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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

#181

Post by disgruntledphd2 »

code4tee wrote: post #132
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…

If student loan debt was treated like any other debt then few if any students would get loans, unless their parents had assets to put up as collateral. So long as the financial burden of education falls on the student first then this is unlikely to change. From a financial perspective it’s a terrible product to sell... tons of money to someone with little to no financial assets, iffy prospects of sufficient future in…

Student loan treatment only changed in the mid-noughties (under GW Bush), how do you account for the existence of student loans before that?

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

#182

Post by pc86 »

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…

This tale does not reflect reality when you look at the numbers. Housing prices have more-or-less always gone up, especially on time scales long enough to spread out market corrections. If housing prices 2-3 years ago "seem like a steal" (they don't), and the same has been true every 2-3 year cycle (it hasn't), an FHA/USDA mortgage with 3.5-5% in basically every market other than San Francisco and NYC makes sense, and if you're making software developer salaries it should take less than a year to save up 3.5% of a home you can afford (again, other than NYC and SF which are outliers).

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

#183

Post by _Anken »

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 obviously benefits buyers in non-hot markets. It's pretty nice to put $7500 down in the mid-west for a house.

Unfortunately banks won't loan what they see as small mortgages like that. This leaves the lower priced homes only available to landlords buying cash. I live in a home like this myself - all the banks would happily loan me $215,000 with $35k down, but no bank would loan me $15,000 to buy a $50k house. There's many people renting in my city that have decent credit that could easily afford one of these lower cost homes, but instead the houses stay empty or get turned in to rentals.

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

#184

Post by pc86 »

CydeWeys wrote: post #169
vertis wrote: post #145

Earlier quoted context omitted.

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 bough…

Rochester is definitely cheap, but for a reason: It's a city on the down slope past its peak. It's a deindustrialized rust belt city with a population down 38% from its pre-WWII high. That goes a long way to explain why housing is so affordable. And I wonder what the tech job situation is like there (though that may matter less now, what with the pandemic increasing the acceptability of WFH). It's hard to move somewh…

> It's hard to move somewhere for cheap housing where you literally wouldn't know a single person, though. Social life is important.

And this is fine, but it seems very disingenuous to say that it's a crime that you can't afford to buy a home when you refuse to move out of arguably one of the most expensive cities in the country. It's equivalent to crying about not being in the 1% when you're in the top 1.5%, and you could move if you wanted to.

There's nothing wrong with wanting to live in San Francisco, but expecting to buy a home a few years after graduating from college is ridiculous in my opinion.

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

#185

Post by mrep »

natcombs wrote: post #120

>> Morgan Stanley analysts pointed out in late March that the buying was running at eight times the pace seen in prior episodes of Fed purchasing under programs known as quantitative easing. 8x increase over QE is crazy. Is that 8x mortgage bonds or 8x bonds in general?

US treasuries mostly in late march. Demand for dollars skyrocketed due to covid-19 and people were selling their treasuries to get dollars causing treasury yields to spike so the FED started buying $75 billion in Treasury securities per day to supply liquidity to the Treasury market and ended up buying over $1 trillion in Treasury securities within a short 3-week window.

More analysis about it at https://www.lynalden.com/august-2020-newsletter/

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

#186

Post by pharke »

gwd wrote: post #156
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…

> From what I've gathered, any intervention by the government to make housing more accessible, just gets priced in pretty quickly, removing the benefit. You say "any intervention", but you've only mentioned interventions that give more money. Other interventions: 1. Encouraging developers to build new properties, particularly properties for low- and medium-income tenants 2. The government building low- to medium-inco…

I would look to England for answers to those questions.

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

#187

Post by jeffreyrogers »

qeternity wrote: post #153
b34r wrote: post #137

Out of curiosity, why wouldn’t we want the government managing mortgages for the whole country? (Assuming the acquisition process isn’t slow AF because government.) Real estate seems like a pretty important part of the economy and, more importantly, the government artificially making housing more accessible for potential first time buyers creates a virtuous cycle where people can finally save money and the eventually…

> Out of curiosity, why wouldn’t we want the government managing mortgages for the whole country? > Real estate seems like a pretty important part of the economy... You just answered your own question. Governments do not have a history of distributing scarce resources effectively. You need various market forces. > the government artificially making housing more accessible for potential first time buyers creates a vir…

It's not like the market is doing a good job distributing scarce resources either, particularly in the case of housing.

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

#188

Post by pc86 »

mrep wrote: post #165
the_gastropod wrote: post #144

Earlier quoted context omitted.

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.

Historically, equity markets and housing provide similar returns when you factor in rent according to this super interesting harvard paper on "The Rate of Return on Everything, 1870–2015" and the corresponding HN discussion [0]. Far less liquid and actually more stable though according to the paper. [0]: https://news.ycombinator.com/item?id=19817584

I would think the stability is in part due to its illiquidity. If the market drops 10% and you've "heard" it's going to drop another 40%, you might dump everything. If you don't get back in at the right time you can lose even more than if you had just stayed in throughout the drop.

It's rare for folks to immediately dump their investment properties because the housing market has cooled off.

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

#189

Post by pc86 »

ethbr0 wrote: post #160
the_gastropod wrote: post #144

Earlier quoted context omitted.

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.

Unfortunately, you need somewhere to live while you're catching up. How much of salary - CoL can an average person dedicate to building capital? I'm not saying it's hopeless, only that there are systemic factors fighting against home ownership in extremely supply-limited cities.

"Extremely supply-limited cities" could just mean outliers like NYC or SF, or it could mean literally every city in the country, depending on your definition. And by definition, isn't it impossible to have an extremely supply-limited city with very little barrier to home ownership?

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

#190

Post by pc86 »

_Anken wrote: post #183
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…

> It obviously benefits buyers in non-hot markets. It's pretty nice to put $7500 down in the mid-west for a house. Unfortunately banks won't loan what they see as small mortgages like that. This leaves the lower priced homes only available to landlords buying cash. I live in a home like this myself - all the banks would happily loan me $215,000 with $35k down, but no bank would loan me $15,000 to buy a $50k house. Th…

> all the banks would happily loan me $215,000 with $35k down, but no bank would loan me $15,000 to buy a $50k house.

This seems like a made up problem. Those same banks would also gladly loan you $40k with $10k down, and you could have the remainder to fix the house up or make huge payments every month. Furthermore, if you already have $35k it shouldn't be too difficult to save another $15k and buy the house cash. If it is, you probably can't qualify for the mortgage payment on either property based on your income.

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