This guys has a point...(faulty inflation measures will screw up all sorts of things)

HoustonHusky

https://www.zerohedge.com/economics/asset-bubbles-danger-anchoring-reported-inflation-non-market-price

There are significant adverse consequences and dangers of relying on a non-market price to anchor reported inflation. Policymakers end up setting official rates too low, allowing real estate and equity values to trade at higher valuations than underlying fundamentals would otherwise support.
...
The latter point is significant. That's because dampening or camouflaging actual inflation creates a false picture which, in turn, compels policymakers to maintain a lower official interest rate than what otherwise would be the case.

One of the consequences or dangers of linking the stance of monetary policy to a non-market-driven inflation rate is that it can lead to an escalation of asset prices that fundamentals alone don't justify.

Think the author misses a bit on the relation of asset prices to Fed policy...but I think it adds to the point that as the Fed prints money its going to keep blowing out and whenever that spigot turns off (or the Fed loses control) its going to get ugly...

creepycoug

This is my fear reduced to a one-pager.

I especially fear this as it relates to buying up house again. I was going to pull the trigger, but a las the Finance Club voices wouldn't let me be and I thought the better of it.

I remembered what I said here when lamenting the American consumer: payments. They always think about payments. Not about owning.

So I go buy some 2.5 million house, or whatever, because I can finance it rather easily with the down pmt. I'll have to apply to the problem. Ok.

Then the Fed corrects (assuming that happens in my life-tim), and we all know housing is going to take it in the ass. Now, I own a, what, 2 million house? 1.8? IDK what the correction will be. But my fucking loan doesn't change. That's what the payments mentality gets you.

@RaceBannon has it right: sell now, rent and wait. I just don't have the balls for that.

There is a disconnect alright. I have not seen one single credible attempt by anyone to argue otherwise. You called this one early Houston.

Shit's getting worse by the day. My daughter and SIL offered on a house in Magnolia last week ... small, modest home. $1.2. ONE POINT FUCKING TWO. JFC. I like Magnolia, but come on.

Two things: when I was 29 years old, I didn't have the stomach for that kind of reach. These kids these days. Also, they were outbid w/in an hour and they knew it would happen. They called me about the offer and I said, "WTF are you doing buying a million dollar house?" They said, "Shut up old man. And don't worry; someone else is going to buy it." They absolutely knew they'd be outbid.

Doog_de_Jour

creepycoug said:

This is my fear reduced to a one-pager.

I especially fear this as it relates to buying up house again. I was going to pull the trigger, but a las the Finance Club voices wouldn't let me be and I thought the better of it.

I remembered what I said here when lamenting the American consumer: payments. They always think about payments. Not about owning.

So I go buy some 2.5 million house, or whatever, because I can finance it rather easily with the down pmt. I'll have to apply to the problem. Ok.

Then the Fed corrects (assuming that happens in my life-tim), and we all know housing is going to take it in the ass. Now, I own a, what, 2 million house? 1.8? IDK what the correction will be. But my fucking loan doesn't change. That's what the payments mentality gets you.

@RaceBannon has it right: sell now, rent and wait. I just don't have the balls for that.

There is a disconnect alright. I have not seen one single credible attempt by anyone to argue otherwise. You called this one early Houston.

Shit's getting worse by the day. My daughter and SIL offered on a house in Magnolia last week ... small, modest home. $1.2. ONE POINT FUCKING TWO. JFC. I like Magnolia, but come on.

Two things: when I was 29 years old, I didn't have the stomach for that kind of reach. These kids these days. Also, they were outbid w/in an hour and they knew it would happen. They called me about the offer and I said, "WTF are you doing buying a million dollar house?" They said, "Shut up old man. And don't worry; someone else is going to buy it." They absolutely knew they'd be outbid.

I’ve been pitching Race’s strategy to my parents. I’m really worried they won’t be able to sell their house if they wait much longer and I don’t like them pumping more money into maintaining a home if they don’t have to.

But then they remind me selling would require me to move out of the basement so I shut up.

In any case, I haven’t seen this kind of FOMO in real estate in awhile.

BleachedAnusDawg

People have been saying sell now, rent, and wait for the last 5 years. Good luck. It's gambling trying to time it right. I tried that in 2017 for a year after selling a condo that had gone up nearly 50% in value from 2014 to 2017. Sat out a year and realized I was losing money waiting and bought a house and here we are 3 years later and prices are still going up. I'm not saying they will continue to increase, but the fundamentals of what is driving costs in the market right now are largely supply and demand.

Maybe the analogy is that if you were to view the real estate cycle as a traffic light it would be a stale yellow at this point. You can still try to hit the gas and make it through, but you might only have a second before the light turns red and you have to slam on the brakes. I think anyone buying a house right now should be prepared to stay in place for 7 - 10 years just in case the wheels come off in a big way.

RaceBannon

Just to be clear I said this in 2006 when Goldman Sachs was both selling and shorting mortgage bundles

It may not be a clear comparison to now but bubbles always pop and Covid is likely the needle

I don't know anything so do what you want

creepycoug

BleachedAnusDawg said:

People have been saying sell now, rent, and wait for the last 5 years. Good luck. It's gambling trying to time it right. I tried that in 2017 for a year after selling a condo that had gone up nearly 50% in value from 2014 to 2017. Sat out a year and realized I was losing money waiting and bought a house and here we are 3 years later and prices are still going up. I'm not saying they will continue to increase, but the fundamentals of what is driving costs in the market right now are largely supply and demand.

Maybe the analogy is that if you were to view the real estate cycle as a traffic light it would be a stale yellow at this point. You can still try to hit the gas and make it through, but you might only have a second before the light turns red and you have to slam on the brakes. I think anyone buying a house right now should be prepared to stay in place for 7 - 10 years just in case the wheels come off in a big way.

Yes, but that demand is predicated almost entirely on "Payments" ... the American way. If I can swing it monthly, then I want it!

Increase the cost of financing and watch what happens.

creepycoug

RaceBannon said:

Just to be clear I said this in 2006 when Goldman Sachs was both selling and shorting mortgage bundles

It may not be a clear comparison to now but bubbles always pop and Covid is likely the needle

I don't know anything so do what you want

You and @pawz (not @paws ) are the Club's real estate oracles. Don't say shit like that; it's bad for the brand meng.

BleachedAnusDawg

creepycoug said:

BleachedAnusDawg said:

People have been saying sell now, rent, and wait for the last 5 years. Good luck. It's gambling trying to time it right. I tried that in 2017 for a year after selling a condo that had gone up nearly 50% in value from 2014 to 2017. Sat out a year and realized I was losing money waiting and bought a house and here we are 3 years later and prices are still going up. I'm not saying they will continue to increase, but the fundamentals of what is driving costs in the market right now are largely supply and demand.

Maybe the analogy is that if you were to view the real estate cycle as a traffic light it would be a stale yellow at this point. You can still try to hit the gas and make it through, but you might only have a second before the light turns red and you have to slam on the brakes. I think anyone buying a house right now should be prepared to stay in place for 7 - 10 years just in case the wheels come off in a big way.

Yes, but that demand is predicated almost entirely on "Payments" ... the American way. If I can swing it monthly, then I want it!

Increase the cost of financing and watch what happens.

Demand slows and the market balances? I'm not a pro on this, but that doesn't seem like a cliff. I think the real possibility of a large correction are the forbearance notes coming due, but I doubt Big Gov allows people to be foreclosed in large numbers.

BleachedAnusDawg

Also, FWIW, the real estate pros I know were saying a month ago that end of 2022 was the correction. Now they're saying 2023 or 2024.

RaceBannon

In 06 loans were available at 99% of value at the peak. When it crashed there was no incentive to stay

If you have 20% down and have lived there and want to stay there you have incentive to tough it out

People also forget that people lost jobs right and left and if you can't pay you can't pay. That is similar to now

HoustonHusky

I'm ok at identifying problems...predicting the consequences from them gets more difficult. I think two (of many) extremes that could happen are that the Fed loses control, rates go nuts just as folks are losing jobs, and everyone is both poorer and leveraged assets (houses, etc.) tank because nobody can afford them with actual interest rates. The other extreme is that the Fed prints money for a couple of years, everything inflates (not as much as the amount of money printed should say), and the people are generally poorer but they system catches up, and the ones really left holding the bag are the folks holding cash and such.

The Fed turning into a crack-whore really throws a wrench into the situation...makes it a bit unique to past bubbles.

RaceBannon

BleachedAnusDawg said:

Also, FWIW, the real estate pros I know were saying a month ago that end of 2022 was the correction. Now they're saying 2023 or 2024.

It depends how long the buck can be passed on repos. It does keep getting moved out which will do more harm than good IMO

RaceBannon

You can probably go to the Seattle Times archives around the time that Wa Mu collapsed and see the articles on the kind of malarkey that was going on with home loans. One that sticks in my mind was the loan officer who accepted a press on JOe the Painter sign on a van as proof of employment

Everyone got paid on the number of loans not the quality

BennyBeaver

Doog_de_Jour said:

creepycoug said:

This is my fear reduced to a one-pager.

I especially fear this as it relates to buying up house again. I was going to pull the trigger, but a las the Finance Club voices wouldn't let me be and I thought the better of it.

I remembered what I said here when lamenting the American consumer: payments. They always think about payments. Not about owning.

So I go buy some 2.5 million house, or whatever, because I can finance it rather easily with the down pmt. I'll have to apply to the problem. Ok.

Then the Fed corrects (assuming that happens in my life-tim), and we all know housing is going to take it in the ass. Now, I own a, what, 2 million house? 1.8? IDK what the correction will be. But my fucking loan doesn't change. That's what the payments mentality gets you.

@RaceBannon has it right: sell now, rent and wait. I just don't have the balls for that.

There is a disconnect alright. I have not seen one single credible attempt by anyone to argue otherwise. You called this one early Houston.

Shit's getting worse by the day. My daughter and SIL offered on a house in Magnolia last week ... small, modest home. $1.2. ONE POINT FUCKING TWO. JFC. I like Magnolia, but come on.

Two things: when I was 29 years old, I didn't have the stomach for that kind of reach. These kids these days. Also, they were outbid w/in an hour and they knew it would happen. They called me about the offer and I said, "WTF are you doing buying a million dollar house?" They said, "Shut up old man. And don't worry; someone else is going to buy it." They absolutely knew they'd be outbid.

I’ve been pitching Race’s strategy to my parents. I’m really worried they won’t be able to sell their house if they wait much longer and I don’t like them pumping more money into maintaining a home if they don’t have to.

But then they remind me selling would require me to move out of the basement so I shut up.

In any case, I haven’t seen this kind of FOMO in real estate in awhile.

I have a spare room in my basement. Rent is negotiable. 😉

Doog_de_Jour

BennyBeaver said:

Doog_de_Jour said:

creepycoug said:

This is my fear reduced to a one-pager.

I especially fear this as it relates to buying up house again. I was going to pull the trigger, but a las the Finance Club voices wouldn't let me be and I thought the better of it.

I remembered what I said here when lamenting the American consumer: payments. They always think about payments. Not about owning.

So I go buy some 2.5 million house, or whatever, because I can finance it rather easily with the down pmt. I'll have to apply to the problem. Ok.

Then the Fed corrects (assuming that happens in my life-tim), and we all know housing is going to take it in the ass. Now, I own a, what, 2 million house? 1.8? IDK what the correction will be. But my fucking loan doesn't change. That's what the payments mentality gets you.

@RaceBannon has it right: sell now, rent and wait. I just don't have the balls for that.

There is a disconnect alright. I have not seen one single credible attempt by anyone to argue otherwise. You called this one early Houston.

Shit's getting worse by the day. My daughter and SIL offered on a house in Magnolia last week ... small, modest home. $1.2. ONE POINT FUCKING TWO. JFC. I like Magnolia, but come on.

Two things: when I was 29 years old, I didn't have the stomach for that kind of reach. These kids these days. Also, they were outbid w/in an hour and they knew it would happen. They called me about the offer and I said, "WTF are you doing buying a million dollar house?" They said, "Shut up old man. And don't worry; someone else is going to buy it." They absolutely knew they'd be outbid.

I’ve been pitching Race’s strategy to my parents. I’m really worried they won’t be able to sell their house if they wait much longer and I don’t like them pumping more money into maintaining a home if they don’t have to.

But then they remind me selling would require me to move out of the basement so I shut up.

In any case, I haven’t seen this kind of FOMO in real estate in awhile.

I have a spare room in my basement. Rent is negotiable. 😉

You’re married, right?

creepycoug

Doog_de_Jour said:

BennyBeaver said:

Doog_de_Jour said:

creepycoug said:

This is my fear reduced to a one-pager.

I especially fear this as it relates to buying up house again. I was going to pull the trigger, but a las the Finance Club voices wouldn't let me be and I thought the better of it.

I remembered what I said here when lamenting the American consumer: payments. They always think about payments. Not about owning.

So I go buy some 2.5 million house, or whatever, because I can finance it rather easily with the down pmt. I'll have to apply to the problem. Ok.

Then the Fed corrects (assuming that happens in my life-tim), and we all know housing is going to take it in the ass. Now, I own a, what, 2 million house? 1.8? IDK what the correction will be. But my fucking loan doesn't change. That's what the payments mentality gets you.

@RaceBannon has it right: sell now, rent and wait. I just don't have the balls for that.

There is a disconnect alright. I have not seen one single credible attempt by anyone to argue otherwise. You called this one early Houston.

Shit's getting worse by the day. My daughter and SIL offered on a house in Magnolia last week ... small, modest home. $1.2. ONE POINT FUCKING TWO. JFC. I like Magnolia, but come on.

Two things: when I was 29 years old, I didn't have the stomach for that kind of reach. These kids these days. Also, they were outbid w/in an hour and they knew it would happen. They called me about the offer and I said, "WTF are you doing buying a million dollar house?" They said, "Shut up old man. And don't worry; someone else is going to buy it." They absolutely knew they'd be outbid.

I’ve been pitching Race’s strategy to my parents. I’m really worried they won’t be able to sell their house if they wait much longer and I don’t like them pumping more money into maintaining a home if they don’t have to.

But then they remind me selling would require me to move out of the basement so I shut up.

In any case, I haven’t seen this kind of FOMO in real estate in awhile.

I have a spare room in my basement. Rent is negotiable. 😉

You’re married, right?

Forgive our little Benny my Lady. He's only in the Club as part of a diversity program. We care.

Also, Benny wouldn't know what to do with you if he had the chance. I see you leading him into a room and him slobbering on himself, shaking at the knees and blowing his junk in his pants before you even begin to unbutton you blouse. I'm afraid the you're too much woman for him @Doog_de_Jour .

BennyBeaver

creepycoug said:

Doog_de_Jour said:

BennyBeaver said:

Doog_de_Jour said:

creepycoug said:

This is my fear reduced to a one-pager.

I especially fear this as it relates to buying up house again. I was going to pull the trigger, but a las the Finance Club voices wouldn't let me be and I thought the better of it.

I remembered what I said here when lamenting the American consumer: payments. They always think about payments. Not about owning.

So I go buy some 2.5 million house, or whatever, because I can finance it rather easily with the down pmt. I'll have to apply to the problem. Ok.

Then the Fed corrects (assuming that happens in my life-tim), and we all know housing is going to take it in the ass. Now, I own a, what, 2 million house? 1.8? IDK what the correction will be. But my fucking loan doesn't change. That's what the payments mentality gets you.

@RaceBannon has it right: sell now, rent and wait. I just don't have the balls for that.

There is a disconnect alright. I have not seen one single credible attempt by anyone to argue otherwise. You called this one early Houston.

Shit's getting worse by the day. My daughter and SIL offered on a house in Magnolia last week ... small, modest home. $1.2. ONE POINT FUCKING TWO. JFC. I like Magnolia, but come on.

Two things: when I was 29 years old, I didn't have the stomach for that kind of reach. These kids these days. Also, they were outbid w/in an hour and they knew it would happen. They called me about the offer and I said, "WTF are you doing buying a million dollar house?" They said, "Shut up old man. And don't worry; someone else is going to buy it." They absolutely knew they'd be outbid.

I’ve been pitching Race’s strategy to my parents. I’m really worried they won’t be able to sell their house if they wait much longer and I don’t like them pumping more money into maintaining a home if they don’t have to.

But then they remind me selling would require me to move out of the basement so I shut up.

In any case, I haven’t seen this kind of FOMO in real estate in awhile.

I have a spare room in my basement. Rent is negotiable. 😉

You’re married, right?

Forgive our little Benny my Lady. He's only in the Club as part of a diversity program. We care.

Also, Benny wouldn't know what to do with you if he had the chance. I see you leading him into a room and him slobbering on himself, shaking at the knees and blowing his junk in his pants before you even begin to unbutton you blouse. I'm afraid the you're too much woman for him @Doog_de_Jour .

Projecting.