all apartments back from private companies - some 240000 of them.
Similar is true in for example Portugal and Romania where even in the face of falling populations housing prices have exploded. Estonia (Talinn) has seen a similar invasion of international money.
Zillow homes were sold to another investment firm that is going to rent them out.
So again. My point was that Americans don’t hold most of these homes from this era unlike 08. So what is going to happen to those investment firms holding these homes when the prices drop? They will still be more valuable to just hold them at a loss.
Less than 20k homes. That’s barely over 3% of the total active listings if we were talking about today. Their share was even lower when they had the homes on their books when inventory was higher. If inventory was were it supposed to be, their share would be under a percent at .9%.
Everyone in my REI meetup are complaining about inventory, not rates, not being overbidded.
Less than 20k homes. That’s barely over 3% of the total active listings if we were talking about today. Their share was even lower when they had the homes on their books when inventory was higher. If inventory was were it supposed to be, their share would be under a percent at .9%.
Everyone in my REI meetup are complaining about inventory, not rates, not being overbidded.
Zillow Group announced it is making strides in selling about half of the about 18,000 homes that were part of its now-shuttered Zillow Offers program, once one of the nation’s largest instant cash buyers. But some lawmakers are raising concerns that some of these properties are going to institutional investors at a time when the housing market is starved for more inventory.
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Pretium's inventory is 70K not Zillow.
Hell, they didn't even have 18k flat out. Almost half were just under contract.
At the end of the third quarter, Zillow had 9,790 homes in its inventory and 8,172 homes under contract
Zillow Group announced it is making strides in selling about half of the about 18,000 homes that were part of its now-shuttered Zillow Offers program, once one of the nation’s largest instant cash buyers. But some lawmakers are raising concerns that some of these properties are going to institutional investors at a time when the housing market is starved for more inventory.
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Pretium's inventory is 70K not Zillow.
Hell, they didn't even have 18k flat out. Almost half were just under contract.
At the end of the third quarter, Zillow had 9,790 homes in its inventory and 8,172 homes under contract
So again. An investment firm with 70,000 bought 20,000ish from Zillow.
In no part of this scenario is an average 40,000 a year salary American involved. So the original question was what happens when this investment firms like Pretium or Blackrock or any of them he other investment firms we don’t know about get caught with these large number of homes and rising interest rates. This isn’t like 08 with a large number of average Americans involved.
Zillow didn’t offload of its own accord. It got caught with too much inventory in a downturn. The Fed is giving these investment firms enough warning of hikes.
So again. An investment firm with 70,000 bought 20,000ish from Zillow.
In no part of this scenario is an average 40,000 a year salary American involved. So the original question was what happens when this investment firms like Pretium or Blackrock or any of them he other investment firms we don’t know about get caught with these large number of homes and rising interest rates. This isn’t like 08 with a large number of average Americans involved.
Zillow didn’t offload of its own accord. It got caught with too much inventory in a downturn. The Fed is giving these investment firms enough warning of hikes.
Dude, the article you posted says they bought 2,000, not 20,000. 20,000 homes are a small fraction of the homes on a depressed MLS. Most of the homes sold every year aren't even listed. These aren't even homes for sale to families. Pretium acquired the 2K as rentals, not flips. This is a totally different segment of the RE market.
Go to meetup.com, look up a REI group in your city and ask any of their members in a Zoom call.
Zillow overpaid for the homes from the get go. They overrode their AI pricing model for a program called Project Ketchup in order to steal market share from OpenDoor. Opendoor, Redfin and other competitors didn't have the problem Zillow had because they adhered to their pricing model.
There's a term for this. It's called alligator properties.
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Matt pretty much saying the same thing as Michael & Johnathan in the first vid.
Economist Michael Hudson explains inflation crisis and Fed's secretive $4.5 trillion bank bailout
Economist Michael Hudson discusses what is causing the global inflation crisis, and also how the US Federal Reserve quietly bailed out big banks in September 2019 with $4.5 trillion of emergency repo loans that appear to have blatantly violated the law.
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