3 ms·

I don't think it's the Fed's job to support the housing market?

by refurb 3y ago

jfengel 3y ago
Inflation is the Fed's job, and rent is part of that. That doesn't extend into managing the housing market, but managing interest rates is a big thumb on the scale.
- refurb 3y ago
  True, but this article is complaining about the opposite - the housing market can't sustain today's prices because of high interest rates. What you're talking about is what the fed is already try to do - bring inflation down with high interest rates.
  - gndk 3y ago
    Prices will go further up when interest rates go down. Interest rates haven't been raised enough to reign in inflation.
- toomuchtodo 3y ago
  It’s a useless thumb for attempting to solve housing inflation. Housing shortages of millions of units means that if you’re priced out of a mortgage, you’re forced to rent with no rent price controls, so instead of mortgage bond investors collecting your housing spend, it’s instead landlords. The only way to fix housing costs is to build baby build, as fast as you can, and the Fed has no power over fiscal policy (and policy in general) to strongly encourage such a build rate. This should be on the scale of the Manhattan Project or the Inflation Reduction Act. https://www.fanniemae.com/research-and-insights/perspectives/us-housing-shortage https://www.fanniemae.com/research-and-insights/perspectives... https://www.npr.org/2024/01/25/1225957874/housing-unaffordable-for-record-half-all-u-s-renters-study-finds https://www.npr.org/2024/01/25/1225957874/housing-unaffordab... https://www.jchs.harvard.edu/americas-rental-housing-2024 https://www.jchs.harvard.edu/americas-rental-housing-2024 https://youtu.be/Jl7vrujr1J4 https://youtu.be/Jl7vrujr1J4
  - irjustin 3y ago
    I'll agree there needs to be a massive supply boost in the form of entry level housing (only for 1st time owners, get rid of corp land grabs). That's what Singapore does quite well (I currently live here). The HDB system isn't a free market - new supply is only allowed for the first time home buyer, priced cheaply and you're not allowed to sell for 5 yrs. Covid had very big problems on supply but SG gov has kept it's promise in creating a lot of new housing in the past 2 yrs. It has a lot of levers to control a housing bubble for its citizens and thusly a big portion of inflation.
    - nojvek 3y ago
      I agree with this move. Tax those who hold single family homes for renting to others and the problems will fix itself. Housing is seen as an investment. If a big portion of rent starts going into taxes, then it doesn’t become a speculative instrument. Have apartment complexes managed by corps with central management. Don’t make single family homes and townhomes a tool of speculative investment. US economy would grow a lot faster if the money sitting on houses went into companies producing goods and services.
  - joecot 3y ago
    Build baby build doesn't work when Black Rock and so many other private equity companies are content to buy as many houses as they can and then hold them to raise prices further or rent them out. 44% of all Single-Family Home Purchases were from Private Investors in 2023. A huge portion of the problem would be solved immediately by 1) a vacancy tax, 2) banning the purchase of single family homes by corporations.
    - toomuchtodo 3y ago
      I agree this is a component of the solution due to the speed at which capital can move.
    - refurb 3y ago
      Those investors are most individuals buying houses to rent. Blackrocks fund accounted for 0.01% of US housing stock.
pixl97 3y ago
Eh.... we forget about that 2008 thing where the housing market crashed the economy and took down a bunch of banks? Also, people need housing and when that gets out of whack people start whispering about replacing the government.
- pessimizer 3y ago
  No, we forget about that time when we ran up house prices so fast they doubled in like 10 years before crashing, catching people who had been allowed to borrow massively on the worth of houses, debt marked AAA.
- chrisweekly 3y ago
  > housing market crashed the economy and took down a bunch of banks or, "a bunch of banks crashed the economy and took down the housing market"
User23 3y ago
The Fed has two official goals: low inflation and full employment. It also has an existential goal that few people think about who aren’t deep into finance: maintain the integrity of the payment system. That 0th commandment as it were will trump its official goals when they conflict.
paulddraper 3y ago
2008 says otherwise
- senectus1 3y ago
  arguably this was a finance sector issue... not so much a housing sector issue.
pessimizer 3y ago
Imagine if the Fed also pretended it had the duty to keep eggs expensive because egg producers might want refinance their loans.

I don't think it's the Fed's job to support the housing market?

by refurb 3y ago

I don't think it's the Fed's job to support the housing market?

Inflation is the Fed's job, and rent is part of that. That doesn't extend into managing the housing market, but managing interest rates is a big thumb on the scale.

refurb 3y ago
True, but this article is complaining about the opposite - the housing market can't sustain today's prices because of high interest rates. What you're talking about is what the fed is already try to do - bring inflation down with high interest rates.
- gndk 3y ago
  Prices will go further up when interest rates go down. Interest rates haven't been raised enough to reign in inflation.
toomuchtodo 3y ago
It’s a useless thumb for attempting to solve housing inflation. Housing shortages of millions of units means that if you’re priced out of a mortgage, you’re forced to rent with no rent price controls, so instead of mortgage bond investors collecting your housing spend, it’s instead landlords. The only way to fix housing costs is to build baby build, as fast as you can, and the Fed has no power over fiscal policy (and policy in general) to strongly encourage such a build rate. This should be on the scale of the Manhattan Project or the Inflation Reduction Act. https://www.fanniemae.com/research-and-insights/perspectives/us-housing-shortage https://www.fanniemae.com/research-and-insights/perspectives... https://www.npr.org/2024/01/25/1225957874/housing-unaffordable-for-record-half-all-u-s-renters-study-finds https://www.npr.org/2024/01/25/1225957874/housing-unaffordab... https://www.jchs.harvard.edu/americas-rental-housing-2024 https://www.jchs.harvard.edu/americas-rental-housing-2024 https://youtu.be/Jl7vrujr1J4 https://youtu.be/Jl7vrujr1J4
- irjustin 3y ago
  I'll agree there needs to be a massive supply boost in the form of entry level housing (only for 1st time owners, get rid of corp land grabs). That's what Singapore does quite well (I currently live here). The HDB system isn't a free market - new supply is only allowed for the first time home buyer, priced cheaply and you're not allowed to sell for 5 yrs. Covid had very big problems on supply but SG gov has kept it's promise in creating a lot of new housing in the past 2 yrs. It has a lot of levers to control a housing bubble for its citizens and thusly a big portion of inflation.
  - nojvek 3y ago
    I agree with this move. Tax those who hold single family homes for renting to others and the problems will fix itself. Housing is seen as an investment. If a big portion of rent starts going into taxes, then it doesn’t become a speculative instrument. Have apartment complexes managed by corps with central management. Don’t make single family homes and townhomes a tool of speculative investment. US economy would grow a lot faster if the money sitting on houses went into companies producing goods and services.
- joecot 3y ago
  Build baby build doesn't work when Black Rock and so many other private equity companies are content to buy as many houses as they can and then hold them to raise prices further or rent them out. 44% of all Single-Family Home Purchases were from Private Investors in 2023. A huge portion of the problem would be solved immediately by 1) a vacancy tax, 2) banning the purchase of single family homes by corporations.
  - toomuchtodo 3y ago
    I agree this is a component of the solution due to the speed at which capital can move.
  - refurb 3y ago
    Those investors are most individuals buying houses to rent. Blackrocks fund accounted for 0.01% of US housing stock.

pixl97 3y ago

Eh.... we forget about that 2008 thing where the housing market crashed the economy and took down a bunch of banks? Also, people need housing and when that gets out of whack people start whispering about replacing the government.

pessimizer 3y ago
No, we forget about that time when we ran up house prices so fast they doubled in like 10 years before crashing, catching people who had been allowed to borrow massively on the worth of houses, debt marked AAA.
chrisweekly 3y ago
> housing market crashed the economy and took down a bunch of banks or, "a bunch of banks crashed the economy and took down the housing market"

User23 3y ago

The Fed has two official goals: low inflation and full employment. It also has an existential goal that few people think about who aren’t deep into finance: maintain the integrity of the payment system. That 0th commandment as it were will trump its official goals when they conflict.

paulddraper 3y ago

2008 says otherwise

senectus1 3y ago
arguably this was a finance sector issue... not so much a housing sector issue.

pessimizer 3y ago

Imagine if the Fed also pretended it had the duty to keep eggs expensive because egg producers might want refinance their loans.