RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Air Miles Powell was late to move and fell behind the inflation curve. I made posts early in the year when they held rates at 0 that it was a mistake. Of course, markets rallied and real estate catapulted even higher... the easy money party lived on for a few months longer.
But, too late... the damage was done. Here we are now 6 months later and the S&P falling 25% and only now is Powell using words like "expect pain" and he'll do "whatever it takes" to get back to his 2% target.
It takes awhile for rates to filter through the economy so after Nov 2's announcement we may rally hard into Christmas if we get any "hope" of a pause on the horizon. But, real estate will suffer regardless. Once the FOMO is gone, buyers retreat waiting for a price drop which inadvertantly occurs and could take years, maybe a decade, before reaching early 2022 prices again.
babedinkleman wrote: Oh for sure....realestate is dead as an investment. Killed by stupidly low rates that made housing unaffordable and no reason to own rentals....the rental income doesn't justify not taking advantage of the asset value by selling it.
I just don't understand those who think rates will drop again....especially 6 months from now. Do they not see the mess that put everyone in? There is zero chance rates will reverse next year.....even after moving up another full percentage point. And they shouldn't. Low rates aren't the solution....they just create a much bigger problem and hurt those who actually need the help the most. I'm guessing the Fed and even their Canadian counterpart understand that at this point. 4-4.5% prime is exactly where things need to be and likely will be for years. The market is just hanging on every tiny possibility that any data that points to a slow down will cause the fed to flinch for some reason. Likely because naive gen z'ers are partially driving the markets these days.
flamingogold wrote: Borrowed money is still dirt cheap by historical comparison. My first mortage was a "builder's special" at 12.75%. 10 years later I sold and didn't make a dime on the house. When rates crashed to near 0 during covid driving real estate to record highs, it was time to sell the rental which closed late Spring. Now sitting on a cash pile and easing in on the pullback. But, real estate is not in my crosshairs. That play is over.
babedinkleman wrote: Capharnaum wrote: Whenever the economy turns sour, high rates won't be sustainable and will crash back towards zero.
Powell is a fool and I think the FED overstates their real capacity of impacting inflation. I believe that their quantitative easing (through the purchase of bonds) has a more potent effect on the money supply than straight up rates.
High rates? Nah.....you've become so accustomed to ridiculously low rates you think what we are seeing are high rates? Fed funds rates of 4%......mortgage rates of 6% or higher are exactly where rates should stay long term so we don't end up in the stupid situation we've been in for the past 6-10 years. This attempting to manage the economy through stupidly low interest rates has been a disaster for the middle and lower class. Hopefully they get understand that now.