When I was a boy my elders told me that we had to win the Cold War or we would end up with the government owning everything.
Well the federal reserve isn't part of the government, so hurray for us I guess.
The Fed now owns nearly 1/3 of all U.S. mortgages
211–220 of 346 posts
Re: The Fed now owns nearly 1/3 of all U.S. mortgages
#212Earlier quoted context omitted.
And they get unhappy because they have been trained to think of housing as investment that should grow faster than inflation rather than a place to live.
You don’t treat a couple hundred thousand dollars as an investment? Sounds privileged.
If the price of the house rises faster than inflation, it is a good investment. However, rising faster than inflation also means that they become proportionally less affordable over time. You cannot have both affordable housing and high returns from housing
Re: The Fed now owns nearly 1/3 of all U.S. mortgages
#213Earlier quoted context omitted.
> 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%. Are you proposing that the effect is to nearly double house prices in a few years? If today’s price is $500K and buyers could pay $50K down, in a few years, that place would need to be $1M fo…
I believe op is saying that a person could “afford” a $500k house at $100k down at 20% would happily instead put $25k down (or $28.75k, to keep numbers accurate at a 5% down) on a $575k house.
What I'm not sure I understand correctly is the second half of OP's content [how the change in downpayment requirement causes prices to rise such that a 5% downpayment is now the same as the prior 10% downpayment].
Re: The Fed now owns nearly 1/3 of all U.S. mortgages
#214Earlier quoted context omitted.
And they get unhappy because they have been trained to think of housing as investment that should grow faster than inflation rather than a place to live.
You don’t treat a couple hundred thousand dollars as an investment? Sounds privileged.
I think you've got it backwards. If new cars all cost $200k, would you buy one as an investment? No -- you'd either not buy one (unprivileged) or buy one anyway realizing it's a cost (privileged).
I might spend $100k on a house that I was going to live in for 20-30 years, even if I knew that at the end of that time it was going to be worthless. But I certainly wouldn't spend $500k+ on a house unless I knew I'd be able to sell it for more down the road.
Re: The Fed now owns nearly 1/3 of all U.S. mortgages
#215@dang should probably link to the main Bloomberg story rather than a shorter, opinionated site/blog:
https://www.bloomberg.com/news/articles/2020-09-01/fed-s-mor...
Re: The Fed now owns nearly 1/3 of all U.S. mortgages
#216Earlier quoted context omitted.
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?
There were fewer loans, by $ amount - https://research.collegeboard.org/trends/student-aid/figures...
Re: The Fed now owns nearly 1/3 of all U.S. mortgages
#217Earlier quoted context omitted.
> 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…
> Governments do not have a history of distributing scarce resources effectively. To be fair, "various market forces" also don't have the best track record of distributing resources, especially scarce ones. Somehow those always end up being "distributed" into the same few hands...
To be fair, how is that even remotely true? Look at the wealth, convenience, leisure and abundance all around you. Even people with lower income experience high standards of living. The system we have now is not without fault, but it has done better than any other before in meeting our needs and desires.
I don't understand why people make wild claims that everything is distributed to only a few hands, thats preposterous. If you really believe that, you are poisoned by ideology.
Re: The Fed now owns nearly 1/3 of all U.S. mortgages
#218Earlier quoted context omitted.
Perhaps the better chart is on page 21 (Figure 16), where as compared to all the other countries surveyed the U.S. is at the far low end of housing price inflation. In fact, unless I'm missing something it comes in dead last among all 14 countries at the end of the sample period, 2012.
The US as a whole has low housing prices. But that is including all the homes in Nebraska and other places most HN readers don't want to live in. The home prices in the ~10 cities people on HN actually want to live in are much higher and not affordable for most people. And the good jobs are only in the expensive places, unless you're a doctor or something like that.
See section 4.3 Urban and rural prices move together. Urban prices may be unaffordable, but the data suggests they haven't inflated faster than rural. Perhaps urban/rural is too coarse a distinction to reflect the effects in major coastal cities, but the return to coastal cities didn't begin until the 1990s. Price inflation indeed accelerates in the 1990s in the U.S., but excepting Japan[1] it accelerates in all the other countries even faster; likewise for the 2000s.
[1] Presumably still reeling from its 1980s property crash.
Re: The Fed now owns nearly 1/3 of all U.S. mortgages
#219Earlier quoted context omitted.
You don’t treat a couple hundred thousand dollars as an investment? Sounds privileged.
If the price of the house rises faster than inflation, it is a good investment. However, rising faster than inflation also means that they become proportionally less affordable over time. You cannot have both affordable housing and high returns from housing
> You cannot have both affordable housing and high returns from housing
Sure, you can, but only if real estate in established neighborhoods is more expensive than housing in new neighborhoods, which isn't hyperlocally sustainable but might be sustainable over a broader region.
Re: The Fed now owns nearly 1/3 of all U.S. mortgages
#220When I was a boy my elders told me that we had to win the Cold War or we would end up with the government owning everything.
Well the federal reserve isn't part of the government, so hurray for us I guess.
Wikipedia says that it's under the jurisdiction of the Federal government of the United States. So maybe depends on how you define 'government'?