141–150 of 229 posts
Some googlers got the same idea and slept in the google parking lot!
It does not make sense to purchase expensive properties with the record low interest rates. As soon as they rise again, your property will lose in 10s of thousands of dollars in value and you will be tempted to walk away from it.
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It's crazy how this isn't more common knowledge that the Economist needs to write an article about it. We're also seeing the same thing recently with tuition prices. There is more money available for student loans so schools just jack up the tuition to meet the supply of money available.
It drives me crazy that people don’t see the very simple reason why tuition has risen so much: student loan debt is not dischargable through bankruptcy. Even if the student is run over with a bus the debt can be passed on to family members. The lenders that give out these loans therefore have essentially no risk and are highly incentivized to give out loans to any and every person that wants one, regardless of their…
Earlier quoted context omitted.
It's crazy how this isn't more common knowledge that the Economist needs to write an article about it. We're also seeing the same thing recently with tuition prices. There is more money available for student loans so schools just jack up the tuition to meet the supply of money available.
It drives me crazy that people don’t see the very simple reason why tuition has risen so much: student loan debt is not dischargable through bankruptcy. Even if the student is run over with a bus the debt can be passed on to family members. The lenders that give out these loans therefore have essentially no risk and are highly incentivized to give out loans to any and every person that wants one, regardless of their…
No, debt is never inherited. The cases you are thinking of is where the family members are cosigners on the loan. Nobody's child/sibling/parent/grandparent is ever responsible for a loan they didn't sign.
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I expected this was true for the same reasoning when buying a home, but when I sampled the historical numbers, there was no strong relationship. Bankrate came to similar conclusions: https://www.bankrate.com/finance/mortgages/rising-rates-lowe... I think your reasoning is valid, so best I can figure it's because home prices and interest rates are both directly correlated with economic activity. So if the economy is h…
Close! The Fed printed many more dollars. Society gradually learns to revalue things and it starts with assets. The same reason Bitcoin and liquid assets are falling, the Feds destroying dollars. It's not that these things are falling but that USD are becoming more scarce.
The fed printing more dollars is done in a way designed to push people into riskier products.
The literal point is so that people put their money into the economy instead of parking it in a savings account. So even though your favorite personal finance guru is having you celebrate 1.75% in an Allied Savings account in exchange for referral commissions, the point is for that to be an unattractive use of your money.
Basically the fed buys things in exchange for dollars that didnt previously exist. Asset goes on the Fed’s balance sheet, the dollars are in the prior owners pockets.
The fed predominantly buys US treasuries, from both the secondary market and directly from the US Treasury.
When you buy these you are picking them up at a higher price than the last person, and this lowers the return you can get from the treasuries. The US government treasury bonds being the safest assets by guarantee of getting your money back. When you cant tolerate that yield anymore, you buy higher yielding assets that are less safe. The fed bought the whole yield curve, pushing people to buy more municipal bonds, corporate bonds, junk bonds, stocks, private equity funding startups, houses
The whole point is to push people to make their money circulate in the economy
Yes the market decided that bitcoin and cryptocurrency would give them ROI, after every socioeconomic class figurd out that houses and stocks are too overpriced to make sense
Why not crypto? Okay now that went further than demand would tolerate
And as risk off mentality comes back, and as other assets lower on the yield & risk curve come back into better lower pricing, people will likely find them attractive again because they are safer and you’ll also get your 5% annually with no work
Earlier quoted context omitted.
I expected this was true for the same reasoning when buying a home, but when I sampled the historical numbers, there was no strong relationship. Bankrate came to similar conclusions: https://www.bankrate.com/finance/mortgages/rising-rates-lowe... I think your reasoning is valid, so best I can figure it's because home prices and interest rates are both directly correlated with economic activity. So if the economy is h…
I don't believe your analysis. The relationship has such a high correlation, you can just look at the the graph and probably eyeball estimate the regression within 10% error. Banks and relators have such a massive conflict of interest in pretending that the inflated prices on housing are normal. Rising interest rates are causing housing sales volumes to plummet to record lows, and after over a year of pretending noth…
It's a weird sort of inverted relationship when the variables spend so much time moving in the same direction.
Here's another take:
“If you look at the relationship between [mortgage] rates and [home] sales and home prices, the relationship is almost zero,” said Sam Khater, deputy chief economist at CoreLogic.
https://www.curbed.com/2018/2/20/17029746/interest-rates-ris...
Maybe all these people are biased, or lying about simple numbers, or it's some big conspiracy.
The alternative explanation is just that the economy really has more than two variables.
That second hypothesis doesn't seem so preposterous to me.
Earlier quoted context omitted.
It drives me crazy that people don’t see the very simple reason why tuition has risen so much: student loan debt is not dischargable through bankruptcy. Even if the student is run over with a bus the debt can be passed on to family members. The lenders that give out these loans therefore have essentially no risk and are highly incentivized to give out loans to any and every person that wants one, regardless of their…
I would expect that such rising demand would result in more universities being built, and big expansions of existing ones.
I take issue with the statement that since 2005 rents in London have only gone up by less than 4%. This is personal data but In 1998 I was paying £650 a month for fully furnished. In the same building but on the top floor unfurnished is £925. I bought in 2000 and sold in 2015 for three times what I paid. The main people buying where I lived in East London, were from West London where rents were so high it was effecti…
So yes, less than 4%. A lot less.
>>> (925/650.0) (1.0/20)
1.0177975914387338
Note that 20 years of +1.78% per year does +42% compounded.
>>> 1.0178 20 1.4231442772353857
In real money, the rent for your place has gone down, not up, ignoring the furnishing.
I take issue with the statement that since 2005 rents in London have only gone up by less than 4%. This is personal data but In 1998 I was paying £650 a month for fully furnished. In the same building but on the top floor unfurnished is £925. I bought in 2000 and sold in 2015 for three times what I paid. The main people buying where I lived in East London, were from West London where rents were so high it was effecti…
Your personal rent example: 650 -> 925 in 20 years is very meager growth, well below inflation: 1.78% per year. So yes, less than 4%. A lot less. >>> (925/650.0) (1.0/20) 1.0177975914387338 Note that 20 years of +1.78% per year does +42% compounded. >>> 1.0178 20 1.4231442772353857 In real money, the rent for your place has gone down , not up, ignoring the furnishing.
(925/650.0) raised to the power (1/20) is 1.0178
1.0178 raised to the power 20 is 1.42
The price of houses is driven by market rents compounded with access to financing. If lenders are willing to finance an investment with 3% yield, then house prices will jump to 33x their annual rent value - it goes without saying that's only possible in low interest markets. The rent itself however is controlled by supply and demand - there needs to be a real person there earning a paycheck and he must have no other…
Years ago in the UK there was a considerable quantity of council owned properties, these were nice places to live with nice rents to pay. There was no shame in living in a council house, but you wouldn't be buying it, so it was not yours. You wouldn't be evicted either or forced to pay through the nose. This worked as a baseline, if you had more money or wanted to live in a posh area (or just the countryside) then yo…
1 https://en.m.wikipedia.org/wiki/History_of_taxation_in_the_U...
Earlier quoted context omitted.
I don't believe your analysis. The relationship has such a high correlation, you can just look at the the graph and probably eyeball estimate the regression within 10% error. Banks and relators have such a massive conflict of interest in pretending that the inflated prices on housing are normal. Rising interest rates are causing housing sales volumes to plummet to record lows, and after over a year of pretending noth…
When I eyeball the graph, 2002 to 2011 really jumps out. For about a third of the graph the two move in lock step. It's a weird sort of inverted relationship when the variables spend so much time moving in the same direction. Here's another take: “If you look at the relationship between [mortgage] rates and [home] sales and home prices, the relationship is almost zero,” said Sam Khater, deputy chief economist at Core…