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I think that was the point. There are many markets that are overheated and it was time to turn down the temperature. 5% should help. (We lived through 18% in th

I think that was the point. There are many markets that are overheated and it was time to turn down the temperature. 5% should help. (We lived through 18% in the 80's. This is barely tapping the brakes.)

globular-toast 4y ago
Yes but it was 18% of a much a smaller amount. In terms of potatoes or shoes the amount of interest they were paying back then was probably the same.
- HarryHirsch 4y ago
  In the 80's a much smaller chunk of paycheck went into housing.
  - refurb 4y ago
    Not really. https://www.brookings.edu/wp-content/uploads/2016/08/where_does_all_the_money_go.pdf https://www.brookings.edu/wp-content/uploads/2016/08/where_d... Percent of income spent on housing for low income households went from 35% (1984) to 41% (2014). So higher, yes, but it wasn’t “much smaller”.
    - voisin 4y ago
      I’d love to see the stats today or closer to today. Prices have skyrocketed since 2014.
      - refurb 4y ago
        Sure but current prices in many areas have only returned to their 2007 peak.
    - beeboop 4y ago
      What these stats often miss, including this one at a glance, is that they're looking at average housing cost across the entire country. Housing in Detroit is definitely a lot cheaper than it was 20 years ago, but in Seattle and Portland and Denver and places people actually want to live, it's soared. These stats also often don't address how many people in a household are working and how that's changed over time. There's a lot more dual incomes for a "household budget" in 2014 than there was in 1984. If your household income has nearly doubled, and you're going from 35% of your household budget to 41%, this could mean the cost of housing has actually doubled or more.
    - HarryHirsch 4y ago
      35 % on a single income vs 41 % on a double income. That's "antifragile", as they say, an unsafe position to be in, especially when the next recession is on the doorstep. Me? Trying to find a property to buy in Western Massachusetts that's affordable on one income. Not looking good.
      - refurb 4y ago
        You think most families were single income in the 80’s? Women entering the workforce happened mostly by the late 70’s.
        HarryHirsch 4y ago
        Lots of headroom left on the 1970's, prices are set at the margin: https://fred.stlouisfed.org/series/LNU01300002 https://fred.stlouisfed.org/series/LNU01300002 Housing prices on the other hand - mostly stable until the 1980's, and then shelter became an investment vehicle: https://fred.stlouisfed.org/series/LNU01300002 https://fred.stlouisfed.org/series/LNU01300002 The prediction is that we will have a period of monetary inflation to deal with the problem of asset inflation.
        refurb 4y ago
        My point stands. The vast majority of households were dual income in 1984. Since then house expenses have only increase by 5%. The real issue is people in HCOL cities think their experience is the same across America. Plenty of places in the US where housing is still affordable.
        HarryHirsch 4y ago
        What kind of salary can you get in LCOL cities, and will you have to move when you change jobs? The withdrawal from the countryside has been ongoing for a long time. In the 1980's one might have joined Dow in Midland, MI or Upjohn in Kalamazoo, and expected to retire with them. Nowadays, job tenures are short, and one would think that this is reflected in demand.
spamizbad 4y ago
Yes, but unlike the 1980s we've been underbuilding housing since the 90s. There were also more first-time buyer incentives available in the 1980s.
- deleted 4y ago
  [deleted]
- HarryHirsch 4y ago
  Exactly that - it's not clear how interest raises in a time of shortage will do something about the shortage. If anything, they discourage investment. And what's with buyer incentives? They are just a conduit from the taxpayer to Big Finance.
- JKCalhoun 4y ago
  At the same time, the higher interest rate will causes existing home-owners to "stay put" rather than jump to another home and pay 5% (unless they are down-sizing and able to make a cash offer). So the supply problem is not addressed. Might make new construction cheaper though?
gr8tnwz 4y ago
Now that speculators have driven up prices while interest was and money printers went brrr, time to drive up the interest. And we should be happy to have been born after others earned all the wealth. https://youtu.be/bUl5rSpfCeI https://youtu.be/bUl5rSpfCeI

globular-toast 4y ago

Yes but it was 18% of a much a smaller amount. In terms of potatoes or shoes the amount of interest they were paying back then was probably the same.

HarryHirsch 4y ago
In the 80's a much smaller chunk of paycheck went into housing.
- refurb 4y ago
  Not really. https://www.brookings.edu/wp-content/uploads/2016/08/where_does_all_the_money_go.pdf https://www.brookings.edu/wp-content/uploads/2016/08/where_d... Percent of income spent on housing for low income households went from 35% (1984) to 41% (2014). So higher, yes, but it wasn’t “much smaller”.
  - voisin 4y ago
    I’d love to see the stats today or closer to today. Prices have skyrocketed since 2014.
    - refurb 4y ago
      Sure but current prices in many areas have only returned to their 2007 peak.
  - beeboop 4y ago
    What these stats often miss, including this one at a glance, is that they're looking at average housing cost across the entire country. Housing in Detroit is definitely a lot cheaper than it was 20 years ago, but in Seattle and Portland and Denver and places people actually want to live, it's soared. These stats also often don't address how many people in a household are working and how that's changed over time. There's a lot more dual incomes for a "household budget" in 2014 than there was in 1984. If your household income has nearly doubled, and you're going from 35% of your household budget to 41%, this could mean the cost of housing has actually doubled or more.
  - HarryHirsch 4y ago
    35 % on a single income vs 41 % on a double income. That's "antifragile", as they say, an unsafe position to be in, especially when the next recession is on the doorstep. Me? Trying to find a property to buy in Western Massachusetts that's affordable on one income. Not looking good.
    - refurb 4y ago
      You think most families were single income in the 80’s? Women entering the workforce happened mostly by the late 70’s.
      - HarryHirsch 4y ago
        Lots of headroom left on the 1970's, prices are set at the margin: https://fred.stlouisfed.org/series/LNU01300002 https://fred.stlouisfed.org/series/LNU01300002 Housing prices on the other hand - mostly stable until the 1980's, and then shelter became an investment vehicle: https://fred.stlouisfed.org/series/LNU01300002 https://fred.stlouisfed.org/series/LNU01300002 The prediction is that we will have a period of monetary inflation to deal with the problem of asset inflation.
        refurb 4y ago
        My point stands. The vast majority of households were dual income in 1984. Since then house expenses have only increase by 5%. The real issue is people in HCOL cities think their experience is the same across America. Plenty of places in the US where housing is still affordable.
        HarryHirsch 4y ago
        What kind of salary can you get in LCOL cities, and will you have to move when you change jobs? The withdrawal from the countryside has been ongoing for a long time. In the 1980's one might have joined Dow in Midland, MI or Upjohn in Kalamazoo, and expected to retire with them. Nowadays, job tenures are short, and one would think that this is reflected in demand.

spamizbad 4y ago

Yes, but unlike the 1980s we've been underbuilding housing since the 90s. There were also more first-time buyer incentives available in the 1980s.

deleted 4y ago
[deleted]
HarryHirsch 4y ago
Exactly that - it's not clear how interest raises in a time of shortage will do something about the shortage. If anything, they discourage investment. And what's with buyer incentives? They are just a conduit from the taxpayer to Big Finance.
JKCalhoun 4y ago
At the same time, the higher interest rate will causes existing home-owners to "stay put" rather than jump to another home and pay 5% (unless they are down-sizing and able to make a cash offer). So the supply problem is not addressed. Might make new construction cheaper though?

gr8tnwz 4y ago

Now that speculators have driven up prices while interest was and money printers went brrr, time to drive up the interest. And we should be happy to have been born after others earned all the wealth. https://youtu.be/bUl5rSpfCeI https://youtu.be/bUl5rSpfCeI