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The Fed now owns nearly 1/3 of all U.S. mortgages

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Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#121

Post by zalkota »

refurb wrote: post #54
JMTQp8lwXL wrote: post #18

I would be curious to see analysis for what home prices would be with 0 Fed intervention. Also, I don't understand how millennials aren't supposed to see this figure and immediately feel a sense of rejection, that the housing market is some form of a pyramid scheme, where you had to get in early to have a chance.

I would be curious to see analysis for what home prices would be with 0 Fed intervention. It is an interesting thought experiment. From what I've gathered, any intervention by the government to make housing more accessible, just gets priced in pretty quickly, removing the benefit. For example, FHA offering 5% down payments instead of a standard 20%, just means every first time buyer can now pay 15% more (approximatel…

Are you just disregarding the mortgage payment?

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#122

Post by zalkota »

scrumbledober wrote: post #34
JMTQp8lwXL wrote: post #18

I would be curious to see analysis for what home prices would be with 0 Fed intervention. Also, I don't understand how millennials aren't supposed to see this figure and immediately feel a sense of rejection, that the housing market is some form of a pyramid scheme, where you had to get in early to have a chance.

well as a 30 year old looking for my first home who grew up in the bay area... yeah that's exactly what I feel.

[flagged]

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#123

Post by baq »

rocqua wrote: post #105
donmcronald wrote: post #26

Earlier quoted context omitted.

If you print money, but only give it to the top 10% who use it to prop up the stock market, does that cause inflation? I don't understand how America can pump a couple trillion dollars into the economy and it doesn't seem to have any impact. If the average person is getting any of that it should cause inflation, shouldn't it?

> If the average person is getting any of that it should cause inflation, shouldn't it? That seems to be roughly correct. And yet, we are not seeing inflation. The conclusion seems easy to me (perhaps too easy). The average person is not seeing much of that money being printed. Instead, all of that money seems to be causing massive inflation in the stock market. The S&P500 and other similar indexes are incredibly hig…

i've been following Krugman who basically says this is the case, just doesn't use the word 'inflation' in the context of the stock market - but indeed this is exactly what he's describing: free money is driving stock prices up. financial institutions don't buy food and gas, they buy financial instruments, so we don't see inflation in food and gas prices, we see inflation in stocks and t-bill yields?

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#124

Post by throwawayhacka »

boulos wrote: post #21
vermilingua wrote: post #12

Earlier quoted context omitted.

IANAE(conomist), but my naive interpretation is this: let’s say the pandemic causes 25% of mortgage holders to become delinquent, a number I don’t think is unreasonable. If the Fed owns a third of all mortgages (and their ownership is a normal distribution of all mortgages, I have no idea if this is true), that’s 25% of $2T that is suddenly at risk. If the total Fed balance sheet is $7T, that’s 7% of their total asse…

Actually, your 25% delinquency rate seems unreasonable. During the financial crisis, the subprime delinquency rate peaked at 26% [1] but the overall (whole US market) rate was just over 9%. Delinquency is also mostly just about being a leading predictor of foreclosure or some sort of renegotiated payment structure. The same stat suggests that foreclosures overall peaked at just over 2% (but up to 15% subprime) [1 aga…

actually, for many metro areas the delinquency rate is reaching 25%+ for FHA loans right now. they're surviving due to the feds preventing foreclosure.

things are a little better in the other classes of loans but not much! if the economy stays weak and jobs dont come back, some metros may well see a housing price decline. Atlanta, Houston and san anton.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#125

Post by rwmurrayVT »

Schiendelman wrote: post #103
AstralStorm wrote: post #94

Earlier quoted context omitted.

No it isn't. There's tons of free space surrounding cities, including with developed infrastructure and support. The demand driven forcing is miniscule compared to artificial scarcity due to zoning permits or bad infrastructure. (Typically slow transportation.)

Not just surrounding cities - to your point, above them. All those single family neighborhoods. All those new buildings built to 6 stories instead of 60. In Seattle, basically every building built is built to the maximum zoning allows. And it’s all arbitrary - purely about the whims of the local homeowners.

My parents moved to Charlotte, NC in 1999. It amazes me the sheer growth in HOUSING in city center. There are several new buildings well beyond 6 stories. There are even more new buildings in the 3-8 range in areas like South End. There are even more single family homes further out of the city.

It may not be perfect, but it's seriously beautiful and developed nicely in the last 20 years.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#126

Post by tialaramex »

glenstein wrote: post #119
refurb wrote: post #54

Earlier quoted context omitted.

I would be curious to see analysis for what home prices would be with 0 Fed intervention. It is an interesting thought experiment. From what I've gathered, any intervention by the government to make housing more accessible, just gets priced in pretty quickly, removing the benefit. For example, FHA offering 5% down payments instead of a standard 20%, just means every first time buyer can now pay 15% more (approximatel…

>just means every first time buyer can now pay 15% more (approximately) for a house Wait, what? Wouldn't it mean that a pool of prospective buyers that couldn't afford 20% but can afford 5% are now able to buy a house? That's a shift in the structure of the market rather than just a change being "priced in" for the same set of buyers. >In hot markets, the prices rise quickly to reflect that and everyone is in the sam…

> Wait, what? Wouldn't it mean that a pool of prospective buyers that couldn't afford 20% but can afford 5% are now able to buy a house?

No. Real property doesn't work that way at all.

The effect of most of this kind of government intervention in the housing market is to subsidise developers.

In fact it's so bad that in the UK shareholders of such a developer are outraged because the uncapped bonus structure for executives at the developer means they get enormous (many times annual salary) bonuses essentially directly funded by central government which the shareholders of course think instead ought to all be profits assignable as dividends, not "bonus payments" for executives whose "performance" amounts to just sitting back and collecting free money from central government.

Like there's not even doubt there about what this government money does, it goes to the house builders, it can't and doesn't magically produce more homes, the argument is about who gets to keep the loot.

Government can intervene to actually build homes, and that would actually work, but NIMBYs hate it, so if a government doesn't actually care about housing people then a policy that can be headlined as support for home buyers but actually just puts money in the pockets of the wealthy is a good choice.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#127

Post by vonmoltke »

rocqua wrote: post #101
rebuilder wrote: post #88

Earlier quoted context omitted.

What would the effects of changing the student loan system be? I assume you mean to increase the creditor's risk to levels comparable to other types of debt. Personally, I'd expect that to result in higher interest rates for student debt, and more stringent eligibility requirements. IOW, a higher barrier to entry to education. Maybe that would be good, it depends on how the price of education would react, and in whet…

If you want to make student loans more accessible, the trick is not to stimulate student loans be legalizing the loan-sharking of students. This way you are just encouraging students to take a bad deal. You are making the system more accessible by offering really bad options. If the reasoning is "It is a good idea to have high education", then stimulate that directly. At the very least, have government-backed or gove…

> In my country (the Netherlands), student loans are given by the government.

Over 90% of American student loans are also issued by the federal government.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#128

Post by sokoloff »

paulgb wrote: post #99
wonder_er wrote: post #86

Earlier quoted context omitted.

> Also, I don't understand how millennials aren't supposed to see this figure and immediately feel a sense of rejection Millenial here. 100% agreed with this. Feels like a big blind spot in the boomer crowd. They don't seem to see the seething, roiling, overpowering resentment their entire generation is receiving from many, many people that currently don't have much power in society . A politician wants to win office…

I'm surprised #1 isn't proposed more. It's not really even that radical when you consider that the Overton window now includes completely eliminating student debt.

If you want to offer student loans to people with low incomes (as almost all students are and many of their families also are), you’re not going to be able to offer loans with traditional finance-based underwriting standards. If someone can only qualify for a pre-paid credit card or payday loan, is a lender going to step up and offer $100K+ in education loans?

I don’t want higher education open primarily to the already-wealthy. I don’t want to deny loans to students whose family will not co-sign loans for them, etc.

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#129

Post by [deleted] »

peterwwillis wrote: post #109
remote_phone wrote: post #5

I just refinanced my 30-year fixed mortgage for 2.5%. The rate is utterly ridiculous now. If we get even a modicum of inflation over the next few years, I will be paying negative real interest rates.

So.... Is it a stupid time to get a mortgage and buy a house, or a fantastic time?

[deleted]

Re: The Fed now owns nearly 1/3 of all U.S. mortgages

#130

Post by ced »

refurb wrote: post #54
JMTQp8lwXL wrote: post #18

I would be curious to see analysis for what home prices would be with 0 Fed intervention. Also, I don't understand how millennials aren't supposed to see this figure and immediately feel a sense of rejection, that the housing market is some form of a pyramid scheme, where you had to get in early to have a chance.

I would be curious to see analysis for what home prices would be with 0 Fed intervention. It is an interesting thought experiment. From what I've gathered, any intervention by the government to make housing more accessible, just gets priced in pretty quickly, removing the benefit. For example, FHA offering 5% down payments instead of a standard 20%, just means every first time buyer can now pay 15% more (approximatel…

It is an interesting thought experiment. From what I've gathered, any intervention by the government to make housing more accessible, just gets priced in pretty quickly, removing the benefit.

It benefits home owners, which (at least in Canada) makes up the majority of the voting base. Like GP said, it's at the expense of the next generation of buyers.

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