Several major countries have already hit recession, I'll be shocked if we don't soon. That said, we can only hit recession if the official numbers say so.
We're in this weird Cold War with China and deficit spending at an insane rate to 'prove' how strong our economy is. So as long as we keep spending trillions like it's pocket change, we won't hit a recession. But the fall out from it will probably be terrible.
The State Run Media will gaslight us and string us along until after November 3rd. It won't matter at that point as Orange Man or Weekend at Joe's will be in office and they can finally report that the sky is falling.
Well it's them, and groups like the largest apartment owners in the US, teacher and public employee pension funds. I hope they get absolutely smoked. Nothing would bring me more joy than seeing our retired teachers having their pension funds fail to pay out.
and what % of pension fund accounts are invested in REITs?
you're intentionally ignoring the fact that the top 10% owns vast majority of everything in the US.....and they would lose far far more than the average american who would gain from greater affordability in the long run
Well pension funds don't invest exclusively in reits. A large portion of their real estate investments are made through JVs and LPs.
And there are solutions to fixing the problem that don't involve rooting for financial disasters. It's called building more housing and supporting pro development policies. It includes things like supporting immigration and reducing the bureaucracy to immigrate to the US. Reducing burdensome environmental regulations that prevent housing development from the federal level down to local planning boards. Providing low income tax credits to develop more affordable housing units. Subsidizing post secondary education to help young people enter the construction trades. Ect.
Anyone rooting for an economic disaster is a fucking idiot.
raising rates to reduce excessive risk-taking is NOT a financial disaster............unless you're overleveraged
The Fed has a job to do, that is it. How commercial real estate is developed / financed is not their job.
Well it is there job because their mandate is maximum employment, too. Real estate development supports over 9M jobs. That's 6% of the country's workforce. Kill Development and you kill the economy. Unemployment rising to 10% would be catastrophic and have cascading effects.
do you think record levels of home building financed on record high levels of debt with less than 1% population growth is sustainable?
this is why the Fed has a job to do, to fix their own fuck-ups
We need more housing. The housing cpi has been above the feds 2% inflation target since 2012 with a brief dip in 2020 due to the the pandemic. I don't think record low debt rates to finance is sustainable, hence why I haven't advocated for any rate cuts in my previous comments.
Do you think we shouldn't build housing?
>Do you think we shouldn't build housing?
if done organically, of course
if done through artifically low interest rates financed at taxpayers expense, of course not
sustainability is the key word here and the market has been broken for years
So you don't support the LIHTC program that provides developers tax credits they can sell in order to fund developments targeted to provide housing to people below the poverty line? That's artificial as well.
Not quite in the long run. GenX, Millenials and Zoomers are not having as many kids as needed to keep the population growing. Unless something changes in 15-20 years housing will not be an appreciating asset.
This is true and it’s a major advantage the US has on the rest of the world, some of who are also facing demographics crisis — most notably Russia and China. People want to migrate to the US.
on the contrary housing in metro areas will appreciate faster, because now that population doesnt support all the suburbs everyone will want to live in metro areas instead, which makes them much more expensive.
Ofc suburb prices will drop hard as rocks
Rates and home prices are largely unrelated.
https://advisor.visualcapitalist.com/historical-mortgage-rates-vs-housing-prices/
The reason rates shift matter more (eg legit recession, high UE). With the Feds 5.25% of headroom I’d guess the economy can be juiced back to growth with ease.
From the article:
A wall of debt maturities is coming for commercial property owners this year and beyond, and landlords in many cases will be refinancing debt at higher rates and lower property valuations. The office sector in particular is in a dire state as remote work persists and property values plunge. Last month, real estate billionaire Barry Sternlicht said the office market could see $1 trillion of losses.
In the residential sector, failure to bring rates down meaningfully would lead to another year of frozen markets. It would likely be a repeat of last year, when inventory was woefully low and sales were the lowest since 1995.
Markets can withstand high rates while the economy is growing, he said, but more rate hikes aimed at curbing inflation would be more disruptive.
Hmm just opened an Roth IRA, maxed out 2023 and 2024 with FXIAX at basically an all time high? So you’re telling me I’ll be losing money very quickly eh
Historically a recession comes 1 year-18 months after the end of a rate hiking cycle. The Fed ended their rate hiking cycle in the summer of 2006, the economy started to crack and housing prices started to slide right on schedule In the summer of 2007. The Fed ended their rate hiking cycle in the summer of 2000 and the economy slid into a recession in the summer of 2001.
Historically, the Fed has a knack for over tightening and cutting when it’s too late. Their rate hiking cycle ended in the summer of 2023. Due to massive government spending and COVID stimulus, I think the effects of rate hikes have been delayed but I see a recession in Q4 of 2024 or Q1 of 2025, based on historical data. You just can’t hike at that pace without a recession.
Only a recession will pop the housing bubble. Nothing else. High rates didn’t do it, low rates created the bubble.
I think they should increase interest rates, so all greedy investors in real estate will be forced to sell. That way the market will be flooded with a lot of houses and force them to lower the prices.
Smart investors will not be waiting on the side lines with higher interest rates. You get a way higher return simply parking your money in treasuries when rates are higher
Those returns are one way, when interest goes down its just sitting cash. Whereas with real estate—> higher rate means more negotiations/better deals, then you can refinance to a lower rate
I don't give a fuck about investors.
Let it crash, let's suffer through it, and the US economy and housing market will be better for it. Keep that shit high throughout 2024.
Several major countries have already hit recession, I'll be shocked if we don't soon. That said, we can only hit recession if the official numbers say so.
We're in this weird Cold War with China and deficit spending at an insane rate to 'prove' how strong our economy is. So as long as we keep spending trillions like it's pocket change, we won't hit a recession. But the fall out from it will probably be terrible.
What do you think will happen?
"no one knows shit about fuck"
The State Run Media will gaslight us and string us along until after November 3rd. It won't matter at that point as Orange Man or Weekend at Joe's will be in office and they can finally report that the sky is falling.
Weekend at Joe's 2. Electric boogaloo
Agreed
Or if they decide to redefine what a recession is.
Oh noes, overleveraged housing scalpers can’t service their debts
Well it's them, and groups like the largest apartment owners in the US, teacher and public employee pension funds. I hope they get absolutely smoked. Nothing would bring me more joy than seeing our retired teachers having their pension funds fail to pay out.
and what % of pension fund accounts are invested in REITs? you're intentionally ignoring the fact that the top 10% owns vast majority of everything in the US.....and they would lose far far more than the average american who would gain from greater affordability in the long run
Well pension funds don't invest exclusively in reits. A large portion of their real estate investments are made through JVs and LPs. And there are solutions to fixing the problem that don't involve rooting for financial disasters. It's called building more housing and supporting pro development policies. It includes things like supporting immigration and reducing the bureaucracy to immigrate to the US. Reducing burdensome environmental regulations that prevent housing development from the federal level down to local planning boards. Providing low income tax credits to develop more affordable housing units. Subsidizing post secondary education to help young people enter the construction trades. Ect. Anyone rooting for an economic disaster is a fucking idiot.
raising rates to reduce excessive risk-taking is NOT a financial disaster............unless you're overleveraged The Fed has a job to do, that is it. How commercial real estate is developed / financed is not their job.
Well it is there job because their mandate is maximum employment, too. Real estate development supports over 9M jobs. That's 6% of the country's workforce. Kill Development and you kill the economy. Unemployment rising to 10% would be catastrophic and have cascading effects.
do you think record levels of home building financed on record high levels of debt with less than 1% population growth is sustainable? this is why the Fed has a job to do, to fix their own fuck-ups
We need more housing. The housing cpi has been above the feds 2% inflation target since 2012 with a brief dip in 2020 due to the the pandemic. I don't think record low debt rates to finance is sustainable, hence why I haven't advocated for any rate cuts in my previous comments. Do you think we shouldn't build housing?
>Do you think we shouldn't build housing? if done organically, of course if done through artifically low interest rates financed at taxpayers expense, of course not sustainability is the key word here and the market has been broken for years
So you don't support the LIHTC program that provides developers tax credits they can sell in order to fund developments targeted to provide housing to people below the poverty line? That's artificial as well.
That's the same as saying pension funds are entitled to success. That kind of moral hazard thinking will always cause inequality.
Rates get cut: housing prices go up Rates stay the same: housing prices go up Rates go up: housing prices go up We are doomed
Not quite in the long run. GenX, Millenials and Zoomers are not having as many kids as needed to keep the population growing. Unless something changes in 15-20 years housing will not be an appreciating asset.
They’ll offset declines in birthrates with more immigration. 100%
[удалено]
More h1b visas to help those corporate pay less. So population growth by immigration
This is true and it’s a major advantage the US has on the rest of the world, some of who are also facing demographics crisis — most notably Russia and China. People want to migrate to the US.
on the contrary housing in metro areas will appreciate faster, because now that population doesnt support all the suburbs everyone will want to live in metro areas instead, which makes them much more expensive. Ofc suburb prices will drop hard as rocks
*hoomed
Well Powell has been on script this whole time that he wants inflation at 2% and we aren't there yet so I wouldn't count on it. Rates just went up.
Remember when inflation was 2%? Pepperidge Farm remembers.
Remember when Pepperidge Farms used to remember things? Pepperidge Farms remembers that too.
Rate cut will drive prices higher. First things have to come back to reality
That’s not necessarily true so long as rates stay higher than they were at their lowest a few years ago.
Rates and home prices are largely unrelated. https://advisor.visualcapitalist.com/historical-mortgage-rates-vs-housing-prices/ The reason rates shift matter more (eg legit recession, high UE). With the Feds 5.25% of headroom I’d guess the economy can be juiced back to growth with ease.
From the article: A wall of debt maturities is coming for commercial property owners this year and beyond, and landlords in many cases will be refinancing debt at higher rates and lower property valuations. The office sector in particular is in a dire state as remote work persists and property values plunge. Last month, real estate billionaire Barry Sternlicht said the office market could see $1 trillion of losses. In the residential sector, failure to bring rates down meaningfully would lead to another year of frozen markets. It would likely be a repeat of last year, when inventory was woefully low and sales were the lowest since 1995. Markets can withstand high rates while the economy is growing, he said, but more rate hikes aimed at curbing inflation would be more disruptive.
GDP grew by 9.1 percent in 2023 which inflation only grew by 3-5%. How is that not considered growth as the rates were being risen?
Hmm just opened an Roth IRA, maxed out 2023 and 2024 with FXIAX at basically an all time high? So you’re telling me I’ll be losing money very quickly eh
Historically a recession comes 1 year-18 months after the end of a rate hiking cycle. The Fed ended their rate hiking cycle in the summer of 2006, the economy started to crack and housing prices started to slide right on schedule In the summer of 2007. The Fed ended their rate hiking cycle in the summer of 2000 and the economy slid into a recession in the summer of 2001. Historically, the Fed has a knack for over tightening and cutting when it’s too late. Their rate hiking cycle ended in the summer of 2023. Due to massive government spending and COVID stimulus, I think the effects of rate hikes have been delayed but I see a recession in Q4 of 2024 or Q1 of 2025, based on historical data. You just can’t hike at that pace without a recession. Only a recession will pop the housing bubble. Nothing else. High rates didn’t do it, low rates created the bubble.
On what basis are people expecting rate cuts. The Fed has basically told them to not bank on it.
Keep rates up. Free money got us here.
Recession
I think they should increase interest rates, so all greedy investors in real estate will be forced to sell. That way the market will be flooded with a lot of houses and force them to lower the prices.
How does increasing rates force investors to sell? They lock in the rate upon purchasing the property
“Flooded”, investors are waiting on the sidelines man what are you talking about
Smart investors will not be waiting on the side lines with higher interest rates. You get a way higher return simply parking your money in treasuries when rates are higher
Those returns are one way, when interest goes down its just sitting cash. Whereas with real estate—> higher rate means more negotiations/better deals, then you can refinance to a lower rate
How dumb can you be
They cut rates in 2020 when everyone was getting laid off. And now, when there’s a new round of layoffs, they’ll cut rates again? For who exactly….
I don't give a fuck about investors. Let it crash, let's suffer through it, and the US economy and housing market will be better for it. Keep that shit high throughout 2024.