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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

#261

Post by egsmi »

thebean11 wrote: post #225
oppenh3imer wrote: post #212

Earlier quoted context omitted.

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 sort of can, but it requires increasing density (so per square foot stays similar but those with low incomes can still afford a small place) or older neighborhoods becoming more expensive than newer neighborhoods (happens all the time).

Increasing density likely implies displacing the people presently in the expensive neighborhood for construction. In the U.S. anyway, that’s easier said than done. So that’s definitely a theoretical solution but I’m not sure how practical it is.

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

#262

Post by OCASM »

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…

Government messing with the housing market is what caused the 2008 recession. I think that's a very good reason not to want that.

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

#263

Post by thebean11 »

egsmi wrote: post #261
thebean11 wrote: post #225

Earlier quoted context omitted.

You sort of can, but it requires increasing density (so per square foot stays similar but those with low incomes can still afford a small place) or older neighborhoods becoming more expensive than newer neighborhoods (happens all the time).

Increasing density likely implies displacing the people presently in the expensive neighborhood for construction. In the U.S. anyway, that’s easier said than done. So that’s definitely a theoretical solution but I’m not sure how practical it is.

Displacing sure, but it's almost always voluntary! Zoning rules change, and developers start offering the big bucks for existing homeowners to sell.

It's starting to happen in Austin: duplexes/fourplexes are getting built in some of the nicer, more central areas.

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

#264

Post by jeffreyrogers »

wahern wrote: post #218
jeffreyrogers wrote: post #170

Earlier quoted context omitted.

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…

Hmmm interesting, I'll have to look at it more closely when I have the time.

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

#265

Post by paulgb »

RhysU wrote: post #116
paulgb wrote: post #99

Earlier quoted context omitted.

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.

Source for claim?

This claim?

> the Overton window now includes completely eliminating student debt.

I'm referring to the fact that Bernie Sanders, who came close to being a major party candidate, ran on canceling student debt.

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

#266

Post by paulgb »

sokoloff wrote: post #128
paulgb wrote: post #99

Earlier quoted context omitted.

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 alrea…

> I don’t want higher education open primarily to the already-wealthy.

I fully agree. I just think that providing cheaper capital to students (which is in effect what this enables) only has the effect of transferring more wealth from (the eventual earnings of) economically disadvantaged students, not less.

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

#267

Post by ryathal »

CydeWeys wrote: post #161
postingawayonhn wrote: post #58

Earlier quoted context omitted.

> For example, FHA offering 5% down payments instead of a standard 20%, just means every first time buyer can now pay 15% more (approximately) for a house. Assuming they had the same deposit available they would theoretically be able to pay 300% more. Of course they probably wouldn't be able to demonstrate their ability to service a loan that large.

They're not gonna pay 300% because they wouldn't be able to pay even the first monthly mortgage payment. Buyers aren't stupid -- they'll take advantage of low money down but they won't get themselves into a mortgage that they literally already can't afford the payment on from day one. No, the way mortgage problems typically happen is that the payments are initially affordable but then something changes (typically job…

People will absolutely try to take out mortgages they can't afford. Post 2008 rules make giving a mortgage to someone who can't afford the first month nearly impossible, but you can still get a mortgage that will crush you without a job loss.

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

#268

Post by OldHand2018 »

jointpdf wrote: post #257
OldHand2018 wrote: post #251

Earlier quoted context omitted.

"desirable neighborhoods" in Chicago is code for living in a bubble (should be very firmly noted that this is NOT race-related). Yes, you pay a lot more for that. There are neighborhoods in the city that have lower crime, faster access to downtown, higher median incomes, better-rated schools and lower house prices than many of the "desirable neighborhoods". The Near South Side is an obvious example. However, you can…

Indeed, my shortlist is Chicago (and maybe Grand Rapids) at this point. I’ve always been in love with Chicago—such a gorgeous city. Housing wise, I’m enchanted by the industrial brick and timber loft condos that there seem to be a lot of for decent prices. Can you recommend other neighborhoods besides Lakeview/Lincoln Park? Those are the only areas I’ve spent significant time in aside from downtown.

It really depends on where you plan to work, where your friends are, etc. I would recommend that you rent for a year or two and spend time exploring neighborhoods. You'll find a location you love eventually. There are definitely dangerous areas, but you're going to hear a lot of very outdated advice such as "never go south of Roosevelt" when in reality from Roosevelt south to Hyde Park has seen an incredible renaissance over the last 20 years.

FYI, brick and timber loft condos are super cool, but they usually have strange layouts and the buildings tend to require a lot of maintenance. Don't let me scare you off, but you're going to want to rent one for a year before buying one, just to make sure.

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

#269

Post by sethammons »

sokoloff wrote: post #213
sethammons wrote: post #191

Earlier quoted context omitted.

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].

If you consider that the $500k house in the example is the same house that goes for $575k, then housing prices just increased to absorb the eager buyer at a lower percent down. And when the neighbor goes to sell, they see a similar house as their own sold for a higher price, so they try to sell for a higher price.

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

#270

Post by thoughtstheseus »

ethbr0 wrote: post #162
xnyan wrote: post #148

Earlier quoted context omitted.

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.

Indeed, and credit where credit is due: https://en.m.wikipedia.org/wiki/Capital_in_the_Twenty-First_... I don't ascribe to everything, but it's a thought provoking perspective.

Piketty has many of his class materials on his personal website as well.
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