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Are you referring to home sticker-price or life-of-mortgage price? Increasing mortgage costs are a direct consequence of Fed inflation-fighting policy. I person
by IggleSniggle 3y ago
Are you referring to home sticker-price or life-of-mortgage price? Increasing mortgage costs are a direct consequence of Fed inflation-fighting policy. I personally benefited from the Greater Fool, selling and purchasing my home just when the buying frenzy was near its peak, making a tidy profit on my old home and locking in a 2.5% interest rate on the new one. But it was a frenzy.
There's no good way to force down housing costs without signaling to sellers that the prices are simply too high (because no one can afford the mortgage).
There are costs associated with making it more difficult to move, of course, but the pessimism about being unable to afford loans is the very thing driving down inflation; so I actually consider that mood on the ground to be a positive signal for the economy.
- willcipriano 3y ago> There's no good way to force down housing costs without signaling to sellers that the prices are simply too high The prices aren't too high the dollars are worth too little beacuse there are too many of them. Stop making more and prices will stabilize.
- epistasis 3y agoIt's actually not because there are too many doses right now, because most people can mot afford to move to a house of a comparable size. There were way too many dollars when mortgage rates were at 2-3%, not at current mortgage rates there are very few dollars for buying homes. This is less a monetary inflation of prices and more structural and supply related. Whoever said that "inflation is always a monetary phenomenon" was a religious nut, IMHO.
- zeroonetwothree 3y agoOne homeowner moving from a house to another similar house has no effect on overall home affordability. So I'm not sure why this is relevant. > Whoever said that "inflation is always a monetary phenomenon" was a religious nut, IMHO. Yes, I'm sure you have many more qualifications than a Nobel Prize winner.
- epistasis 3y agoCurrent homeowners often simply can not move, because the costs of a new mortgage at the same sticker price are too high to afford. This results in an illiquid housing market where people can not move as frequently at they would like.
- epistasis 3y agoMortgage costs. Most people now have super low mortgage rates, and could not afford to switch to a comparable home, because sticker prices have barely budged. This leads to a very tiny inventory of homes. However, part do the reason that prices are staying high is that we are still under supplied on homes, and interest rates being high also means that construction starts will be way down, keeping those sticker prices higher for longer.