We have friends, two young cybersecurity professionals, making very high salaries.
They are engaged and have been looking for a house for two years.
Once the interest rate went up to 7%, they stopped looking.
As they explained to me, "If we buy a house with a 30-year loan, the jump in the rate of interest from 3% to 7% adds another million dollars to our loan. We can't afford that."
Now...they are the 1% that make good money. What about all those making less?
House purchases drives significant economic growth because of all the appliance purchases, painter, electrician, plumber, roofer, and other tradesmen who depend on it.
Fed raises the interest rate above 7% to monetize the debt, and average people suffer horribly.
Well it's a little trickier. The people really screwed over are those who had a variable rate--which of course you needed in order to compete with other offers. Since it's all competitive, a high interest rate keeps the cost of the house low. When I bought my house 35 yrs ago, the interest rate was almost 20%. Every drop in the interest rate has raised the cost of the houses on the market, and what they could be refinanced for. They needed this because mortgages create the money in the US but only the principle. Halfways through, the money in circulation runs out in society, so they have to keep wobbling it down.
What's happening now is that hedge funds are overbidding for properties because it doesn't matter--as bankers it's a loan to themselves. And yes, home prices drive inflation as I explain in this article: https://thirdparadigm.substack.com/p/inflation-colonization.
I see a solution in very small plot grants with very small one story houses. Say a 50x50 ft lot with a 25x25ft house on it. Many would take a 30x30 ft lot with a 15x15ft house on it. So folks could grow a bit of food too. Maybe a submerged main floor with some kind of raised space above. There has got to be a way to make it happen without such deep loans. We as a country have to invest in people again.
And that is where we are. Expectations have been drastically reduced. Shrinkflation. Sounds amazing! And all the while, our overlords are living high on the hog.
Why be chained to a house when the earthly demons want you dead and gone? This is a cyclical industry and right now the Fed and inflation are pushing the cycle down into a trough.
I remember having a mortgage at 8-9%. Not fun, especially if it is adjustable. The only reason I bought and could afford to was because the house was marked down by about 1/3.
As a government, you can't install UBI, attached to social credit system, within a digitally fenced, open air prison, until the people beg you for it😉🤨
The people won't ask their governments to "save them", until the majority of them are broke and homeless (or about to be), so the fastest way to speed up that process, is to crash the system (looking at you, bonds market and you commercial real estate loans😉), because we are under a deadline, 2030 remember?!😉
How to stay for FREE in a top NYC hotel this weekend!
#travel tips
https://babylonbee.com/news/genius-frugal-family-poses-as-illegal-immigrants-to-get-free-hotel-oom-in-nyc
We have friends, two young cybersecurity professionals, making very high salaries.
They are engaged and have been looking for a house for two years.
Once the interest rate went up to 7%, they stopped looking.
As they explained to me, "If we buy a house with a 30-year loan, the jump in the rate of interest from 3% to 7% adds another million dollars to our loan. We can't afford that."
Now...they are the 1% that make good money. What about all those making less?
House purchases drives significant economic growth because of all the appliance purchases, painter, electrician, plumber, roofer, and other tradesmen who depend on it.
Fed raises the interest rate above 7% to monetize the debt, and average people suffer horribly.
Inflation is a silent killer.
As here.
Well it's a little trickier. The people really screwed over are those who had a variable rate--which of course you needed in order to compete with other offers. Since it's all competitive, a high interest rate keeps the cost of the house low. When I bought my house 35 yrs ago, the interest rate was almost 20%. Every drop in the interest rate has raised the cost of the houses on the market, and what they could be refinanced for. They needed this because mortgages create the money in the US but only the principle. Halfways through, the money in circulation runs out in society, so they have to keep wobbling it down.
What's happening now is that hedge funds are overbidding for properties because it doesn't matter--as bankers it's a loan to themselves. And yes, home prices drive inflation as I explain in this article: https://thirdparadigm.substack.com/p/inflation-colonization.
I see a solution in very small plot grants with very small one story houses. Say a 50x50 ft lot with a 25x25ft house on it. Many would take a 30x30 ft lot with a 15x15ft house on it. So folks could grow a bit of food too. Maybe a submerged main floor with some kind of raised space above. There has got to be a way to make it happen without such deep loans. We as a country have to invest in people again.
Yep, lots of YouTube videos recently about folks buying 10to 15k sheds at Home Depot or Menards and converting them to mini houses.
And that is where we are. Expectations have been drastically reduced. Shrinkflation. Sounds amazing! And all the while, our overlords are living high on the hog.
Shrinkflation. I plan to use it 3x in normal speech today, along with my new fav "hawkish pause" (what does a Federal Reserve lapdog have?...:)
Why be chained to a house when the earthly demons want you dead and gone? This is a cyclical industry and right now the Fed and inflation are pushing the cycle down into a trough.
I remember having a mortgage at 8-9%. Not fun, especially if it is adjustable. The only reason I bought and could afford to was because the house was marked down by about 1/3.
Anyone with an adjustable loan in this environment is about to be in a world of hurt 😞
Crixycon, how to you roll, then, some kind of camper mobile? Bike camper? Just curious.
As a government, you can't install UBI, attached to social credit system, within a digitally fenced, open air prison, until the people beg you for it😉🤨
The people won't ask their governments to "save them", until the majority of them are broke and homeless (or about to be), so the fastest way to speed up that process, is to crash the system (looking at you, bonds market and you commercial real estate loans😉), because we are under a deadline, 2030 remember?!😉
Have you heard that WEF Nazi say……you will own nothing and be happy!
Serf.