4 ms·

With what? Dollars that are dipping 8% a year?

andrewmcwatters 4y ago
Interesting you mention this because the US equities market is dropping in value faster than the dollar is right now. :)
2Gkashmiri 4y ago
interestingly US $ to indian rupee is growing more wider at around 77.8 INR to 1 US$. by that projection, indian rupee is falling so either invest in gold or US$ to beat "indian inflation"... does that make sense?
vmception 4y ago
Yes exactly. You can handle inflation for 6 months to 2 years
onlyrealcuzzo 4y ago
If the hypothesis is that home prices are going down - then dollars are not going down the same amount WRT house prices.
- ryanSrich 4y ago
  Home prices are not going down. The math just doesn’t work. The demand outweighs the inventory by several orders of magnitude the last time I checked. Rate hikes and inflation won’t have much of an impact.
  - lazide 4y ago
    Demand is driven by ability to finance. People buy the maximum home they can 'afford' (really, that they'll be loaned most of the time). That is determined mostly by loan servicing costs to income ratios. What happens when interest rates go up? Hint: what people can 'afford' changes. And it doesn't get better. Prices on the market of course won't dip right away, because most sellers don't have to sell right away, and most owners won't have to sell at all. It takes inventory backlogging and houses sitting on the market a few years (usually) before sellers get desperate and start being willing to compete on price. Short sales and foreclosures can force the issue sometimes, but since people REALLY want to avoid those, they also tend to be lagging. In rich neighborhoods, often the sellers will just pull the listing and wait, both to avoid drops in nearby property values based on comps (neighbors will hate them, and that matters in places like that), and because they have the capital to wait out a downturn and don't want to take the haircut. The poor/shitty areas though, once the dam breaks it is quite impressive. I've watched it happen a few times now. This is why real estate is often considered illiquid and hard to value.
  - sokoloff 4y ago
    There are 100 buyers for every home (charitably assuming "several" is only 2) or 1000 buyers for every home (a more reasonable reading that "several" is minimum of 3)? That doesn't sound right at all.
    - rory 4y ago
      Several base 2 orders of magnitude :)
    - onlyrealcuzzo 4y ago
      There are only 409k homes for sale: https://fred.stlouisfed.org/series/ACTLISCOUUS https://fred.stlouisfed.org/series/ACTLISCOUUS The home ownership rate is ~65%: https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N Theoretically, there are close to 30M HH that want to own a home, but don't. That's close to 100:1. More practically, probably only a 1/3rd of them are remotely qualified to buy something they'd want to own, and only a 1/3rd probably actually want to own & are currently interested in houses at this price. That could still be >10 buyers for every house.
newaccount2021 4y ago

Interesting you mention this because the US equities market is dropping in value faster than the dollar is right now. :)

2Gkashmiri 4y ago

interestingly US $ to indian rupee is growing more wider at around 77.8 INR to 1 US$. by that projection, indian rupee is falling so either invest in gold or US$ to beat "indian inflation"... does that make sense?

vmception 4y ago

Yes exactly. You can handle inflation for 6 months to 2 years

onlyrealcuzzo 4y ago

If the hypothesis is that home prices are going down - then dollars are not going down the same amount WRT house prices.

ryanSrich 4y ago
Home prices are not going down. The math just doesn’t work. The demand outweighs the inventory by several orders of magnitude the last time I checked. Rate hikes and inflation won’t have much of an impact.
- lazide 4y ago
  Demand is driven by ability to finance. People buy the maximum home they can 'afford' (really, that they'll be loaned most of the time). That is determined mostly by loan servicing costs to income ratios. What happens when interest rates go up? Hint: what people can 'afford' changes. And it doesn't get better. Prices on the market of course won't dip right away, because most sellers don't have to sell right away, and most owners won't have to sell at all. It takes inventory backlogging and houses sitting on the market a few years (usually) before sellers get desperate and start being willing to compete on price. Short sales and foreclosures can force the issue sometimes, but since people REALLY want to avoid those, they also tend to be lagging. In rich neighborhoods, often the sellers will just pull the listing and wait, both to avoid drops in nearby property values based on comps (neighbors will hate them, and that matters in places like that), and because they have the capital to wait out a downturn and don't want to take the haircut. The poor/shitty areas though, once the dam breaks it is quite impressive. I've watched it happen a few times now. This is why real estate is often considered illiquid and hard to value.
- sokoloff 4y ago
  There are 100 buyers for every home (charitably assuming "several" is only 2) or 1000 buyers for every home (a more reasonable reading that "several" is minimum of 3)? That doesn't sound right at all.
  - rory 4y ago
    Several base 2 orders of magnitude :)
  - onlyrealcuzzo 4y ago
    There are only 409k homes for sale: https://fred.stlouisfed.org/series/ACTLISCOUUS https://fred.stlouisfed.org/series/ACTLISCOUUS The home ownership rate is ~65%: https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N Theoretically, there are close to 30M HH that want to own a home, but don't. That's close to 100:1. More practically, probably only a 1/3rd of them are remotely qualified to buy something they'd want to own, and only a 1/3rd probably actually want to own & are currently interested in houses at this price. That could still be >10 buyers for every house.

newaccount2021 4y ago