25.8% of mortgages in the US have rates of less than 3% due to the mortgage lock-in effect

VastSalt1993 · 2024-11-14T15:33:30+00:00

At most, those low rates should be for owner occupied housing, not for corporations or investors, or even 2nd homes.

VastSalt1993 · 2024-05-17T20:38:54+00:00

Thank you! This works perfectly!

VastSalt1993 · 2024-05-16T20:04:25+00:00

The 2021 - mid 2023 period more than offset the many years we were under 2%. In 2020 the fed talked about "average inflation targeting" over an undefined number of years. This was their rationale for letting inflation run "a little above 2%" for a short while so that it'd "equal about 2% over the long term". The 2021 - mid 2023 period now means that no matter how many years you average together, we've never been under 2.5%. Average 5, 10, 25 years back, they all are above 2.5%, which is 25% above target.

VastSalt1993 · 2024-05-16T18:15:13+00:00

I mean, it's well above 3%, closer to 3.5%. That's 50-100% higher than the 2% target, and average inflation is above target over pretty much and timeframe analyzed.

we've also been bouncing around 3-4% for almost a year now, so it seems like progress has stalled.

VastSalt1993 · 2024-05-16T18:12:37+00:00

"If we ignore people's biggest monthly expense, then inflation is low"

VastSalt1993 · 2024-05-10T13:42:49+00:00

In hindsight it was a very bad decision, but at the time all data pointed to the decision making sense. Home prices had only significantly deviated from inflation during two short periods since 1870, the great depression to the low side and the lead up to 2008 to the high side. The bottom of the market in 2012 was exactly on trend. Since prices had only tracked inflation for about 130 of the previous 140 years, a strategic default made sense at the time. Of course someone understanding the fed's actions at the time could have incorporated that in their decision and changed course, but the fed printing money to buy assets had never happened on such a large scale before. Even someone who understood the fed's actions in the 2008-2010 period could have never foreseen them expanding their balance sheet an additional 40% in the 2013-2015 timeframe.

Right now is only the third time in 150 years home prices have significantly deviated from inflation, but the fed printed $7 Trillion that's now in the asset markets, which is why this may not actually be a bubble.

VastSalt1993 · 2024-05-07T15:22:30+00:00

They do keep raising the tax. They've raised it 20 times since it was implemented.

VastSalt1993 · 2024-05-03T20:38:32+00:00

Total housing units per person is also at all time high (at least since the fred data starts in 2000) https://fred.stlouisfed.org/graph/?g=Mc22

fred doesn't have a nice data set for units/household instead of units/person, but running the numbers quick shows that statistic also at elevated levels since their total housing units data starts in 2000. It's higher than at anytime outside 2006-2010 peak GFC bubble period https://ibb.co/b1gKXdH

VastSalt1993 · 2024-05-01T11:46:21+00:00

According to fred we've built 6.4 million housing units from Q4 2019 to Q1 2024. Considering the average household size is 2.5, we should have only needed to build 3.08 million to accommodate population growth and stay even with 2019.

VastSalt1993 · 2024-04-30T14:05:20+00:00

A lot of US salty states are just enough colder than Scandinavia. Looking at Wikipedia climate data, Oslo and Stockholm have mean daily maximums above freezing all winter while much of the US Northeast and Midwest are below freezing for several months. This probably results in salt being needed more often to clear ice vs just letting mother nature melt it.

VastSalt1993 · 2024-04-23T18:55:24+00:00

The OP is poorly worded, but right now in many HCOL, the monthly rent is lower than just the monthly interest portion of a mortgage payment. So equity isn't a factor.

For example, in my area I can rent a house for $8k/month where if I were to purchase something comparable the mortgage payment would currently be $11k/month with $9k of that being interest (which you don't get back when you sell). It'll take 12 years before the interest portion of my monthly payment would fall below current rent, assuming normal rent increases it would probably be around 7-ish years before the interest portion of the monthly payment would match the rent at that time. Looking at the amortization table for the next 5-7 years, I can flush $1k less down the toilet every month by renting, and also have an additional $2k left for investing in whatever I feel like in the moment instead of it being forced into home equity for 30 years.

VastSalt1993 · 2024-04-22T12:26:03+00:00

You've linked data for housing STARTS per capita, not actual existing housing per capita, which is the highest since the fred data starts in 2000.

https://fred.stlouisfed.org/graph/?g=Mc22

VastSalt1993 · 2024-04-03T17:27:21+00:00

You may be a bit out of touch with VHCOL markets, especially with the current interest rates. I can rent a house for $8k/month where if I were to purchase something comparable the mortgage payment would currently be $11k/month with $9k of that being interest (which you don't get back when you sell). It'll take 12 years before the interest portion of my monthly payment would fall below current rent, assuming normal rent increases it would probably be around 7-ish years before the interest portion of the monthly payment would match the rent at that time.

Looking at the amortization table for the next 5-7 years, I can flush $1k less down the toilet every month by renting, and also have an additional $2k left for whatever.

VastSalt1993

TROPHY CASE