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The biggest issue with 0% interest rates is that it let the stock market skyrocket. From 2009, the returns on some stocks like FAANGs are 20X or more, in less t

The biggest issue with 0% interest rates is that it let the stock market skyrocket. From 2009, the returns on some stocks like FAANGs are 20X or more, in less than 15 years. This created a huge, ridiculous income gap between the haves (ie. those with tech stocks) and the have nots (everyone else). Everyone with exposure to tech stocks got extremely rich, including hedge funds. So all home owners are either those that had houses before the bust, those that had money before the housing bust and bought houses during the bust, or those that became very wealthy from tech stocks and bought houses. That raised the price of houses to unaffordable levels, and now hedge funds with all their tech wealth are buying homes to turn most people into renters. There's no room for the Have Nots to buy houses anymore. If you don't currently have a house, and you don't make millions on the stock market, there's no way you're ever going to be able to afford a house. We need a housing crash, but the Fed will never allow it, and hedge funds know this. That's why supply remains tight. Only rich people are currently buying houses, and it won't change regardless of interest rates. Hedge funds have to suffer catastrophic losses in order for supply to reenter the market.

RhysU 3y ago
> So all home owners are either those that had houses before the bust, those that had money before the housing bust and bought houses during the bust, or those that became very wealthy from tech stocks and bought houses. "Nice place!" I said to many of my professors. "How'd you afford this part of town?" "Oh, housing crashes happen periodically" said the professors. "Find where you want to be, save money outside the markets, and just wait." So I rented too small a place for over 5 years, saved, and waited. Sure enough, Covid tanked prices and interest rates yet my down payment was fine because I had kept it outside of the markets. This approach is not hard. It just can take a decade.

RhysU 3y ago

> So all home owners are either those that had houses before the bust, those that had money before the housing bust and bought houses during the bust, or those that became very wealthy from tech stocks and bought houses. "Nice place!" I said to many of my professors. "How'd you afford this part of town?" "Oh, housing crashes happen periodically" said the professors. "Find where you want to be, save money outside the markets, and just wait." So I rented too small a place for over 5 years, saved, and waited. Sure enough, Covid tanked prices and interest rates yet my down payment was fine because I had kept it outside of the markets. This approach is not hard. It just can take a decade.