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Looks like rates will stay high for the time being, if you're at a cash starved startup, it may be a good time to look around as that's not gonna fix itself any

Looks like rates will stay high for the time being, if you're at a cash starved startup, it may be a good time to look around as that's not gonna fix itself any time soon. On the bright side, if you don't have a house yet, this may mean that rates stay high long enough to have some impact on median home prices. The Q4 2023 home sale numbers will be interesting in that regard. OTOH, if you're buying a house or bought one recently, I admire your optimism, might I also interest you in a bridge?

FooBarBizBazz 3y ago
> OTOH, if you're buying a house or bought one recently, I admire your optimism, might I also interest you in a bridge? Is this a reference to the "date the rate, marry the house" play (which is supposed to be relatively short term, on the order of 1-2 year timescales)? (I.e., the strategy of buying something you can't really afford now in the hopes of refinancing soon at an anticipated lower rate.) Or is this a reference to longer-term demographic issues -- the "boomergeddon" thesis, that as that generation dies off there will be excess housing capacity?
- AnarchismIsCool 3y ago
  The former, just about everyone is buying with an ARM and expects rates to fall this year, but with that not likely to happen they're mostly just setting more money on fire than they would be renting at the moment. Boomergeddon is a fun thought experiment for y/z but the US has made it far too difficult to build affordable housing at a rate matching the population growth of the country. The more likely effect IMO is y/z will just never see the levels of net worth growth the boomers did.
  - FooBarBizBazz 3y ago
    Gotcha. And, agree on both counts.
matwood 3y ago
The problem with homes is supply. Eventually rates will push some prices down, but without more supply there isn't going to be some big reset (~35% of houses are bought with cash). A soft landing in this case could mean flat (+/- 5%) home prices for a couple years. Those same higher rates also starve out new supply because it drives up cost of capital for builders. I think if people follow the old house buying rule of planning to stay at least 2 years they'll probably be ok.
- AnarchismIsCool 3y ago
  https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST Housing starts are still pretty high right now (relative to post 08), though they could definitely be much higher. Rates don't seem to be impacting builders all that much, rather they were just making outsized profits in the lower interest rate years. IIRC labor supply was a bigger issue for them. The issue is that if you have 100 people and 100 houses, the price of any house is just whatever the construction and land costs. If you have 101 people and 100 houses, suddenly not even the sky is the limit. It's not that the 100 houses suddenly became better, they just became an existential land grab resulting in astronomical prices dictated by the absolute maximum the median person can convince a bank to lend them. If getting the money becomes more difficult, the prices will follow.

FooBarBizBazz 3y ago

> OTOH, if you're buying a house or bought one recently, I admire your optimism, might I also interest you in a bridge? Is this a reference to the "date the rate, marry the house" play (which is supposed to be relatively short term, on the order of 1-2 year timescales)? (I.e., the strategy of buying something you can't really afford now in the hopes of refinancing soon at an anticipated lower rate.) Or is this a reference to longer-term demographic issues -- the "boomergeddon" thesis, that as that generation dies off there will be excess housing capacity?

AnarchismIsCool 3y ago
The former, just about everyone is buying with an ARM and expects rates to fall this year, but with that not likely to happen they're mostly just setting more money on fire than they would be renting at the moment. Boomergeddon is a fun thought experiment for y/z but the US has made it far too difficult to build affordable housing at a rate matching the population growth of the country. The more likely effect IMO is y/z will just never see the levels of net worth growth the boomers did.
- FooBarBizBazz 3y ago
  Gotcha. And, agree on both counts.

matwood 3y ago

The problem with homes is supply. Eventually rates will push some prices down, but without more supply there isn't going to be some big reset (~35% of houses are bought with cash). A soft landing in this case could mean flat (+/- 5%) home prices for a couple years. Those same higher rates also starve out new supply because it drives up cost of capital for builders. I think if people follow the old house buying rule of planning to stay at least 2 years they'll probably be ok.

AnarchismIsCool 3y ago
https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST Housing starts are still pretty high right now (relative to post 08), though they could definitely be much higher. Rates don't seem to be impacting builders all that much, rather they were just making outsized profits in the lower interest rate years. IIRC labor supply was a bigger issue for them. The issue is that if you have 100 people and 100 houses, the price of any house is just whatever the construction and land costs. If you have 101 people and 100 houses, suddenly not even the sky is the limit. It's not that the 100 houses suddenly became better, they just became an existential land grab resulting in astronomical prices dictated by the absolute maximum the median person can convince a bank to lend them. If getting the money becomes more difficult, the prices will follow.