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There is some logic to the idea that rising rates makes supply-side issues worse across the board because it curtails investments needed to resolve those supply

There is some logic to the idea that rising rates makes supply-side issues worse across the board because it curtails investments needed to resolve those supply issues. I don't think that means the fed is doing the wrong thing though. Fixing our energy bottlenecks will take a decade or more(regardless of rates. refineries and nuke plants take 10+ years to build), so pulling back demand to be in line with that supply seems like the right thing to do. It will hurt, but it is better than entrenched inflation and wage-price spirals. > They usually care about their monthly mortgage payment. True, but not for me. I care about price, because the price never changes yet I can always refinance. Also, your initial assessed value, at least in California, is a big factor in the lifetime(or more) amount of property taxes you'll be paying. I would much, much rather have lower prices and high interest rates. Overall I think housing will sort itself out. We already have plenty of units in the pipeline. Also, we're going to grudgingly transition, as a nation, towards more efficient, higher density housing whether we like it or not. Energy prices combined with policies to combat AGW will, over the long term, incentivize more urban living. I'm not a fan of it, being a suburban lover, but it is what it is.

pertymcpert 4y ago
It's a risk though, because you may not be able to refinance for a long time. In that time, the interest you paid will also compound.
- nostromo 4y ago
  And people often forget that rates go down at the same time people get laid off and the market crashes and house prices go down. If you're unfortunate enough to be out of work, you won't be able to refinance your loan. And if you're upside down on your loan, you can't refinance either.
  - whimsicalism 4y ago
    > And people often forget that rates go down at the same time people get laid off and the market crashes and house prices go down. This is really difficult to describe as a general trend due to endogenous actors like the Fed. Recessions can co-occur with low rates as the Fed expands to try to spur investment in the economy. They can also co-occur with high rates that choke investment. Never reason from a price change
- 01100011 4y ago
  Not a problem if you can service the debt. Sure, you could be missing out on other investments with that cash, but if you buy conservatively it's not a bad plan. One thing I haven't seen anyone predict is sustained high interest rates. More than likely, rates will be back down below 5% in a couple years as the fed tries to restart the economy it crashed.
yucky 4y ago
> Also, we're going to grudgingly transition, as a nation, towards more efficient, higher density housing whether we like it or not. After seeing how pandemics can sweep though dense areas, I think many people want no part of being forced to live in high density areas. Quite the opposite actually.
- Schiendelman 4y ago
  You can measure that desire in how much people bid per sqft for housing - and they bid far more in dense places. The impact of people who fear the next pandemic has not changed that at all.
  - yucky 4y ago
    That's not what that measures, since you can look at the denser residential areas in large cities like Houston or smaller cities like Detroit, Baltimore, St. Louis etc and find the opposite. Only when you mix in downtown commercial districts that have residential housing (typically stacked on top of stores) do you see that. But the denser inner ring neighborhoods outside of a commercial zone are generally much cheaper than more spread out suburban neighborhoods where people typically want to live. So there is no correlation.
    - Schiendelman 4y ago
      Want to find an example of what you’re saying? I suspect you’re missing the per square foot aspect.
      - yucky 4y ago
        Sure, compare sq. foot costs in denser neighborhoods of Detroit vs a spacious outer ring suburb like Bingham Farms or Oakland Twp.
        Schiendelman 4y ago
        Does it make sense that most of the US isn’t experiencing what Detroit is?

pertymcpert 4y ago

It's a risk though, because you may not be able to refinance for a long time. In that time, the interest you paid will also compound.

nostromo 4y ago
And people often forget that rates go down at the same time people get laid off and the market crashes and house prices go down. If you're unfortunate enough to be out of work, you won't be able to refinance your loan. And if you're upside down on your loan, you can't refinance either.
- whimsicalism 4y ago
  > And people often forget that rates go down at the same time people get laid off and the market crashes and house prices go down. This is really difficult to describe as a general trend due to endogenous actors like the Fed. Recessions can co-occur with low rates as the Fed expands to try to spur investment in the economy. They can also co-occur with high rates that choke investment. Never reason from a price change
01100011 4y ago
Not a problem if you can service the debt. Sure, you could be missing out on other investments with that cash, but if you buy conservatively it's not a bad plan. One thing I haven't seen anyone predict is sustained high interest rates. More than likely, rates will be back down below 5% in a couple years as the fed tries to restart the economy it crashed.

yucky 4y ago

> Also, we're going to grudgingly transition, as a nation, towards more efficient, higher density housing whether we like it or not. After seeing how pandemics can sweep though dense areas, I think many people want no part of being forced to live in high density areas. Quite the opposite actually.

Schiendelman 4y ago
You can measure that desire in how much people bid per sqft for housing - and they bid far more in dense places. The impact of people who fear the next pandemic has not changed that at all.
- yucky 4y ago
  That's not what that measures, since you can look at the denser residential areas in large cities like Houston or smaller cities like Detroit, Baltimore, St. Louis etc and find the opposite. Only when you mix in downtown commercial districts that have residential housing (typically stacked on top of stores) do you see that. But the denser inner ring neighborhoods outside of a commercial zone are generally much cheaper than more spread out suburban neighborhoods where people typically want to live. So there is no correlation.
  - Schiendelman 4y ago
    Want to find an example of what you’re saying? I suspect you’re missing the per square foot aspect.
    - yucky 4y ago
      Sure, compare sq. foot costs in denser neighborhoods of Detroit vs a spacious outer ring suburb like Bingham Farms or Oakland Twp.
      - Schiendelman 4y ago
        Does it make sense that most of the US isn’t experiencing what Detroit is?