RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Air Miles You couldn't be more wrong. Free money is over. You likely have only lived in this era of cheap money so can't believe what you haven't experienced.
People can only afford to pay so much for a roof over their head. Lower rates or higher wages are the main two factors supporting higher real estate prices. The FED has been cyrstal clear pain is coming for the debtors and he is on a mission to increase unemployment with higher rates, thereby slowing the economy and pressuring wages down.
Tommy123 wrote:
Capharnaum wrote: 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.
Fed rates should be aligned with long term growth rates. That's the only way to keep the money supply in line with the production and keep prices fairly balanced.
As countries get more developed, their productivity tends to slow down, hence it's normal for rates to decline as well.
Now, should they be at zero? Probably not. Will they be there? Surely, because when the economy isn't doing good, the Fed will go back to "stimulus" mode. The decline of the economy is written in the sky.
Asset prices have increased mostly due to a deficit of lodging supply when compared to demand (regardless of owned or rented). The deficit in lodging supply is mostly due to the regulations in place, which restricts rents rates or restricts building permits/rights. The growing imbalance keeps pressure on prices. Sure, interest rates have also increased "purchasing" power, but overall, accessibility to purchase real estate has declined over the years, which in itself should have put pressure on prices going lower.
100% agree that we're headed back to zero percent rates very soon. I could see a recession occuring by mid-2023, and rates dropped to zero later in the year. Housing is going to absolutely soar!