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That doesn't seem to be what happens when the interest rate for full employment is below zero. I do think it has some other effects, like hedgefunds can easily

That doesn't seem to be what happens when the interest rate for full employment is below zero. I do think it has some other effects, like hedgefunds can easily leverage themselves to buy up assets that normal people want, like houses.

nitrogen 6y ago
Speaking of houses, I've heard from some local agents that the housing market in my part of Utah is currently dominated by cash offers. They didn't say where the cash was coming from.
- paulryanrogers 6y ago
  Around my area of the Midwest the cash offers are from investors. Guess the only alternative to equities is real estate.
- Scoundreller 6y ago
  "Cash" might mean someone with several properties with Equity Lines of Credit on them that they can draw on immediately. E.g. own 5 properties, each 50% mortgage, 50% equity, and 30% of equity immediately available keeping max LTV under 80%. They could immediately buy 1.5 equivalent properties and work out the financing later. They might even get better financing terms because they negotiate without the pressure of "I need you to give me a mortgage, otherwise I can't buy this hot property". If you received two identical offers, 1 contingent on financing, the other cash, you'd take the cash offer.
- rblatz 6y ago
  We just put in a cash offer on a house, but we fully intend to put a mortgage the property. But we didn’t make the bid contingent on financing going through. We can cover the cost in cash if we have to, but we would rather not.
- TuringNYC 6y ago
  Cash can also mean that you are selling a home and purchasing a new one with the equity proceeds of the first home (possibly + new savings).
coliveira 6y ago
That only works as long as the housing bubble lasts.
- TuringNYC 6y ago
  We've now been through 4.5 US presidential terms where the US administration does not want to turn the dial back. If anything, the dial is turned further and further to ensure housing prices remain artificially inflated with easy credit and low rates. However much sense stable, realistic home prices make in the long term, it makes sense in the short term for each president to continue propping up the market -- which president wants to inflict wide-scale harm on 2/3 of the households in the US?

nitrogen 6y ago

Speaking of houses, I've heard from some local agents that the housing market in my part of Utah is currently dominated by cash offers. They didn't say where the cash was coming from.

paulryanrogers 6y ago
Around my area of the Midwest the cash offers are from investors. Guess the only alternative to equities is real estate.
Scoundreller 6y ago
"Cash" might mean someone with several properties with Equity Lines of Credit on them that they can draw on immediately. E.g. own 5 properties, each 50% mortgage, 50% equity, and 30% of equity immediately available keeping max LTV under 80%. They could immediately buy 1.5 equivalent properties and work out the financing later. They might even get better financing terms because they negotiate without the pressure of "I need you to give me a mortgage, otherwise I can't buy this hot property". If you received two identical offers, 1 contingent on financing, the other cash, you'd take the cash offer.
rblatz 6y ago
We just put in a cash offer on a house, but we fully intend to put a mortgage the property. But we didn’t make the bid contingent on financing going through. We can cover the cost in cash if we have to, but we would rather not.
TuringNYC 6y ago
Cash can also mean that you are selling a home and purchasing a new one with the equity proceeds of the first home (possibly + new savings).

coliveira 6y ago

That only works as long as the housing bubble lasts.

TuringNYC 6y ago
We've now been through 4.5 US presidential terms where the US administration does not want to turn the dial back. If anything, the dial is turned further and further to ensure housing prices remain artificially inflated with easy credit and low rates. However much sense stable, realistic home prices make in the long term, it makes sense in the short term for each president to continue propping up the market -- which president wants to inflict wide-scale harm on 2/3 of the households in the US?