8 ms·

I bought a house recently so I'm theoretically on the losing side of any drop in home prices resulting from this, but I still support it. I'm of the opinion tha

I bought a house recently so I'm theoretically on the losing side of any drop in home prices resulting from this, but I still support it. I'm of the opinion that the government putting a ceiling on the price of money by controlling interest rates leads to all sorts of market dysfunctions, not the least of which is asset inflation of the kind we've seen recently.

deleted 4y ago
[deleted]
mech987 4y ago
I think we're seeing the culmination of a long-term trend of declining interest rates. Interest rates have been declining for 400 years, and have finally reached the point where they bottom out at 0. (or even negative interest rates, in European bank policy!). The bad part of this I think, is that valuations of long-term cash flows start becoming more and more sensitive to rates. The difference between a 2.75% mortgage and a 3.75% mortgage is bigger, relatively, than the difference between a 3.75% mortgage and a 4.75% mortgage; because people buy the largest, longest mortgage they can afford, small changes in small interest rates result in large changes in the monthly payment. I feel like this ends up making the whole housing market more volatile.
- onlyrealcuzzo 4y ago
  This exactly! If you can assume long-term stable interest rates and have access to a 30-year fixed mortgage - the difference between a 2% mortgage and a 1% mortgage is the same as the difference between a 12% mortgage and a 6% mortgage. Every percentage points that central banks artificially reduce interests by exponentially distorts the markets. A 0% mortgage with a 1% property tax - theoretically - costs you -2% (x 5 for leverage per year). On a million dollar house - you'd get paid $100k per year to live there. The effects of this policy have been a moral hazard unseen before, and if it ever has to end, we're in for wild times.
  - andsoitis 4y ago
    > A 0% mortgage with a 1% property tax - theoretically - costs you -2% (x 5 for leverage per year). How did you calculate that?
    - cannaceo 4y ago
      The assumption is 3% CPI inflation.
      - lotsofpulp 4y ago
        I do not think it is reasonable to assume a random piece of land will appreciate at 3% per year over a period of 30 years. Not to mention the maintenance and renovation costs on a $1M home. Maybe in the most popular areas, it would sell for 1.03^30 = $2.4M after 30 years, but in the vast majority of the US, that has not historically been the case.
        aidenn0 4y ago
        Doesn't matter what a random piece of land does; the $200k you owe on your house is $200k more money you have to do other things. If the value of that money goes down by more than 1% per year, then the person with the 0% mortgate and 1% property tax is better off using any money in pocket for literally anything other than paying down the mortgage.
        lotsofpulp 4y ago
        Yes, this would not be true: > On a million dollar house - you'd get paid $100k per year to live there.
        s1artibartfast 4y ago
        That is exactly how it works for millions of people who bought or refinanced with record low rates. If you borrow $1million at 2% interest, and inflation is 10%, you are profiting $80k/yr if you put the money in an asset that goes up in value with inflation.
- lotsofpulp 4y ago
  > because people buy the largest, longest mortgage they can afford, small changes in small interest rates result in large changes in the monthly payment. I feel like this ends up making the whole housing market more volatile. In the US, I think 90% of home mortgage loans are fixed rate loans, so borrowers do not have changing monthly payments. I cannot find an easy source for it, but I think I read it from an Ellie Mae report. And ARMs come in 5/7/10 year, but the longest mortgages are fixed rate at 15/20/25/30 years.
  - Wohlf 4y ago
    This is true, but a decent number of people with homes move so their interest rate does change.
- toomuchtodo 4y ago
  https://www.visualcapitalist.com/700-year-decline-of-interest-rates/ https://www.visualcapitalist.com/700-year-decline-of-interes...
- prottog 4y ago
  > Interest rates have been declining for 400 years This is surprisingly easy to explain: interest rates are a combination of the time factor of money (a dollar in hand is more useful than a dollar tomorrow) and the risk of default. Geopolitical stability and security has increased in the aggregate over the past few centuries, so it follows that interest rates have declined in aggregate. Makes you wonder what the implications are, now that we've hit zero. ;-)
2OEH8eoCRo0 4y ago
Tell me more about your house, what your mortgage rate is, etc. I'm looking at houses in the Boston area but I can never seem to grow enough balls to buy one even though I could.
- georgeecollins 4y ago
  I don't think you should buy a house unless you really need one. The transaction and maintenance costs are usually downplayed, and you don't know how it will do as an investment. If you don't need a house save and invest.
  - 2OEH8eoCRo0 4y ago
    I don't care how it will do as an investment, I don't like paying thousands of dollars a month to somebody else in the form of rent.
    - mariodiana 4y ago
      I don't care so much about paying rent. What I care about is what happened to me, back in 2020. During the pandemic, the wealthy fled Manhattan and created a buying frenzy in Upstate NY, where I live. My landlady decided it was in her interest to cash in on that; and, so, when the whole world was being turned upside down, I got the news that I would have to look for another place to live. I bought a condo solely for the control it offered me. As far as I'm concerned, nobody gets to do that to me again.
    - ska 4y ago
      It's usually a trade off between paying someone for rent, or paying someone else interest (and others for tax, maintenance, etc.) You can't really take the investment aspect or any of these others out of the analysis if you want to understand what's best for you. Particularly in countries with policies to encourage/subsidize home ownership the answer is often, "buy a place", but not always.
      - 4y ago
phkahler 4y ago
>> I bought a house recently so I'm theoretically on the losing side of any drop in home prices resulting from this There are situations where this doesn't matter. Obviously if you bought with a lot of borrowed money, and home prices drop significantly, and you try to sell while still owing money you may be in trouble. But if you pay it off (or didn't borrow) you will own the home free and clear. When you own one home free and clear, the price is almost irrelevant. If you measure your net worth in houses as opposed to dollars, you have 1. If you move you'll sell one and buy one at whatever the going rate is - unless you're looking to upsize or downsize the price is not relevant. What if I held off buying until prices drop?!?! Well, if you borrow nearly the full amount, it makes little difference. Housing as a percent of income has remained unchanged for 50 years (I saw something recently confirming this). In other words, your monthly payments are determined first and then the bank tells you how much house you can buy - which is exactly why prices vary inversely with interest rates. In the situations above, the biggest problems stem from rate changes during the course of a low equity housing loan that is paid off early. IMHO we need to get back to 10-15 year terms as the norm. Still, IMHO it is a bad time to buy. Also IMHO interest rates need to be a LOT higher to fix our economic problems, which would mean big drops in home prices still ahead.
- JumpCrisscross 4y ago
  > When you own one home free and clear, the price is almost irrelevant This ignores opportunity cost. Moreover, depending on your community's funding model, your quality of life could be impacted by over-leveraged neighbors defaulting on their property taxes and/or being foreclosed on.
- pedrosorio 4y ago
  > When you own one home free and clear, the price is almost irrelevant. What does this look like in a state like California for property taxes? My understanding is, due to prop 13, your property taxes are a function of the initial price you paid and increase slowly (much slower than housing inflation in recent decades). That suggests paying a lower price later could have long term impact on cost of ownership beyond just mortgage payments. Apparently there is a prop 8 that allows the property tax to be reduced if the house value goes down. I wonder if this has actually been applied in practice (2008 crisis?), but the process seems to be a lot more bureaucratic (annual revision of home value) so I wonder if it's even feasible to do this in a down market. EDIT: This [0] seems to be a concise explanation with an example. Essentially, if you pay P, that's the base value for property tax. On year k you will pay property tax as if the house was worth min(assessed_value, P * (1.02 ^ k)). If housing prices go down, you may temporarily pay lower property taxes, but in the long term, if house prices keep increasing faster than 2% a year, your property tax will be tied to the P you paid initially. [0] https://www.sccassessor.org/tax-savings/tax-reductions/historical-properties/item/337-an-example-of-how-prop-8-works https://www.sccassessor.org/tax-savings/tax-reductions/histo...
mdasen 4y ago
Are you on the losing end of it? If you're not looking to sell your home while rates are high, it doesn't really impact you. While your home might decline from $500k to $450k, when interest rates lower your home value will climb back up as buyers see lower monthly payments. If interest rates are permanently high, then you got to lock in an amazing rate that will effectively make your housing cheaper - even if your purchase price was higher. If/when rates come back down, your property value will go back up and unless you're forced to sell while rates are high, you won't experience anything bad. Even if you're worried that maybe you could have gotten a better deal with a lower price and higher interest loan, I wouldn't be. Let's say you buy a home at $500,000 at 4% interest. Interest rates hit 6% and your home's value declines to $450,000. The person who buys at $450,000 at 6% will be paying $2,150 vs. your $1,900 ($250/mo more, 13% more). Let's say interest rates go back down to 4% in 2025. They can refinance at 4% and their purchase price was $450,000, but they've already paid $49,700 in interest. They'd have payments around $1,750/mo (assuming they did a 28-year term) which is less than your $1,900. Ultimately, they'd be paying around $641,000 over the life of the loan against your $687,000 so it's not really that different. Of course, that doesn't consider the fact that the other person would also need to pay the loan closing costs a second time and that if they sold the house after 5 or 10 years, they wouldn't have that 4% interest rate for as long. So you're probably still in a significantly better position financially - unless you're quite sure you're going to stay in the home for 30 years. If you're only going to be there for 5 years, you'd rather pay $1,900/mo ($114,000) than $2,150/mo for the first 2 years 4 months and then $1,750 for 2 years 8 months ($116,200). Plus, because interest gets front-loaded, you end up with more equity with the lower rate. At 6%, you're getting 0.0008% equity per month instead of 0.0012% per month. With the 4% loan, you've paid off $38,210 over the first 5 years (9.5% of the loan principal). With the 6% loan, you'd pay off $25,004 over the first 5 years (6.9% of the loan principal). Even if you assume that the home is really worth $500,000 and not the $450,000 purchase price, the higher rate still means that you only own 26.9% of the home rather than 29.5% of the home (assuming 20% down). They've been paying a higher monthly and they own a lower percentage of their home! Again, if you're going to stay for 30 years, buying at a lower price and a higher rate might end up better if you can refinance. However, it does mean that you end up with less equity (paying more interest) earlier in the loan. Basically, you're probably in a way better position than someone buying at 6% while getting the benefit of downward pressure on housing prices.
JumpCrisscross 4y ago
> bought a house recently so I'm theoretically on the losing side of any drop in home prices Same. I live in Wyoming. Our county has "workforce housing." It's exclusively for sale or rent to workers in the local area. (Versus remote workers or holidayers.) I'm not advocating for this policy, though I think it's brilliant. But it highlights our desire, perhaps need, for non-market demand-side moderation. We presently put all the non-market moderation on the supply side. From the meaningful, like capacity, design and environmental reviews, to the useless: neighborhood bitching sessions and meaningless permits from every politician who needs petitions signed. Instead, the Teton model points to a hybrid approach. Less regulation on the supply side. But more non-market requirements on the demand side. One approach is ring-fenced supply for groups the community deems desirable, like critical workers, disadvantaged groups, et cetera. We have good reason to be wary of this government-picking-the-winners approach. But if we want to maintain a community feel and keep housing affordable, the solution must be rationing. Centralized rationing leads to patronage. (See New York City.) De-centralised rationing, where supply is held back for certain groups who have a market to themselves, looks more resilient. The process of choosing who's in the non-market group and how much of the market they get to themselves will be fraught. But it looks more plausible than convincing Atherton to build sky-rises or homeowners to accept rent and price regulation.
- prottog 4y ago
  That's interesting. Thanks for bringing this up. I'm generally of the opinion that "maintaining a community feel" is a fool's errand, especially when it comes to highly desirable locations like Jackson Hole; but it also looks like that most (all?) of your county is some kind of national park, so perhaps the usual approach of allowing the market to build more does not apply. I share your wariness of government picking the winners, and posit that this Workforce Homes program appears to be maybe a slightly cleverer version of state-imposed price control, which does not escape the core fact that the in-group (those who qualify for the program) gets below-market price housing at the expense of the out-group (those who don't qualify for whatever reason) who either must bid higher than they would have without this program or are priced out entirely. And if belonging to a "disadvantaged group" is one of the qualification criteria, then I'm afraid that the underlying economic facts may exacerbate tensions along racial lines. That said, this is only one person's opinion from thousands of miles away; and I can only say that I'm jealous of what must be the view from your window. :-)
anm89 4y ago
I don't philosophically disagree with you, but I think it's worth pointing out, that if we just woke up tomorrow and the Fed announced it was immediately letting the market set rates, it would be so bad (the resulting global market implosion) that it would be a humanitarian crisis IMO. I literally, non hyperbolicly believe that
- prottog 4y ago
  I agree with you, and it really is too bad that the Fed dug itself so deep -- there is and always will be another crisis that requires unprecedented Fed intervention. Historical evidence points to innumerable recessions and bank failures even after the advent of the Fed, so it's unclear if they add value above and beyond what the market setting rates would do, but I don't believe that I'll ever get to find out in person.
isitmadeofglass 4y ago
> I bought a house recently so I'm theoretically on the losing side of any drop in home prices resulting from this Are you actually? We recently bought a house pre rising rates. We got a great financing. And if we refinance now we immediately cut 10% of the debt. We don’t intent to sell anytime soon. Looking at the market, even with lower prices now, it would still have been more expensive to finance a purchase after interest increases. From our perspective it looks like recently having bought is the best position you could be in, except of cause for having bought a decade ago or a decade before etc.

deleted 4y ago

[deleted]

mech987 4y ago

I think we're seeing the culmination of a long-term trend of declining interest rates. Interest rates have been declining for 400 years, and have finally reached the point where they bottom out at 0. (or even negative interest rates, in European bank policy!). The bad part of this I think, is that valuations of long-term cash flows start becoming more and more sensitive to rates. The difference between a 2.75% mortgage and a 3.75% mortgage is bigger, relatively, than the difference between a 3.75% mortgage and a 4.75% mortgage; because people buy the largest, longest mortgage they can afford, small changes in small interest rates result in large changes in the monthly payment. I feel like this ends up making the whole housing market more volatile.

onlyrealcuzzo 4y ago
This exactly! If you can assume long-term stable interest rates and have access to a 30-year fixed mortgage - the difference between a 2% mortgage and a 1% mortgage is the same as the difference between a 12% mortgage and a 6% mortgage. Every percentage points that central banks artificially reduce interests by exponentially distorts the markets. A 0% mortgage with a 1% property tax - theoretically - costs you -2% (x 5 for leverage per year). On a million dollar house - you'd get paid $100k per year to live there. The effects of this policy have been a moral hazard unseen before, and if it ever has to end, we're in for wild times.
- andsoitis 4y ago
  > A 0% mortgage with a 1% property tax - theoretically - costs you -2% (x 5 for leverage per year). How did you calculate that?
  - cannaceo 4y ago
    The assumption is 3% CPI inflation.
    - lotsofpulp 4y ago
      I do not think it is reasonable to assume a random piece of land will appreciate at 3% per year over a period of 30 years. Not to mention the maintenance and renovation costs on a $1M home. Maybe in the most popular areas, it would sell for 1.03^30 = $2.4M after 30 years, but in the vast majority of the US, that has not historically been the case.
      - aidenn0 4y ago
        Doesn't matter what a random piece of land does; the $200k you owe on your house is $200k more money you have to do other things. If the value of that money goes down by more than 1% per year, then the person with the 0% mortgate and 1% property tax is better off using any money in pocket for literally anything other than paying down the mortgage.
        lotsofpulp 4y ago
        Yes, this would not be true: > On a million dollar house - you'd get paid $100k per year to live there.
        s1artibartfast 4y ago
        That is exactly how it works for millions of people who bought or refinanced with record low rates. If you borrow $1million at 2% interest, and inflation is 10%, you are profiting $80k/yr if you put the money in an asset that goes up in value with inflation.
lotsofpulp 4y ago
> because people buy the largest, longest mortgage they can afford, small changes in small interest rates result in large changes in the monthly payment. I feel like this ends up making the whole housing market more volatile. In the US, I think 90% of home mortgage loans are fixed rate loans, so borrowers do not have changing monthly payments. I cannot find an easy source for it, but I think I read it from an Ellie Mae report. And ARMs come in 5/7/10 year, but the longest mortgages are fixed rate at 15/20/25/30 years.
- Wohlf 4y ago
  This is true, but a decent number of people with homes move so their interest rate does change.
toomuchtodo 4y ago
https://www.visualcapitalist.com/700-year-decline-of-interest-rates/ https://www.visualcapitalist.com/700-year-decline-of-interes...
prottog 4y ago
> Interest rates have been declining for 400 years This is surprisingly easy to explain: interest rates are a combination of the time factor of money (a dollar in hand is more useful than a dollar tomorrow) and the risk of default. Geopolitical stability and security has increased in the aggregate over the past few centuries, so it follows that interest rates have declined in aggregate. Makes you wonder what the implications are, now that we've hit zero. ;-)

2OEH8eoCRo0 4y ago

Tell me more about your house, what your mortgage rate is, etc. I'm looking at houses in the Boston area but I can never seem to grow enough balls to buy one even though I could.

georgeecollins 4y ago
I don't think you should buy a house unless you really need one. The transaction and maintenance costs are usually downplayed, and you don't know how it will do as an investment. If you don't need a house save and invest.
- 2OEH8eoCRo0 4y ago
  I don't care how it will do as an investment, I don't like paying thousands of dollars a month to somebody else in the form of rent.
  - mariodiana 4y ago
    I don't care so much about paying rent. What I care about is what happened to me, back in 2020. During the pandemic, the wealthy fled Manhattan and created a buying frenzy in Upstate NY, where I live. My landlady decided it was in her interest to cash in on that; and, so, when the whole world was being turned upside down, I got the news that I would have to look for another place to live. I bought a condo solely for the control it offered me. As far as I'm concerned, nobody gets to do that to me again.
  - ska 4y ago
    It's usually a trade off between paying someone for rent, or paying someone else interest (and others for tax, maintenance, etc.) You can't really take the investment aspect or any of these others out of the analysis if you want to understand what's best for you. Particularly in countries with policies to encourage/subsidize home ownership the answer is often, "buy a place", but not always.
    - 4y ago

phkahler 4y ago

>> I bought a house recently so I'm theoretically on the losing side of any drop in home prices resulting from this There are situations where this doesn't matter. Obviously if you bought with a lot of borrowed money, and home prices drop significantly, and you try to sell while still owing money you may be in trouble. But if you pay it off (or didn't borrow) you will own the home free and clear. When you own one home free and clear, the price is almost irrelevant. If you measure your net worth in houses as opposed to dollars, you have 1. If you move you'll sell one and buy one at whatever the going rate is - unless you're looking to upsize or downsize the price is not relevant. What if I held off buying until prices drop?!?! Well, if you borrow nearly the full amount, it makes little difference. Housing as a percent of income has remained unchanged for 50 years (I saw something recently confirming this). In other words, your monthly payments are determined first and then the bank tells you how much house you can buy - which is exactly why prices vary inversely with interest rates. In the situations above, the biggest problems stem from rate changes during the course of a low equity housing loan that is paid off early. IMHO we need to get back to 10-15 year terms as the norm. Still, IMHO it is a bad time to buy. Also IMHO interest rates need to be a LOT higher to fix our economic problems, which would mean big drops in home prices still ahead.

JumpCrisscross 4y ago
> When you own one home free and clear, the price is almost irrelevant This ignores opportunity cost. Moreover, depending on your community's funding model, your quality of life could be impacted by over-leveraged neighbors defaulting on their property taxes and/or being foreclosed on.
pedrosorio 4y ago
> When you own one home free and clear, the price is almost irrelevant. What does this look like in a state like California for property taxes? My understanding is, due to prop 13, your property taxes are a function of the initial price you paid and increase slowly (much slower than housing inflation in recent decades). That suggests paying a lower price later could have long term impact on cost of ownership beyond just mortgage payments. Apparently there is a prop 8 that allows the property tax to be reduced if the house value goes down. I wonder if this has actually been applied in practice (2008 crisis?), but the process seems to be a lot more bureaucratic (annual revision of home value) so I wonder if it's even feasible to do this in a down market. EDIT: This [0] seems to be a concise explanation with an example. Essentially, if you pay P, that's the base value for property tax. On year k you will pay property tax as if the house was worth min(assessed_value, P * (1.02 ^ k)). If housing prices go down, you may temporarily pay lower property taxes, but in the long term, if house prices keep increasing faster than 2% a year, your property tax will be tied to the P you paid initially. [0] https://www.sccassessor.org/tax-savings/tax-reductions/historical-properties/item/337-an-example-of-how-prop-8-works https://www.sccassessor.org/tax-savings/tax-reductions/histo...

mdasen 4y ago

Are you on the losing end of it? If you're not looking to sell your home while rates are high, it doesn't really impact you. While your home might decline from $500k to $450k, when interest rates lower your home value will climb back up as buyers see lower monthly payments. If interest rates are permanently high, then you got to lock in an amazing rate that will effectively make your housing cheaper - even if your purchase price was higher. If/when rates come back down, your property value will go back up and unless you're forced to sell while rates are high, you won't experience anything bad. Even if you're worried that maybe you could have gotten a better deal with a lower price and higher interest loan, I wouldn't be. Let's say you buy a home at $500,000 at 4% interest. Interest rates hit 6% and your home's value declines to $450,000. The person who buys at $450,000 at 6% will be paying $2,150 vs. your $1,900 ($250/mo more, 13% more). Let's say interest rates go back down to 4% in 2025. They can refinance at 4% and their purchase price was $450,000, but they've already paid $49,700 in interest. They'd have payments around $1,750/mo (assuming they did a 28-year term) which is less than your $1,900. Ultimately, they'd be paying around $641,000 over the life of the loan against your $687,000 so it's not really that different. Of course, that doesn't consider the fact that the other person would also need to pay the loan closing costs a second time and that if they sold the house after 5 or 10 years, they wouldn't have that 4% interest rate for as long. So you're probably still in a significantly better position financially - unless you're quite sure you're going to stay in the home for 30 years. If you're only going to be there for 5 years, you'd rather pay $1,900/mo ($114,000) than $2,150/mo for the first 2 years 4 months and then $1,750 for 2 years 8 months ($116,200). Plus, because interest gets front-loaded, you end up with more equity with the lower rate. At 6%, you're getting 0.0008% equity per month instead of 0.0012% per month. With the 4% loan, you've paid off $38,210 over the first 5 years (9.5% of the loan principal). With the 6% loan, you'd pay off $25,004 over the first 5 years (6.9% of the loan principal). Even if you assume that the home is really worth $500,000 and not the $450,000 purchase price, the higher rate still means that you only own 26.9% of the home rather than 29.5% of the home (assuming 20% down). They've been paying a higher monthly and they own a lower percentage of their home! Again, if you're going to stay for 30 years, buying at a lower price and a higher rate might end up better if you can refinance. However, it does mean that you end up with less equity (paying more interest) earlier in the loan. Basically, you're probably in a way better position than someone buying at 6% while getting the benefit of downward pressure on housing prices.

JumpCrisscross 4y ago

> bought a house recently so I'm theoretically on the losing side of any drop in home prices Same. I live in Wyoming. Our county has "workforce housing." It's exclusively for sale or rent to workers in the local area. (Versus remote workers or holidayers.) I'm not advocating for this policy, though I think it's brilliant. But it highlights our desire, perhaps need, for non-market demand-side moderation. We presently put all the non-market moderation on the supply side. From the meaningful, like capacity, design and environmental reviews, to the useless: neighborhood bitching sessions and meaningless permits from every politician who needs petitions signed. Instead, the Teton model points to a hybrid approach. Less regulation on the supply side. But more non-market requirements on the demand side. One approach is ring-fenced supply for groups the community deems desirable, like critical workers, disadvantaged groups, et cetera. We have good reason to be wary of this government-picking-the-winners approach. But if we want to maintain a community feel and keep housing affordable, the solution must be rationing. Centralized rationing leads to patronage. (See New York City.) De-centralised rationing, where supply is held back for certain groups who have a market to themselves, looks more resilient. The process of choosing who's in the non-market group and how much of the market they get to themselves will be fraught. But it looks more plausible than convincing Atherton to build sky-rises or homeowners to accept rent and price regulation.

prottog 4y ago
That's interesting. Thanks for bringing this up. I'm generally of the opinion that "maintaining a community feel" is a fool's errand, especially when it comes to highly desirable locations like Jackson Hole; but it also looks like that most (all?) of your county is some kind of national park, so perhaps the usual approach of allowing the market to build more does not apply. I share your wariness of government picking the winners, and posit that this Workforce Homes program appears to be maybe a slightly cleverer version of state-imposed price control, which does not escape the core fact that the in-group (those who qualify for the program) gets below-market price housing at the expense of the out-group (those who don't qualify for whatever reason) who either must bid higher than they would have without this program or are priced out entirely. And if belonging to a "disadvantaged group" is one of the qualification criteria, then I'm afraid that the underlying economic facts may exacerbate tensions along racial lines. That said, this is only one person's opinion from thousands of miles away; and I can only say that I'm jealous of what must be the view from your window. :-)

anm89 4y ago

I don't philosophically disagree with you, but I think it's worth pointing out, that if we just woke up tomorrow and the Fed announced it was immediately letting the market set rates, it would be so bad (the resulting global market implosion) that it would be a humanitarian crisis IMO. I literally, non hyperbolicly believe that

prottog 4y ago
I agree with you, and it really is too bad that the Fed dug itself so deep -- there is and always will be another crisis that requires unprecedented Fed intervention. Historical evidence points to innumerable recessions and bank failures even after the advent of the Fed, so it's unclear if they add value above and beyond what the market setting rates would do, but I don't believe that I'll ever get to find out in person.

isitmadeofglass 4y ago

> I bought a house recently so I'm theoretically on the losing side of any drop in home prices resulting from this Are you actually? We recently bought a house pre rising rates. We got a great financing. And if we refinance now we immediately cut 10% of the debt. We don’t intent to sell anytime soon. Looking at the market, even with lower prices now, it would still have been more expensive to finance a purchase after interest increases. From our perspective it looks like recently having bought is the best position you could be in, except of cause for having bought a decade ago or a decade before etc.