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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

#291

Post by refurb »

FiReaNG3L wrote: post #111
missedthecue wrote: post #80

Earlier quoted context omitted.

Point is, you can't expect to have your cake and eat it too

You mean, like the previous generation did?

I think you’re romanticizing the prior generation. Sure they could buy a house with a blue collar job, but they weren’t doing that in NYC or other top tier cities and they often lived in much smaller home. Maybe 2bed/1bath 1000 sq ft house for a family of 5.

My entire extended family struggled a lot when growing up in the 50-70s.

It’s easy to look back at those that lucked out and bought a house in a prime location in CA (before it was prime) and say how easy they had it. You’re just ignoring all those people who did the same in Ohio and Michigan and lost their jobs and have houses worth about the same as when they bought it (adjusting for inflation).

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

#292

Post by proverbialbunny »

gwd wrote: post #214
tnel77 wrote: post #206

Earlier quoted context omitted.

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 abl…

It used to be that buying a car was an investment. It's one of the reasons the US got so car happy.

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

#293

Post by coronadisaster »

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?

I'm hoping it's a good time to sell because I just sold mine for 3x what I paid for it 10 years ago. But there could still be a lot of inflation coming up.

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

#294

Post by sokoloff »

opportune wrote: post #286
sokoloff wrote: post #131

Earlier quoted context omitted.

It’s a great time to refinance mortgage debt you already have. Whether it’s a great time to buy a house depends on the future demand for housing in the local area. If you pay today’s price for a house in Palo Alto or condo in NYC and those areas fall in popularity, it could easily be a bad call.

Condos in NYC have fallen about 10-20% lately (at least the ones I was looking at) so even with rising rates I doubt it could go underwater once the pandemic is over

It seems quite possible that, depending on the course of the pandemic (short-term) and a related long-term evolution of remote work in finance/tech, that the footprint of highly compensated employment and demand for real estate becomes much more spread out. In a scenario like that, coupled with 8% mortgage rates, I could easily imagine a 50% haircut to high priced real estate.

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

#295

Post by qeternity »

horsemessiah wrote: post #174
qeternity wrote: post #153

Earlier 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…

Markets are basically anarchy... there are countless examples of markets inefficiently allocating resources (homes, for one). Not sure I buy this.

This thread is literally about how the housing market isn't a true market...it's a government run welfare program backed by the Fed. You're proving my point.

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

#296

Post by qeternity »

jeffreyrogers wrote: post #187
qeternity wrote: post #153

Earlier 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…

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

Capitalism is like democracy: it's the worst form of economics, except for all the others. The fact that it has flaws does not make other systems superior.

Also, this thread is literally about how the housing market isn't a true market...it's a government run welfare program backed by the Fed. You're proving my point.

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

#297

Post by qeternity »

black_puppydog wrote: post #179
qeternity wrote: post #153

Earlier 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...

You're focusing on wealth inequality/relative living standards, which while important, is secondary to absolute living standards.

And while it may just seem that the rich get richer, the poor have gotten far richer under capitalist systems than any other form of economy.

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

#298

Post by _dps »

proverbialbunny wrote: post #292
gwd wrote: post #214

Earlier quoted context omitted.

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 abl…

It used to be that buying a car was an investment. It's one of the reasons the US got so car happy.

It was (and remains) an investment in the sense that it allowed you to live in a nicer place farther from work, or to commute to a job you otherwise couldn't take.

But was it ever an investment as an appreciating asset per se? I'm not aware of such a situation but I'd be interested to learn otherwise.

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

#299

Post by johnrgrace »

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…

FHA offering 5% instead of 20% down payments means first time buyers can buy 4x the house.

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

#300

Post by jdashg »

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…

Fortunately, we don't actually need to make housing more affordable to the whole market, just the ones for whom it matters: the poor.
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