3 ms·

So why are prices still going up at the exact same rate despite 30Y mortgage rates going from 2.x% to 7.x%

ty6853 2y ago
Prices are not going up at anything like the rate they did during the impulse event of low interest mania. They're flattening out but not lowering, as the price of buying out the opportunity cost of losing someone else's fixed low interest loan rises as interest rates rise.
- arcticbull 2y ago
  Ok let's look at Case-Shiller instead. [1] So you're saying lowering interest rates raises house prices and raising interest rates 5X ... also raises house prices, and therefore monetary policy is responsible for house prices? Are you sure it's not supply and demand? Because to me, when you do X and Y happens, then you do ~X and Y still happens, X and Y are uncorrelated. It would seem like a more reasonable assessment is that we're 5M houses short in the US [2], mostly in and around major metros where the jobs are [3], and that changes to interest rates symmetrically impact both supply and demand. [1] https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA [2] https://zillow.mediaroom.com/2024-06-18-The-U-S-is-now-short-4-5-million-homes-as-the-housing-deficit-grows https://zillow.mediaroom.com/2024-06-18-The-U-S-is-now-short... [3] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage
  - ty6853 2y ago
    Supply and demand, yes. I have a loan at or below zero that you can't have, and if I sell the house I can't have it either. There is low supply available and high demand to keep them, which is tied to the house. The summation of supply and demand for the materials and land as well as the financial products attached to them are all considerations. But the most notable recent supply change is those tied to monetary policy. Zoning, codes, regulations and trades licensing have been the steadier hands on the noose but less so impulses on the accumulator. The truth is you can get around all of those if you pay cash ( I built an uninspected shithole to live in for $30k that is uninsurable and unloanable and i cant get a certificate of occupancy) but the main market is mortgagable properties tied to monetary policy.
    - arcticbull 2y ago
      So why is there no correlation between mortgage rates and house prices over the last 50 years? Just stating your theory again doesn't make it true.

Prices are not going up at anything like the rate they did during the impulse event of low interest mania. They're flattening out but not lowering, as the price of buying out the opportunity cost of losing someone else's fixed low interest loan rises as interest rates rise.

arcticbull 2y ago
Ok let's look at Case-Shiller instead. [1] So you're saying lowering interest rates raises house prices and raising interest rates 5X ... also raises house prices, and therefore monetary policy is responsible for house prices? Are you sure it's not supply and demand? Because to me, when you do X and Y happens, then you do ~X and Y still happens, X and Y are uncorrelated. It would seem like a more reasonable assessment is that we're 5M houses short in the US [2], mostly in and around major metros where the jobs are [3], and that changes to interest rates symmetrically impact both supply and demand. [1] https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA [2] https://zillow.mediaroom.com/2024-06-18-The-U-S-is-now-short-4-5-million-homes-as-the-housing-deficit-grows https://zillow.mediaroom.com/2024-06-18-The-U-S-is-now-short... [3] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage
- ty6853 2y ago
  Supply and demand, yes. I have a loan at or below zero that you can't have, and if I sell the house I can't have it either. There is low supply available and high demand to keep them, which is tied to the house. The summation of supply and demand for the materials and land as well as the financial products attached to them are all considerations. But the most notable recent supply change is those tied to monetary policy. Zoning, codes, regulations and trades licensing have been the steadier hands on the noose but less so impulses on the accumulator. The truth is you can get around all of those if you pay cash ( I built an uninspected shithole to live in for $30k that is uninsurable and unloanable and i cant get a certificate of occupancy) but the main market is mortgagable properties tied to monetary policy.
  - arcticbull 2y ago
    So why is there no correlation between mortgage rates and house prices over the last 50 years? Just stating your theory again doesn't make it true.