Feds raise US interest rates again

[jnevin]

I expect NYC to see a small correction, at most 15%, because some of the prices are insane. A friend of mine around Chelsea just sold his place for $2.8M. It's 2300 s/f - a nice place, but almost $3M? You gotta be kidding me!

Many NYC places are expensive enough that their owners own multiple residences....for example another in Miami or Ft Lauderdale, etc., especially as their NYC residences have appreciated in value. These are the buyers who are likely to go interest only to take on a second place, or use a lot of their equity in their primary residence, etc.

But NYC is usually the primary residence (the high paying jobs are in NY), so these people will not be selling their NY residences. They will be selling their secondary places at a loss and flooding the market, if rates continue to rise. I am steering clear of South FL property.

NYC property owners are also sophisticated enough to know that higher interest rates mean that other investment vehicles will generate better returns, so some might sell investment properties they own (in NYC) thereby adding to the supply a little bit...hence the aforementioned correction.

If you own in NYC, you have little to worry about unless you really stretched, went interest only / ARM.

Post correction prices will level off 10% lower than they are today - my best guess.

I fuggin' hate I.O. products, unles someone wants a HELOC that they'll use wisely. Utah is so fucked in a few years. You know anyone that wants to buy a shitload of 2-8 unit properties that they will be able to pick up on the cheap, start looking here in a year or so when their stated I.O. ARM's begin adjusting. So many home owners here are going to dump their homes and have to rent. I have a few I'm looking at that I did a few years ago and the fuckers didn't listen to me when I told them what to do. Always have to learn the hard way, huh?

 

[MattTheSkywalker]

I fuggin' hate I.O. products, unles someone wants a HELOC that they'll use wisely. Utah is so fucked in a few years. You know anyone that wants to buy a shitload of 2-8 unit properties that they will be able to pick up on the cheap, start looking here in a year or so when their stated I.O. ARM's begin adjusting. So many home owners here are going to dump their homes and have to rent. I have a few I'm looking at that I did a few years ago and the fuckers didn't listen to me when I told them what to do. Always have to learn the hard way, huh?

Yep. I am holding off on any more properties for now, will look to buy some for cash as the supply goes up when the ARM's adjust.

Markets are cool. People will get shitted on. I like tacos.

 

[bluepeter]

Which is $80K U.S.

lol


About 420000 US actually. Which is irrelevant anyway since we earn Canadian and purchase in Canadian.

 

[Tadow]

I expect NYC to see a small correction, at most 15%, because some of the prices are insane. A friend of mine around Chelsea just sold his place for $2.8M. It's 2300 s/f - a nice place, but almost $3M? You gotta be kidding me!

Many NYC places are expensive enough that their owners own multiple residences....for example another in Miami or Ft Lauderdale, etc., especially as their NYC residences have appreciated in value. These are the buyers who are likely to go interest only to take on a second place, or use a lot of their equity in their primary residence, etc.

But NYC is usually the primary residence (the high paying jobs are in NY), so these people will not be selling their NY residences. They will be selling their secondary places at a loss and flooding the market, if rates continue to rise. I am steering clear of South FL property.

NYC property owners are also sophisticated enough to know that higher interest rates mean that other investment vehicles will generate better returns, so some might sell investment properties they own (in NYC) thereby adding to the supply a little bit...hence the aforementioned correction.

If you own in NYC, you have little to worry about unless you really stretched, went interest only / ARM.

Post correction prices will level off 10% lower than they are today - my best guess.

Well put.

 

[Tadow]

alright bro's...the fed has little corrolation with mortgage interest rates. Mortgage interest rates are based on the secondary mortgage market, where investors trade mortgage backed securities. the stock market effects interest rates more than the fed does.

it's pretty funny that most people panic

Yes the Fed has little DIRECT effect on very few things. Most importantly the Fed Funds Rate and the money supply.

There is a reason that Greenspan has been called the most powerfull man in America, and it's not because his power ends at raising the Fed Funds rate. Changes made by the Fed have wide reaching effects into secondary markets.

How do you think the Fed fights inflation? Upping interest rates and constrainig money supply through the selling of T-Bonds to the private sector. Until the past few years, don't think you'd find many economists that would agree with you when you say that the Fed cannot strongly influence secondary markets if that were it's goal. Given the fact that the Fed has been unable to do so in recent years, there are many very intelligent people trying to find out what is wrong with our current model of economic understanding to explain why these efforts aren't having intended effects.

And the reason for "panic" as you call it it this - if the Fed can't cool those markets down (slowing the rise in prices), prices WILL drop. So far, they have failed.

 

[calveless wonder]

Yes the Fed has little DIRECT effect on very few things. Most importantly the Fed Funds Rate and the money supply.

There is a reason that Greenspan has been called the most powerfull man in America, and it's not because his power ends at raising the Fed Funds rate. Changes made by the Fed have wide reaching effects into secondary markets.

How do you think the Fed fights inflation? Upping interest rates and constrainig money supply through the selling of T-Bonds to the private sector. Until the past few years, don't think you'd find many economists that would agree with you when you say that the Fed cannot strongly influence secondary markets if that were it's goal. Given the fact that the Fed has been unable to do so in recent years, there are many very intelligent people trying to find out what is wrong with our current model of economic understanding to explain why these efforts aren't having intended effects.

bottom line is........ the fed can only affect mortgage rates if they disrupt the stock and bond market. As long as people are buying bonds, they're most likely investing in some form of mortgage backed securites. Mortgage interest rates are almost(not exactly) inverse to the stock market.
It's typically when these mortgage backed securities are sold to free up cash flow (usually to invest in stocks), that interest rates on mortgages go up. When investors want a guaranteed yield over a certainn period of time, they invest in bonds or mortgage backed securities obviously. i

Housing inflation and overall economic inflation are two completely different entities. The housing market will naturally correct itself when the demand runs out. Prices will go down, but i think it's gonna be geographically specific.

The south florida housing market (my market) will thrive for at least a few more years. Especially in the miami area.

 

[bran987]

fear and hope

 

[sawastea]

Crude oil is banging today.

 

[Tadow]

http://biz.yahoo.com/usat/050816/13048929.html

I thought this article was interesting.

 

[jnevin]

http://biz.yahoo.com/usat/050816/13048929.html

I thought this article was interesting.

I was surprised to see that Utah wasn't included in that article. 1 in 5 homes is foreclosed on in the first year here, and we have the highest BK % in the country.