The Federal Reserve Board starts its two day meeting today. June's meeting is a big one as the tightening cycle will be ending shortly.
Despite, the speculative talk of 50bps increase in short term interest rates, I am still predicting a 25bps increase at tommorow's announcement. That would bring rates to 5.25%.
What will happen at August's FOMC Meeting?
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Another 25 BPS increase.
ReplyDeletedavid, give it up already..5 and done, yeah..
ReplyDeletewell you will see fed at 6 by yr end.
and inflation would still be a problem. gotcha
Its very, very unlikely to go to 6 by year's ends. 5.75% max! More likely 5.5%
ReplyDeleteI'm curious, if this is a bubble, and we are seeing the pop.
ReplyDeleteIsn't that a good time to buy?
I mean since homes are on the market for so long and prices keep dropping. If you have the money, (ie 20+% down) why not wait a little bit and buy on the cheap?
its just the start of the decline in the bubble markets. Much better deals are coming in the coming years.
ReplyDeleteDavid,
ReplyDelete"David said...
its just the start of the decline in the bubble markets. Much better deals are coming in the coming years."
You should put this quote up on the masthead of your blog (with a date of posting, of course) ... Something we can discuss in coming years ...
I'm curious, if this is a bubble, and we are seeing the pop.
ReplyDeleteIsn't that a good time to buy?
Historically, once home prices have begun declining they continue declining for years due to secondary economic impact declining real estate typically has.
Unless this time is different, now would be an unwise time to buy.
Phoenix inventory up 188% in 9 months.
ReplyDeleteIt was 175% in last week's report.
http://www.benengebreth.org/housingtracker/location/Arizona/Phoenix/
anon said:
ReplyDelete"Historically, once home prices have begun declining they continue declining for years due to secondary economic impact declining real estate typically has.
Unless this time is different, now would be an unwise time to buy."
Didn't someone just post a Washington Post article from today showing (a) established neighborhoods in the District have flatlined in price while (b) transitional neighborhoods continue to go up in price by leaps and bounds? Wouldn't it make more sense to buy in one of these transistional neighborhoods now before the prices rise even further? Or is it "bubblesense" to instead wish upon a falling star that prices will suddenly and magically fall even thought that has NEVER happened in US history before? "Bubblesense" ... I like that new word! It's aking to "Bubblespeak" and "Bubble-economics"! "You click your heels, wish upon a star, and all your dreams come true!" Ignorance truly is bliss, isn't it?!
Lance, there have been housing bubbles before that deflated substantially. Your lack of knowledge is showing.
ReplyDeleteAddressing this to Lance,
ReplyDeleteFollowing up from another thread, which was locked by the site administrator.
It's funny that you praise the legacy of the FDR New Deal programs. Did you know because of government intervention sort forth by FDR; the income gap between Americans decreased. Yes, government policy changed the market place so a more level playing field can exist. The poor, the disabled, the elderly, impoverish children received the public funds to help make themselves productive in American society.
I am advocating that local government take an activist role in the same spirit as FDR and LBJ so lower income Americans have affordable properties. Capitalism failed our society in 1929. Free market capitalism without limits has failed to provide adequate health care, education, environmental safeguards, and yes...fair housing opportunities for impoverished Americans. The real estate industry has NO incentive to make this happen.
So I am confused Lance. You celebrate the achievements of the social welfare system that glued this nation together. Yet, when I advocate a similar remedy for housing...you change your tune by making an exception.
Or is it "bubblesense" to instead wish upon a falling star that prices will suddenly and magically fall even thought that has NEVER happened in US history before?
ReplyDeleteIs this guy for real? Home prices have most certainly fallen - just not the median average nationwide. Although, there is a first time for everything - this bubble may be bad enough to abolish that truthiness forever...
Suggest speculation? The Post article flatly stated 34% of all condos purchased were for investment purposes. Which matches up very well with the proportion of units for sale in many of these buildings.
ReplyDeleteNathan said: "I used to work for Fannie Mae. 15 years ago, they never hedged securities with swaptions, caps, floors, and other exotic instruments."
ReplyDeletedude, you're kidding right? you're using Fannie as a good example of financial innovation?
Considering that the Fed has raised rates 17 straight times (as of tomorrow) and inflation-adjusted GDP has barely BUDGED in the last two years (~3.7%) we are nowhere near done with rate increases.
ReplyDeleteThe Fed would like to stop, but they won't be able to until people stop taking out loans or banks stop making them. Raising rates doesn't tighten credit unless it changes behavior.
I just want to say thanks to David and the other faithful bloggers. I'm a potential first time buyer who has learned a lot from reading on this blog and others. I read the report on DC home affordability and I found it very interesting. I think people assume that because folks move to places like Wards 7 and 8 that they will automatically develop into the same kinds of areas as those in other wards such as Logan and Dupont Circle. There have been other development efforts in places like Anacostia and near Alabama and Missippi Avenues that have been built in the last few years. I am wondering how long people think it will take for these areas to really take off so to speak? Thanks for all the great information.
ReplyDeleteihateyuppies said:
ReplyDelete"So I am confused Lance. You celebrate the achievements of the social welfare system that glued this nation together. Yet, when I advocate a similar remedy for housing...you change your tune by making an exception."
FDR's policies made it possible for more Americans to share in a piece of the pie by putting into place policies that ensured that the average person didn't get "run over" by his more powerful employer or others. What you were advocating is "taking" what others have and redistributing it to those in need. In my opinion at least, those are two very different concepts. One protects the weaker individual from being taken advantage of, the other helps the weaker individual by litterally stealing from the individual/organization that is perceived to be stronger. It's the difference between ensuring workers get a fair wage, medical care, pensions, etc. and putting into effect rent controls, taxes on luxury items, etc. In the first instance, the government levels the playing field by giving the weaker individual/group back strenght to match the stronger individual/group he is dealing with or worker for. (For example, I am all for regulations that ensure rental agreements not be one side-ed.) In the second instance, you have government bureacrats using others money or resources to make decisions that the marketplace and not any one individual (or government entity) should be doing. In addition to the distinction being a matter of fairness, it is also a matter of efficiency. Free markets are efficient. Central planning committees are not. (Look at the Soviet Union). Free markets allocate resources to their best and highest use very quickly. Central planning (which is what you get when you get government involved in redistributing wealth) is very inept at allocating resources. Do you see the difference? Lots of dems don't. The later model (redistribution) was what we had under the 60s Dems leadership ... such as under Johnson. The former model (leveling the playing field) is what we had under FDR and Clinton.
nathan,
ReplyDeleteYou've threaded into the area of the bubblehead's conspiracist theory villains. It's the old story of "when you don't really understand what is going on around you, blame the people you are dealing with ... it's easier to just blame them than dealing with the complicated reality of the situation." You'll be talking all day and they still won't understand that without institutions such as Fannie Mae, they really wouldn't have a chance at home ownership. It would be like in countries like Costa Rica where the yes, the housing is relatively cheaper, but you gotta pay cash for it ... and that means only the very wealthy can buy. The vast majority remains renters for life ... generation after generation.
help me out ANYONE ... does someone have a clue what dc_too is saying? I mean, what do loan terms have to do with their not being ANY loans available in countries that don't have institutions such as Fannie Mae around? Did I miss something, or is DC-Too so wound up in his own bubble that he re-interprets everything anyone says to somewho make it apply to interst only loans?
ReplyDeleteLance,
ReplyDeleteIt's true that home prices (nominal values) have never fallen from one year to the next on a national basis. However, there are many cases where prices have fallen substantially in local markets from one year to the next.
Also, we have had real value declines on a national scale on many occasions.
Furthermore, the situation we are now in appears to be unique in history -- we have a large number of local markets in the US that have experienced extraordinary price increases in unison all inter-linked, many believe, by a global credit bubble.
There's reason to suspect this could be the first time the US sees price declines on a national basis.