3C's
Footballguy
Love when the stonks are up big
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US economy thread (2 Viewers)
- Thread starter Jayrod
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jvdesigns2002
Footballguy
I definitely want to avoid saying anything political here—but the notion that we just ship cash to our allies in these situations is not super true. There might be some cash involved—but when a bill gets passed that gives “billions of dollars in military aid” to an ally—it doesn’t mean we just send cash there. It means that our government approves giving money to defense contractors (companies like Raytheon, Lockheed Martin, military supply companies, gun manufacturers..etc) to send supplies/packages to them. These aid packages fuel the military industrial complex that a lot of our economy is built upon. A lot of the reason why the US economy looks better than most post-Covid is because the number of military conflicts around the world have made it so that our government has an excuse to keep injecting money into our system through companies that make military and aid equipment.
Doug B
Footballguy
Drawdowns of existing stock is a big part of materiel aid, correct?
culdeus
Footballguy
Trickle down economics is basically US buying stuff that we can use to blow **** up with or other people blows other people up with. Cash goes to the workers, who use it for hookers and blow. Not that hard.
Peggy
Footballguy
From my view i love high interest rates too, but, its not the people with money in the stock market and in their mattress that the economy has its greatest effect on.
STEADYMOBBIN 22
Footballguy
Call me liberal, but I have to think there are better places to spend that money than abroad - "blowing stuff up".
culdeus
Footballguy
It isn't really abroad though. It's us dumping stuff we never needed on Ukraine or welfare for bomb factories.
Cowboysfan8
Footballguy
I agree and noone that knows me would ever call me liberal
massraider
Footballguy
PIK95
Footballguy
I expect the real estate bubble will burst sooner than later. A ranch house in my area bought for $140k in 2000, is now sold for $550 with no improvements. It's actually pretty run down. It's one example, but common up here in the north east. I could give twenty similar examples fwiw.
IvanKaramazov
Footballguy
That's not really much of a bubble though. The price of that house doubled, and then doubled again in 24 years. That's actually a perfectly normal rate of return. (The Rule of 72 is telling me that this works out to about 6%).
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PIK95
Footballguy
We will see. It was worth $225-$240 in 2021 fwiw.
urbanhack
Fight The Power!
It's the elevators, guys!
Opinion | The American Elevator Explains Why Housing Costs Have Skyrocketed
An illness led Stephen Smith to study why America has so few elevators. What he learned explains why housing costs are so high.
Todem
Footballguy
A 10-15% pull back is absolutely plausible in the real estate market and it's probably coming sooner rather than later with inventories building and buying coming to a halt in that price range. But inflation is a real thing over a 24 year time period.
It's completely reasonable to see a home average anywhere from 3-6% average annual appreciation over a decade, two decades etc. And it's not linear. Yes real estate has had a huge run here since Covid.....that will pull back...but not crash. I can speak for South Florida.......we are not seeing a crash here. The demand is insane down here.
Looking at the twitter thread, that guys been predicting a crash since at least 2020. I’m sure he’ll be right eventually
fruity pebbles
Footballguy
The crash bros are quoting new houses builds which are only 15% of the housing market. Let me know when the total housing inventory hits highs. That said the 18 year housing cycle predicts a top and fall in 2026, which I think will align with rates coming down, unemployment spiking and a full on recession.
Grahamburn
Footballguy
People are certainly still buying. I don't know how people are affording them though? Wages certainly can't be keeping up. Everyone cashing in BTC?
fruity pebbles
Footballguy
Still a lot of cash out there in some circles
Grahamburn
Footballguy
In response to the referenced tweetX I suspect many are cashing in their highly valued northern or big city homes and moving south where things are still "reasonable." Values have increased 100%+ in my area over the last ~5 years. There's a lot available, but they're not rotting on the market. People are gladly paying these insane (to me) prices.
Alex P Keaton
Footballguy
Don’t worry y’all. “It’s different this time.”
fruity pebbles
Footballguy
Most of the people I know who are buying houses are putting down big down payments from prior sales. The ones who are financing nearly the entire thing are maxed out on what they can borrow and counting on rates coming down and refinancing soon. Dangerous game to play.
beer 30
Footballguy
I keep thinking I don't know how people afford it around where I live (just over the border from Charlotte, NC in Fort Mill, SC). Homes that were $300k-$350k are now "starting at $400k" a year later but we can't build enough of them to satisfy the demand. Good for me who's been here since 2007 but if I sold I couldn't afford to buy anywhere near the house I live in now. Couldn't afford to downsize in this area either. Pretty crazy around here.
SFBayDuck
Footballguy
One of those dudes who has predicted 14 of the last 3 recessions?
Grahamburn
Footballguy
People are getting into outrageously high interest mortgages on outrageously high priced homes. What could go wrong?
Battersbox
Footballguy
Life hack: buy your home in Illinois and you'll never have to worry about a real estate bubble.
Craig_MiamiFL
Footballguy
Just have to pay out the *** in property taxes.....
....and have to live in Illinois
Stonks
not outrageous interest rates, take a look at history
Mortgage Rate History: 1970s To 2025 | Bankrate
Today’s mortgage rates aren’t all that different from the rates of years past. Here’s how they compare.
www.bankrate.com
Grahamburn
Footballguy
I could also buy a mansion for $100k in 1970.not outrageous interest rates, take a look at history
Mortgage Rate History: 1970s To 2025 | Bankrate
Today’s mortgage rates aren’t all that different from the rates of years past. Here’s how they compare.www.bankrate.com
fruity pebbles
Footballguy
That’s just it. It’s a combo of rates, house prices and income. Those three together and houses have never been less affordable.I could also buy a mansion for $100k in 1970.not outrageous interest rates, take a look at history
Mortgage Rate History: 1970s To 2025 | Bankrate
Today’s mortgage rates aren’t all that different from the rates of years past. Here’s how they compare.www.bankrate.com
100K in 1970 is worth $809,456 today.I could also buy a mansion for $100k in 1970.not outrageous interest rates, take a look at history
Mortgage Rate History: 1970s To 2025 | Bankrate
Today’s mortgage rates aren’t all that different from the rates of years past. Here’s how they compare.www.bankrate.com
ETA: housing prices have increased more than inflation. Good if you've owned real estate, not so good if don't.
Increases in average home prices have far exceeded the rate of inflation. Home prices have increased 1,608% since 1970, while inflation has increased 644%.
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Ministry of Pain
Footballguy
Agreed, best to put your money in the home you own and hope for the best when you are ready to sell.
Yeah, we likely will never see interest rates anywhere close to what we saw a few years ago, sad in a sense.
But we've also been at these higher interest rates for some time and the market certainly hasn't crashed.
If it did crash i would assume it's a buying opportunity for cash buyers and since so many of them sit on the sidelines waiting for a drop, keeps the market relatively high here.
IvanKaramazov
Footballguy
In fairness, I do agree that housing prices seem kind of high. And especially considering mortgage rates, I feel bad for young people looking to buy their first home.
None of this affects me at all. We own our home outright and we expect to swap for something comparable when we retire. Whatever happens to the housing market hurts us as buyers but helps us as sellers or vice versa, so we don't really care. But if you're not already bought in, oof.
None of this affects me at all. We own our home outright and we expect to swap for something comparable when we retire. Whatever happens to the housing market hurts us as buyers but helps us as sellers or vice versa, so we don't really care. But if you're not already bought in, oof.
Battersbox
Footballguy
Yes, that was certainly meant to be taken tongue-in-cheekly.
We never have to worry about a real estate bubble because our home values don't appreciate very much because most people aren't stupid enough to endure the weather and the property taxes.
Andy Dufresne
Footballguy
Do you all think that home prices are elevated due to reduced supply as a result of SO many people and corporations buying up the inventory as investments - particularly things like VRBO and the like?
IvanKaramazov
Footballguy
I'm skeptical of this. This is the sort of phenomenon that might affect a local community for a while, but I don't know that housing supply should be that inelastic over years and years and years. But just anecdotally it does feel like things have changed, especially at the lower end of the market. Who knows -- maybe you're right.
Dr_Zaius
Footballguy
I'd like to see data, but I could believe that's part of it. I'm surprised by how many random people I know have rental properties, and these are not people who strike me as FBG rich. I have a friend who built a house just before the pandemic and told me he'll live in it for a few years, then build another one and live in that while he rents the first.
Willy
Footballguy
It's not just VRBO. I live in a suburb just north of Milwaukee. It's a mix of first time buyers wanting to get into a good school district and super high end McMansions. A lot of the Brewers and Bucks players own homes out here.
It's been nuts seeing these 3 bed houses going for 50K over asking price on the first day, then the day after they close I see them on Zillow as rentals. Again, these are not VRBOs, just single family rentals in these subdivisions where no one ever had a rental before. And seriously, does the math really work out for these investors? 450k for a house, they put up for 3400/month rent. This phenomenon is foreign to me. I don't really like it.
It's been nuts seeing these 3 bed houses going for 50K over asking price on the first day, then the day after they close I see them on Zillow as rentals. Again, these are not VRBOs, just single family rentals in these subdivisions where no one ever had a rental before. And seriously, does the math really work out for these investors? 450k for a house, they put up for 3400/month rent. This phenomenon is foreign to me. I don't really like it.
Alex P Keaton
Footballguy
I mean, pretty clearly this is the case. The question a) to what degree, and b) will it be permanent?
Given the history of landowners preying upon peasants throughout history, I’m not a big fan of this recent trend. That said, our society isn’t agrarian-based today, and at least in the US land is plentiful, so the issue might be overblown in the long run.
Battersbox
Footballguy
I believe this is certainly part of it. There are many factors at play. But ultimately, supply and demand is everything. Between 2010 and 2020, there simply weren't enough homes built in this country relative to years past. https://www.statista.com/statistics/1041889/construction-year-homes-usa/
Andy Dufresne
Footballguy
And that's likely an aftershock of the 2008 crash, right?
Dinsy Ejotuz
Footballguy
Another quarter under our belt and the economy is still booming -- all the "100% recession" calls from a year ago (remember those?) were proved wrong, stocks are at all time highs, consumers are still spending, inflation is now likely under 3%, wages continue to outpace that inflation, unemployment is low by historical standards, the Fed was able to stop raising rates without pushing beyond their historical average (at least so far). Hope everyone is enjoying the ride and didn't listen to any of the doomcasters that would have cost you a fortune.
(I've seen better charts along these lines than the one I linked -- some of them going back decades now -- but this one was handy, so I grabbed it instead.)
(I've seen better charts along these lines than the one I linked -- some of them going back decades now -- but this one was handy, so I grabbed it instead.)
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Dinsy Ejotuz
Footballguy
Saw a great chart of Minneapolis vs some other midwestern cities -- where they've been pursuing policies to encourage building, and
ETA: added the link.
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Andy Dufresne
Footballguy
If Minneapolis is "affordable" the rest of the country must really be screwed.
Most of the building I see around here is apartments.
Dinsy Ejotuz
Footballguy
It's specifically rents in the chart I linked. But yes, housing prices in a lot of cities are higher and a lot of people are priced out. There just aren't enough houses to fill demand.
SFBayDuck
Footballguy
A blog post that includes that Minneapolis chart and some context on the topic. Make it easier to build housing and (surprise!) rent, housing costs, and homelessness rates are all improved.
It's also not corporations or "VRBO" (which is mostly middle to upper-middle class landowners trying to make a buck). Recent data shows institutional investors (>100 homes owned) haven't hit 2.5% of homes purchased in any year this century. So we can't blame the big, bad corporations for this, as much as that narrative is sexy in the media.
So who can we actually point the finger at? Mostly long-time homeowners (Boomers and now Gen-Xers), who do everything they can to prevent new inventory coming online that might negatively impact their home values. It's primarly an inventory issue, fueled by NIBMYism. Add in demographics, with millennials now the largest demographic of home buyers, combined with the slowly improving but coming off of historically low levels of new homes being built, and we end up where we are today.
As for mortgage rates, I know most of us are too young to remember when our parents bought homes in the 80s and paid 17%! Where we are today is still lower than anytime from 1970-early 2000s!!
I don't mean to sound insensitive. I've been through it. Other than a condo that I bought and then lost to foreclosure before and then during the GFC, I became a first time home owner three years ago at the age of 48! I have a daughter who will be out of college in a year, and her prospects of owning a home anytime soon are bleak. The housing market is broken, there is no doubt. But let's be honest about how we got here and what it will take to improve things.
It's also not corporations or "VRBO" (which is mostly middle to upper-middle class landowners trying to make a buck). Recent data shows institutional investors (>100 homes owned) haven't hit 2.5% of homes purchased in any year this century. So we can't blame the big, bad corporations for this, as much as that narrative is sexy in the media.
So who can we actually point the finger at? Mostly long-time homeowners (Boomers and now Gen-Xers), who do everything they can to prevent new inventory coming online that might negatively impact their home values. It's primarly an inventory issue, fueled by NIBMYism. Add in demographics, with millennials now the largest demographic of home buyers, combined with the slowly improving but coming off of historically low levels of new homes being built, and we end up where we are today.
As for mortgage rates, I know most of us are too young to remember when our parents bought homes in the 80s and paid 17%! Where we are today is still lower than anytime from 1970-early 2000s!!
I don't mean to sound insensitive. I've been through it. Other than a condo that I bought and then lost to foreclosure before and then during the GFC, I became a first time home owner three years ago at the age of 48! I have a daughter who will be out of college in a year, and her prospects of owning a home anytime soon are bleak. The housing market is broken, there is no doubt. But let's be honest about how we got here and what it will take to improve things.
Orange&Blue
Footballguy
I'm curious on the size of the average home being built. Seems like they've gotten bigger and more complex.
quick google search says 1500 sqft in 1970 and 2200 in 2023. So yeah, that's why housing prices have gone up more than inflation.
Maybe account for home size in those calculations.
quick google search says 1500 sqft in 1970 and 2200 in 2023. So yeah, that's why housing prices have gone up more than inflation.
Maybe account for home size in those calculations.
Alex P Keaton
Footballguy
Given that the Minneapolis prices take a massive hit right around the time of the George Floyd riots, when businesses and residents were leaving downtown in droves, I interpret the data differently than you do.
culdeus
Footballguy
Single family homes being bought to rent out long term as investments is not helping. There are only tiny pockets where VRBO make sense to do full time, but it probably messes with places like new York
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