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Generational Luck in the Housing Market

awealthofcommonsense.com

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Re: Generational Luck in the Housing Market

#111

Post by smallmancontrov »

JumpCrisscross wrote: post #89
smallmancontrov wrote: post #72

Earlier quoted context omitted.

They become asset holders on worse terms. Now they must maintain their predecessor's degeneracy to simply not lose money. If they want to gain money, they must figure out how to impose even more degenerate terms on those beneath them. Ratchet goes click. Eventually it implodes. People who got in early on the ponzi walk away with windfalls but the last generation is the largest generation and it gets to hold the bags.

> the last generation is the largest generation and it gets to hold the bags You're describing a housing-price decline as if it didn't happen less than two decades ago. It's painful, because of the leverage. But a lot of Americans are uniquely equity rich in their homes right now. The missing pieces in your equation are (a) default, which wipes out the debt and (b) real economic growth. It's a tragedy that so much of…

2008 was not a reversal in the secular decline in interest rates and increase in leverage. Quite the opposite, it just ushered in the next leg. While you are correct that (a)+(b) can keep the party going under all conditions we have seen for the last 40 years and likely for the next 10, the trouble is that if you hit the (a) default button too much people eventually get tired of the inflation and force you to deleverage and reduce prices (in real terms). This is the actual bust.

Or maybe replacing our workforce with robots is actually deflationary enough to make it different this time. Who knows.

Re: Generational Luck in the Housing Market

#112

Post by JumpCrisscross »

pandaman wrote: post #110
JumpCrisscross wrote: post #109

Earlier quoted context omitted.

> Whatever model you run is most probably wrong because jumbo loans are not priced double and actually are priced pretty close to the conforming loans Modelling non-jumbo loans provided without support. I have a jumbo mortgage. I also had substantial assets when I took it out, substantial income and opted to put 25% down. Remove those factors and your credit component starts interacting with duration in complex ways.…

It's great that you have substantial assets but neither that, nor the article "model" anything. Also you are now changing your argument from "remove F&F" to "remove securitization and hedging infrastructure". As I already pointed out, if F&F did not exist, another firm could have done exactly the same securitization, as many do on non-government controlled markets right now.

> neither that, nor the article "model" anything

I was showing why 30y-fixed jumbos exist as a result of F&F. You argued an incorrect connection between jumbos within the current system as a proxy for unsubsidised mortgages in a non-F&F system.

> if F&F did not exist, another firm could have done exactly the same securitization, as many do on non-government controlled markets right now

Show me a single one that does for fixed-rate 30-year mortgages to average Americans at scale. Or a single other country that does this.

F&F can do that at the scale they do because they have an implicit guarantee. That creates securitisation and hedging infrastructure for that product that niche firms, like those doing jumbos, can piggyback on. Take out F&F and there isn’t the mass market which means you lose the product. (And no, another firm can’t trivially mint an implicit guarantee from the U.S. government.) Going back to the original point of this thread: they’re far more critical to this process than the Fed.

Genuine question: have you or someone you know traded mortgages?

Re: Generational Luck in the Housing Market

#113

Post by office_drone »

bryanlarsen wrote: post #101
office_drone wrote: post #100

Earlier quoted context omitted.

That can't be right. GTA and Vancouver home prices are 3 times what they were in 2009.

Vancouver average detached was $1.2M in 2008, it's $1.8M now. That's not 3X.

According to a realtor association site [0] the 'Residential - All Types' price for 'Greater Vancouver' went from $466,500 in March 2009 to $1,196,800 in March 2024. That is a 2.57x multiple.

[0] https://www.gvrealtors.ca/market-watch/MLS-HPI-home-price-co...

Re: Generational Luck in the Housing Market

#114

Post by red-iron-pine »

riku_iki wrote: post #24
bluefirebrand wrote: post #20

Earlier quoted context omitted.

The year you are born is absolutely an uncontrollable force

But subsequent policies are the choice.

not until you're 18 and can vote. hopefully your parents have sane views towards public policy.

Re: Generational Luck in the Housing Market

#115

Post by riku_iki »

red-iron-pine wrote: post #114
riku_iki wrote: post #24

Earlier quoted context omitted.

But subsequent policies are the choice.

not until you're 18 and can vote. hopefully your parents have sane views towards public policy.

in this case those who the most benefited from fed policies are well over 18yo

Re: Generational Luck in the Housing Market

#116

Post by pandaman »

JumpCrisscross wrote: post #112
pandaman wrote: post #110

Earlier quoted context omitted.

It's great that you have substantial assets but neither that, nor the article "model" anything. Also you are now changing your argument from "remove F&F" to "remove securitization and hedging infrastructure". As I already pointed out, if F&F did not exist, another firm could have done exactly the same securitization, as many do on non-government controlled markets right now.

> neither that, nor the article "model" anything I was showing why 30y-fixed jumbos exist as a result of F&F. You argued an incorrect connection between jumbos within the current system as a proxy for unsubsidised mortgages in a non-F&F system. > if F&F did not exist, another firm could have done exactly the same securitization, as many do on non-government controlled markets right now Show me a single one that does…

>I was showing why 30y-fixed jumbos exist as a result of F&F. You argued

I understood that. But showing that something is a result of something else needs some kind of logic, stating both things exist does not establish a casual relationship. You can try it for yourself by applying your own argument in the reverse direction: if your logic had been sound then it would also be true that F&F exist because of 30 years fixed jumbo loans.

>F&F can do that at the scale they do because they have an implicit guarantee. That creates securitisation

What? Securitization is turning something into securities, it's a process that is not caused by any guarantees, you can do it yourself.

Re: Generational Luck in the Housing Market

#117

Post by bryanlarsen »

office_drone wrote: post #113
bryanlarsen wrote: post #101

Earlier quoted context omitted.

Vancouver average detached was $1.2M in 2008, it's $1.8M now. That's not 3X.

According to a realtor association site [0] the 'Residential - All Types' price for 'Greater Vancouver' went from $466,500 in March 2009 to $1,196,800 in March 2024. That is a 2.57x multiple. [0] https://www.gvrealtors.ca/market-watch/MLS-HPI-home-price-co...

This is what I went from.

https://globalnews.ca/news/2531266/one-chart-shows-how-unpre...

Those numbers look a lot closer to my experience than yours.

All three lines show a ~50% price increase.

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