T1B

Thought this would be worth bringing to the attention of Suckaholic, our resident fiscal policy expert, who spent the last 8 years berating Obama for his shitty economy propped up by artificially low interest rates.

Now the new Fed chair wants to continue raising interest rates (a good idea) and now Suckaholic's hero hates that.

Thoughts, Suckaholic?

The feds used basically free money to try to breath life into the corpse that was the US economy during the Obama years.

It was a really stupid thing to do.

Did I take advantage of it?

You bet your ass, I did. I used a no cost 3.5% heloc to payoff my very small mortgage, about 29K, at the time. It was a variable rate, but I knew I could pay it off in short order, so I took that gamble. I have been mortgage free, including the heloc for a few years now.

During that stretch, many people locked in to this artificial rate. And prices artificially rose as a result of it, as well.

Now, we are returning to an economy that can stand on its own two feet, so rates should return to historically normal range, somewhere around 5-6%. The trouble is, that 500K crib that was doable at 3.2% is now out of the reach of folks not named Zuckerburg or 88.

So, there will be some necessary adjustments and there will be pain, as there always is, when the gubmint stops artificially subsidizing things.

Of course, you and your minions will point to Trump and cry that he killed housing prices when he did nothing of the sort.

So let's recap what Suckaholic just did here---

He completely ignores the question, whether Trump should be berating the Fed chair for supporting rising interest rates, and instead admits he profited from Yellen's fiscal policy during Obummer's corpse of an economy. Then he wraps it all up in the shroud of victimhood, like the good little Trump ball licker he is.

Amazing the mental gymnastics on display here.

My admittedly limited knowledge on this subject is that a mild raising of the interest rates acts as a brake on inflation as the economy heats up, but what do I know? I’m just a dumb helicopter pilot.

Screw_Michigan wrote:So let's recap what Suckaholic just did here---

He completely ignores the question, whether Trump should be berating the Fed chair for supporting rising interest rates, and instead admits he profited from Yellen's fiscal policy during Obummer's corpse of an economy. Then he wraps it all up in the shroud of victimhood, like the good little Trump ball licker he is.

Amazing the mental gymnastics on display here.

Trump knows the rates must raise. He also knows it is gonna cause real estate values to drop. It has to. I wish explaining this sort of thing was his strong suit, but it ain't. He is attempting to position himself as being against these increases.

As for him being a victim here, on this topic, he is. He is going to be painted as the evil, racist bastard who cowtowed to the bankers and gave them their high rates back. Hopefully there are enough honest people out there with a speck o feconomic understanding that won't blame him for this coming problem.

As for my taking advantage of it, why shouldn't I? I suppose I could have said, no thanks, I'll stay with my 6% fixed based on principle. THat would be dumb. Anyway, I would have had it paid off nearly as soon anyway.

smackaholic wrote:Trump knows the rates must raise. He also knows it is gonna cause real estate values to drop. It has to.

No, it doesn't. Values may rise more slowly, maybe even approach stagnation, but they won't drop. At least not until President Chucklehead manages to crash the economy. Your feconomic understanding is sorely lacking.

Goober McTuber wrote:Your feconomic understanding is sorely lacking.

fe-co-NOM-ic adj. 1. Description of monetary policies resulting in economic indicators that resemble fecal matter; e.g., lower GDP, higher unemployment, undesirable inflation rates, reduction of middle class, increased homelessness, widening of class disparites. Synonyms: voodoo economics, trickle-down theory, stagflation

I'm so glad I went into the family diamond trade...and didn't pursue a degree in feconomics, like my cousin Herschel.

See Herschel? Who's the dummy now, Herschel?

smackaholic wrote: Trump knows the rates must raise. He also knows it is gonna cause real estate values to drop. It has to. I wish explaining this sort of thing was his strong suit, but it ain't. He is attempting to position himself as being against these increases.

As for him being a victim here, on this topic, he is. He is going to be painted as the evil, racist bastard who cowtowed to the bankers and gave them their high rates back. Hopefully there are enough honest people out there with a speck o feconomic understanding that won't blame him for this coming problem.

As for my taking advantage of it, why shouldn't I? I suppose I could have said, no thanks, I'll stay with my 6% fixed based on principle. THat would be dumb. Anyway, I would have had it paid off nearly as soon anyway.

Nobody said was bad for you to profit from artificially inflated interest rates. But why can't you just admit your boy is a moron and that a Fed free of presidential influence is better than the alternative?

Trump (and his supporters) are stupid, Fed board members are not.

Sent from my computer using common sense

The fed works for the administration. It will carry out the policy of the administration, just as it did under Barry by setting the prime rate at pretty much "free money".

Are you going to deny that? And go knee deep into your own colon.....again?

Of course you will. It's what you do. KYOA is an autonomic nervous system function for you at this point.

Want to know what would a better idea than an independent fed?

No fukking fed.

Imagine a system where the price of money is set by the demand for it.

What a novel fukking concept.

smackaholic wrote:The fed works for the administration.

Try again, genius.

Goober McTuber wrote:

smackaholic wrote:Trump knows the rates must raise. He also knows it is gonna cause real estate values to drop. It has to.

No, it doesn't. Values may rise more slowly, maybe even approach stagnation, but they won't drop. At least not until President Chucklehead manages to crash the economy. Your feconomic understanding is sorely lacking.

Are you implying that a 66% rise in a fixed mortgage rate (3-5%) will not have a yyyyyyyuuuuuge effect on the amount of money one can afford to borrow? And that the amount one qualifies to borrow, is not a major factor in how much one can spend?

This is all very simple feco 101.

Years of artificially low mortgage rates have put us in a condition where a 2 point rise is going to have a big effect. This means that if other factors would have led to a normal, say 5% yearly real estate appreciation, a 50% drop in the amount one qualifies for will result in depreciation. I'm no math or fecomonics wiz, but this is common sense. It may not apply to those in the high end of the market. They can write a check. But, it sure as hell does apply to the large majority of potential home buyers who will have to carry a mortgage.

Who appoints the fed.....genius?

And if I am not mistaken, which I very well could be, that appointer has the ability to shitcan the fed.

Apparently you have no idea what “the fed” is or why it was created. Go out and educate yourself, then get back to me. At that might be worth my time to have this discussion.

smackaholic wrote:

Goober McTuber wrote:

smackaholic wrote:Trump knows the rates must raise. He also knows it is gonna cause real estate values to drop. It has to.

No, it doesn't. Values may rise more slowly, maybe even approach stagnation, but they won't drop. At least not until President Chucklehead manages to crash the economy. Your feconomic understanding is sorely lacking.

Are you implying that a 66% rise in a fixed mortgage rate (3-5%) will not have a yyyyyyyuuuuuge effect on the amount of money one can afford to borrow? And that the amount one qualifies to borrow, is not a major factor in how much one can spend?

This is all very simple feco 101.

Years of artificially low mortgage rates have put us in a condition where a 2 point rise is going to have a big effect. This means that if other factors would have led to a normal, say 5% yearly real estate appreciation, a 50% drop in the amount one qualifies for will result in depreciation. I'm no math or fecomonics wiz, but this is common sense. It may not apply to those in the high end of the market. They can write a check. But, it sure as hell does apply to the large majority of potential home buyers who will have to carry a mortgage.

A 66% rise in a fixed mortgage rate (3-5%) does not equal a 50% drop in the amount one qualifies for. More in the neighborhood of 20%. People will do what they always have done in such situations. Buy a little less house, or budget a little bit more for the mortgage, or a combination of the two.

I have owned houses for over 30 years, and the only time I've seen the value drop was 10 years ago. And it has bounced back and then some. You're right about one thing. You're no math or fecomonics wiz.

Our stable economic genius in action! This will be great for the economy!

Trump pushes 25 percent auto tariff as top advisers scramble to stop him

smackaholic wrote:
Now, we are returning to an economy that can stand on its own two feet, so rates should return to historically normal range, somewhere around 5-6%. The trouble is, that 500K crib that was doable at 3.2% is now out of the reach of folks not named Zuckerburg or 88.

Maybe for some segments and those typical US consumers who have to be right on the edge as to qualifying for a mortgage. There are a lot of variations in the market right now and regional differences. In our market there is a lot of out of state cash coming into the real estate market. A 500K home is pretty much the bottom of the new market right now. A lot are being bought for cash and if a note is involved it is usually less than 50% of the value.

My son started a new job at Intel on Monday. There were 32 people in the first day orientation session. He and one other person were the only local residents. The rest were from the East Coast, midwest, southwest, Texas, Illinois. They were all creaming their jeans over how much house they could get for the price here, and most had 150K or better to put down.

If the minimum threshold for financing were true across the board, then your take might hold water. But when you have buyers with good cash positions coming into the deals, a 1% to 2% up tick in interest rate is not going to be a deal killer at all.

smackaholic wrote:The fed works for the administration. It will carry out the policy of the administration...

Ummm...no.

Dude, you just got clowned by Screwey. Fucking Screw_Michigan of all people...wow...

I'm sorry, Screwey...but you know what I was getting at. I hope we're still bros... :(

Shlomart Ben Yisrael wrote:I'm sorry, Screwey...but you know what I was getting at. I hope we're still bros... :(

Goober McTuber wrote:

smackaholic wrote:

Goober McTuber wrote: No, it doesn't. Values may rise more slowly, maybe even approach stagnation, but they won't drop. At least not until President Chucklehead manages to crash the economy. Your feconomic understanding is sorely lacking.

Are you implying that a 66% rise in a fixed mortgage rate (3-5%) will not have a yyyyyyyuuuuuge effect on the amount of money one can afford to borrow? And that the amount one qualifies to borrow, is not a major factor in how much one can spend?

This is all very simple feco 101.

Years of artificially low mortgage rates have put us in a condition where a 2 point rise is going to have a big effect. This means that if other factors would have led to a normal, say 5% yearly real estate appreciation, a 50% drop in the amount one qualifies for will result in depreciation. I'm no math or fecomonics wiz, but this is common sense. It may not apply to those in the high end of the market. They can write a check. But, it sure as hell does apply to the large majority of potential home buyers who will have to carry a mortgage.

A 66% rise in a fixed mortgage rate (3-5%) does not equal a 50% drop in the amount one qualifies for. More in the neighborhood of 20%. People will do what they always have done in such situations. Buy a little less house, or budget a little bit more for the mortgage, or a combination of the two.

I have owned houses for over 30 years, and the only time I've seen the value drop was 10 years ago. And it has bounced back and then some. You're right about one thing. You're no math or fecomonics wiz.

On a 30 year mortgage, the amount of the mortgage that is interest is rather astounding. A 2/3rd increase in the rate will have more than a 20% decrease in the amount they qualify for. I think it will be closer to 50 than 20.

Regardless, a 20% drop in what people can spend is pretty damn big.

I have been a homeowner for a few years less than you, but then again, I’m not 87 years old. And there has been one big real estate flop. That time, 10 years ago and there’s blame enough to go around for why it happened. There has been regional flops as well. The late 80s/early 90s flop in the U&R and D&L was pretty nasty and likely what caused poppa Bush a second term.

What you nor I haven’t since at least the depression, is a stretch of 3% money. I paid 75k for my first home at 8%. Had I been able to get 3% money, I could and would have bought more. And prices would have been higher.


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Jesus Christ, you fucking moron, there are dozens of online mortgage calculators. Run the numbers, you credulous tard. I did, that's how I got 20%.

Good idea, goobs.

30 year 3% fixed, $250K - 1.054.01/month

30 year 5% fixed, $200K - 1,073.64/month

Those numbers are straight out of one of them calculators. 3% buys you 50K more house, plus a twelve pack of quality micro-brew.

Now, I do realize there are other considerations, property taxes, insurance, downpayment amount, etc.... , but the fact remains that with this 2% bump in the rate, you lose close to 50K in buying power. If you think those won't have a major affect on markets, you really are weapons grade stupid. The effect will be greatest on first time buyers as they quite typically will be right at the top of the range they qualify for.

So, my guess of 50% was quite a bit high. But, it is more than 20, and even if it is just 20, it is substantial.

Based on your numbers, a reduction of $50,000 from $250,000 is 20%. And you want to call me weapons grade stupid? Just shut the fuck up.

We have gone through ups and downs in interest rates before. People keep buying houses. They adjust. And it's not like rates are going from 3% to 5% overnight. It will take a couple of years. I never said it wouldn't affect the market, I said it would slow the increase in home values.

Goober McTuber wrote: I never said it wouldn't affect the market, I said it would slow the increase in home values.

Good

smackaholic wrote:Good idea, goobs.

30 year 3% fixed, $250K - 1.054.01/month

30 year 5% fixed, $200K - 1,073.64/month

Change the 5% number to 250K for an actual comparison to see what it does to the payment. Then look at the payment as 28% of the AGI of your buyer and see what that does. That is all anyone cares about anyway.

I know in your hood there may be cribs that are still going out at 200 or 250, but in any place that has an actual economy, and where people have jobs not like jizz mopping, and where people want to live, 250 gets you a fucking broken down shack that would probably need a complete gut job and 100K of work unless you like living in squalor.

Derron wrote: I know in your hood there may be cribs that are still going out at 200 or 250, but in any place that has an actual economy, and where people have jobs not like jizz mopping, and where people want to live, 250 gets you a fucking broken down shack that would probably need a complete gut job and 100K of work unless you like living in squalor.

You clearly haven't look at the Texas housing market. S250K goes a long way here. Plus you get your own washer and dryer at that price as well.

Derron wrote:

smackaholic wrote:Good idea, goobs.

30 year 3% fixed, $250K - 1.054.01/month

30 year 5% fixed, $200K - 1,073.64/month

Change the 5% number to 250K for an actual comparison to see what it does to the payment. Then look at the payment as 28% of the AGI of your buyer and see what that does. That is all anyone cares about anyway.

I know in your hood there may be cribs that are still going out at 200 or 250, but in any place that has an actual economy, and where people have jobs not like jizz mopping, and where people want to live, 250 gets you a fucking broken down shack that would probably need a complete gut job and 100K of work unless you like living in squalor.

Hi Dohron.

1. The discussion was based on how much house someone could afford with rising interests rates, not what payments would be for the same $ amount.

2. The median home price in your hood is not typical of the 100 top US metro areas. It's a tad bit higher. And it's still below Screwball's neighborhood.

https://www.kiplinger.com/tool/real-est ... /index.php

3. You remain one of the dumbest motherfuckers capable of accessing the interwebs.

Goober McTuber wrote: 2. The median home price in your hood is not typical of the 100 top US metro areas. It's a tad bit higher. And it's still below Screwball's neighborhood.

https://www.kiplinger.com/tool/real-est ... /index.php

That must be one old list. Median home price in Portland (where Derron doesn't live) is $425K.

Dinsdale wrote:

Goober McTuber wrote: 2. The median home price in your hood is not typical of the 100 top US metro areas. It's a tad bit higher. And it's still below Screwball's neighborhood.

https://www.kiplinger.com/tool/real-est ... /index.php

That must be one old list. Median home price in Portland (where Derron doesn't live) is $425K.

Yes, it hasn't been updated in 4 months. And the value listed is for the metro area, not Portland proper.