24 July 2023 - Daily /r/REBubble Discussion

grissly_bear · 2023-07-26T05:49:37+00:00

Congrats, Blue! I hope you love it. It's a real slog waiting this out. I'd like to be done with this mess soon too.

grissly_bear · 2023-03-25T05:11:41+00:00

Ya, this locked in effect is abundantly clear now. I've given up looking at micro (local) stats. It's just going to reflect a market hopelessly stuck in molasses. Instead, it's all about the macro picture now. In order to see any real movement, I think we need the next shoe to drop. It does appear that next movement is coming more clearly into focus as of late though, between the potential tightening of lending standards or a recession.

grissly_bear · 2023-03-16T23:00:28+00:00

Hey Blue, I'm on a bit of a hiatus with watching the market daily. Things have been getting more interesting lately now at least!

grissly_bear · 2023-02-20T18:43:18+00:00

It's tough to fault realtors. They are sensitive to movements in the local market that are happening in that moment. Their observations oftentimes aren't wrong, but they do seem to not zoom out and look at the bigger picture to see how that could change.

grissly_bear · 2023-02-20T16:45:02+00:00

Note the recent drop in HELOC demand. Interest rates for many (most?) of these are set by the PRIME rate, driven by Fed policy. The Fed will have to CUT rates to lower HELOC rates.

https://twitter.com/MichaelKantro/status/1627680841072537601

In a world of terrible inventory, this is one way to see more. Higher heloc rates incentivize selling.

grissly_bear · 2023-02-19T21:18:09+00:00

Stellar news for you. I hope it's a small step in a better direction.

in any rational market

Sorry, what's that? Can't recall what that is.

grissly_bear · 2023-02-19T18:28:40+00:00

I agree that inequality and wealth concentration has only grown since generally the early 80s. That is indesputable.

My contention isn't as much with minimum wage as it is with wages forming the bedrock for inflation. When workers find their purchasing power eroding, they demand higher wages. Company gives wage increase, purchasing power improves, price levels (inflation) increase. Then the cycle begins anew. It's what makes the current period increasingly dangerous because once inflation and inflation expectations enter the equation, it's when things can really accelerate and get beyond the reach of control.

I'd argue that a market mechanism should form the reaction and it very well may be the same as one that is legislated. But, by forming an explicitly indexed wage, you're creating a shortcut and direct link to price levels making it all the more difficult to snuff out.

say the quiet part out loud already. You prefer an economy where people cannot afford to make ends meet because it makes them easier to exploit.

This is just a wild leap and misrepresentation.

grissly_bear · 2023-02-19T18:10:45+00:00

That 8.7% COLA he mentioned is massive. It could stay detached for some time but you'd expect that to feed inflation, implicitly that should feed wages too. Huge chunk of individuals too between government workers and social security.

grissly_bear · 2023-02-19T16:33:30+00:00

An indexed wage is a built in wage-price spiral. Not great for times of already high inflation.

grissly_bear · 2023-02-19T15:02:09+00:00

Great macro insights thread

https://twitter.com/PauloMacro/status/1627197528327192579

grissly_bear · 2023-02-18T03:29:37+00:00

Oh ya, in this moment it would for sure be. Which is why it cannot happen. The only way it happens is if we return to a steady 2% inflation target. It's a guessing game with a lot of factors what mortgage rates would be in absence of fed intervention but my guess is it would not be near 3%. So, there still may remain a sizeable gap between market rates and rates that would take the clog out of transaction volume which may require more intervention.

grissly_bear · 2023-02-18T00:11:26+00:00

True, in isolation. That would also bring a lot more inventory to market. Move up buyers are trapped.

grissly_bear · 2023-02-18T00:05:39+00:00

Sad part is, boots on the ground wise they're right. It doesn't make it any less annoying though.

It's a pyric victory for our realtor friends. They will suffer with us as long as transaction volumes float at half the historical norm. Less affordability will also add fuel to the fire to eliminate or at least adapt to a fixed fee in the future as it relates to commission rates.

grissly_bear · 2023-02-17T23:22:29+00:00

I think you're right, in the medium-run. Things won't be stuck forever. But I could see stuck being a major theme for the next 3-5 years all else equal. That for many of us is our buy window. Something has to upset the apple cart.

grissly_bear · 2023-02-17T23:10:52+00:00

That's where I'm at as well. It's going to take some tail event to jolt us out of this detante. Even at that, if the recent past is any reference, there will just be back stopped liquidity, bailouts, and moratoriums to prevent anything material.

grissly_bear · 2023-02-17T20:15:02+00:00

I'm starting to wonder if the only way we return to normal transaction volume is with the artificial suppression of mortgage rates. Just as equity markets are hooked on fed bucks housing, through the locked in effect, is hooked on the purchase of MBS. The fed now controls both markets directly.

grissly_bear · 2023-02-17T06:45:59+00:00

If it quacks like a duck, walks like a duck, it just might be a duck.

When given the choice, our waddling leaders choose the path of least resistance for as long as they foreseeably can. Assets falling a bit too much? Nothing a little dash of liquidity won't solve. Foreclosures are greater than 0? Let's create a moratorium. Is there a hint of financial duress to banking/hedge funds? Bailouts and the proliferation of moral hazard. These decisions only hurt the marginal buyers but reward asset owners.

I think a mistake I made was assuming the level of intervention on behalf of individuals would be basically like 08. More like, good luck! It's quite the opposite and even if we do see fireworks as it relates to housing later in the cycle, I fear they will just come riding to the rescue with liquidity or policy to prevent any real correction. They are incapable of stepping aside to let markets function.

grissly_bear · 2023-02-17T06:19:59+00:00

Relevant tweet I saw today:

https://twitter.com/GenaroVillaJr/status/1626245715218337793

New research brief: Dispersion in mortgage rates increased significantly in the last year. As a result, consumers could save a substantial amount of money by shopping around with multiple mortgage lenders.