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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

#141

Post by jehb »

rwmurrayVT wrote: post #125
Schiendelman wrote: post #103

Earlier quoted context omitted.

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.

It can't be understated what a huge impact the Lynx Blue Line (light rail) had on Charlotte's ability to shape and concentrate their growth in the past 15-20 years. Developers started planning and building around it well before it opened. Strong transit can make a huge impact on affordability, especially if it frees families up from the burden of car ownership (expensive depreciating assets with large operating costs).

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

#142

Post by wyclif »

jointpdf wrote: post #61
refurb wrote: post #41

Earlier quoted context omitted.

Not to be snarky or obvious, but you should do what the people in the past did - find a better place to live that allows you to buy a home more easily. That's one of the reasons why there was a big migration to places like LA. Lots of jobs and cheap land to build on. To me, SF is like NYC. Unless you got in early or are one of the 1%, it's not a great place to try and build a life in (if you're looking to own a home)…

Housing (and construction) prices have been ballooning out of control everywhere for the last several years. Both major cities (DC, Boston, Portland, Seattle, Chicago, LA, Denver, San Diego) and secondary cities (Boise ID, Grand Rapids MI, many more) are all totally unaffordable. I’ve spent hundreds of hours researching different areas over the last year. Looking at sold homes from just 2-3 years ago, many seem like…

Since you're spent a lot of time researching this: have you ever found a way to correlate 3rd-tier and below cities with fiber internet speeds and infrastructure? Seems like that info would be useful to a lot of people here, who are looking to move to a more rural area but are working tech jobs remote long term or even permanently and need fast internet.

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

#143

Post by jdhn »

jointpdf wrote: post #61
refurb wrote: post #41

Earlier quoted context omitted.

Not to be snarky or obvious, but you should do what the people in the past did - find a better place to live that allows you to buy a home more easily. That's one of the reasons why there was a big migration to places like LA. Lots of jobs and cheap land to build on. To me, SF is like NYC. Unless you got in early or are one of the 1%, it's not a great place to try and build a life in (if you're looking to own a home)…

Housing (and construction) prices have been ballooning out of control everywhere for the last several years. Both major cities (DC, Boston, Portland, Seattle, Chicago, LA, Denver, San Diego) and secondary cities (Boise ID, Grand Rapids MI, many more) are all totally unaffordable. I’ve spent hundreds of hours researching different areas over the last year. Looking at sold homes from just 2-3 years ago, many seem like…

>secondary cities (Grand Rapids MI)

Grand Rapids? Unaffordable? Are you looking at condos downtown? Here's[0] a 3bd/2br with 1800 sq ft that admittedly is outside of downtown a bit, but is under $1000 a month. This condo [1] is more expensive, but would be totally affordable if 2 people were able to pay $1250 in rent by themselves. Both of these were on the first page of Trulia results when I searched for Grand Rapids.

[0] https://www.trulia.com/p/mi/grand-rapids/1546-escott-ave-nw-...

[1] https://www.trulia.com/p/mi/grand-rapids/60-monroe-center-st...

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

#144

Post by the_gastropod »

ethbr0 wrote: post #115
jacobush wrote: post #100

Earlier quoted context omitted.

If you can rent significantly cheaper than total cost of servicing loans etc, consider investing the difference in index funds and rent as cheap as you can. It might be a good bet, especially if speculation in housing is slowing down compared to the last 20-30 years.

It's possible the problem isn't speculation, but the rate of return on capital vs the rate of return on labor. If capital dominates, you're going to run into scenarios where it's fundamentally impossible to ever afford scarce goods that generate returns, because someone who started with more capital will now have an even larger delta with you, and is therefore able to outbid you.

Not all capital generates the same returns. Index funds have virtually no gatekeeper—you can open a brokerage account, toss in $10, and be an honest-to-god capitalist. And stocks tend to outperform real estate by a hefty margin. So catching up is possible.

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

#145

Post by vertis »

jointpdf wrote: post #61
refurb wrote: post #41

Earlier quoted context omitted.

Not to be snarky or obvious, but you should do what the people in the past did - find a better place to live that allows you to buy a home more easily. That's one of the reasons why there was a big migration to places like LA. Lots of jobs and cheap land to build on. To me, SF is like NYC. Unless you got in early or are one of the 1%, it's not a great place to try and build a life in (if you're looking to own a home)…

Housing (and construction) prices have been ballooning out of control everywhere for the last several years. Both major cities (DC, Boston, Portland, Seattle, Chicago, LA, Denver, San Diego) and secondary cities (Boise ID, Grand Rapids MI, many more) are all totally unaffordable. I’ve spent hundreds of hours researching different areas over the last year. Looking at sold homes from just 2-3 years ago, many seem like…

I'm an outsider, but when I look at the US market there seem to be really cheap houses away from the major cities. Far cheaper than Australia.

For example: https://www.realtor.com/realestateandhomes-search/Rochester_...

Now I don't really know anything about Rochester. But you would be hard pressed to find anything in a city for ~50-60k in Australia. Not comparing Apples to Apples, but the 1 bedroom apartment I bought in Melbourne suburbs in 2016 was AU$265k

If I look at somewhere like Bendigo (about 2 hours from Melbourne). The cheapest houses are about 250k.

https://www.domain.com.au/sale/bendigo-vic-3550/?ptype=apart...

Does Australia have housing problems as well? Possibly.

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

#146

Post by gbasin »

tialaramex wrote: post #126
glenstein wrote: post #119

Earlier quoted context omitted.

>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 exec…

Developers can't get FHA loans

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

#147

Post by mrep »

olliej wrote: post #3

Does the fed get the interest income from those mortgages? Because if it’s not getting 100% of that interest it’s simply bailing out speculative loans by banks. What are the rules for the fed taking on mortgages etc? I would want a max price of 80% of the value of the mortgage alongside the all proceeds portion so that banks can’t just make bad loans and then onsell them to tax payers

From the Federal Reserves press release in 2015: https://www.federalreserve.gov/newsevents/pressreleases/othe...

The Federal Reserve Board on Monday announced preliminary results indicating that the Reserve Banks provided for payments of approximately $97.7 billion of their estimated 2015 net income to the U.S. Treasury. In addition, the Federal Reserve transferred to the Treasury $19.3 billion from Reserve Bank capital surplus on December 28, 2015, which was the amount necessary to reduce aggregate Reserve Bank surplus to the $10 billion surplus limitation in the Fixing America's Surface Transportation Act (FAST Act). The FAST Act, which was enacted on December 4, 2015, requires that aggregate Federal Reserve Bank capital surplus not exceed $10 billion. The 2015 audited Reserve Bank financial statements are expected to be published in March and may include adjustments to these preliminary unaudited results.

The Federal Reserve Banks' 2015 estimated net income of $100.2 billion was derived primarily from $113.6 billion in interest income on securities acquired through open market operations (U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS), and GSE debt securities).

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

#148

Post by xnyan »

ethbr0 wrote: post #115
jacobush wrote: post #100

Earlier quoted context omitted.

If you can rent significantly cheaper than total cost of servicing loans etc, consider investing the difference in index funds and rent as cheap as you can. It might be a good bet, especially if speculation in housing is slowing down compared to the last 20-30 years.

It's possible the problem isn't speculation, but the rate of return on capital vs the rate of return on labor. If capital dominates, you're going to run into scenarios where it's fundamentally impossible to ever afford scarce goods that generate returns, because someone who started with more capital will now have an even larger delta with you, and is therefore able to outbid you.

Well said. Another way of looking at it: in the long term return on investment (r) > economic growth (g) because “everyone” gets g but people with capital also get r.

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

#149

Post by glofish »

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…

Initially it does have the effect you state:

> prospective buyers that couldn't afford 20% but can afford 5% are now able to buy a house?

hence the measures are popular and very visible. Long term however (just as with subsidies and scolarships for education) all lead to pushing prices up.

Perhaps the buyers in the market could pay 10% but now that they only have to pay 5% the remaining 5% slowly (say over a few years) gets factored into the purchase price so that the down payment is the same as it were for 10%.

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

#150

Post by [deleted] »

andi999 wrote: post #64
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?

Inflation is mitigated by all products you buy come from china.

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