where do you think the fed funds/SOFR needs to drop to get permits/new supply started up again? Developers in construction loans are usually pricing off of SOFR no? I would think single family developers have a little more wiggle room as they can do rate buy-downs vs multi-family who just sell?
In late 2022, mortgage rates fell from 7.37% to 6%, and permits started to grow. Not that it was working from a really low base; the forward-looking builder survey data had a slight uptick in the last report, so if rates keep on heading lower toward 6%, that should be able to grow permits after these last four-month declines in permits.
The problem with crashbros is they’re thinking median wages is for both couples, everybody is making the same pay and everybody is working at tech jobs 😂.
Total existing-home sales will be up this year, not a lot, but it will be a positive year; with rates falling now and not heading toward 8% like it did last year, it will create a shallow bar to show positive YoY data prints with some of the weekly and monthly data in October & Early November, which I would mostly ignore because it's simply a low bar
@@peterbedford2610 Only because it's the lowest bar ever recorded in history. I know many people had higher sales forecasts early on, but I wrote that article in March about February sales being the monthly year peak because of rates. Now, if rates drop in the 2nd half of the year and we get a 12-14 week pick up on apps, then you rise up a degree, this is why weekly apps and our pending contract data is an early indicator of sales that will take months to show up in the reports
Other countries are tied to short-term debt products, which gives them more buying power during low interest rate periods. However, that only works if rates never go higher Many countries have higher short-term rates, and their loans are recasting, which is a significant payment shock. For example, Canada is now trying 90-year loan modification to keep the cost of homeowners low enough for them to stay in their homes. 30-year fix, even though the rate is higher vs a short-term debt product. It's a fixed debt cost, and your wages rise yearly, so naturally, your debt cost becomes less as you age. Also, when your wages rise more during an inflationary period, it's a significant cost hedge against inflation. Mainly, there is no recast risk in payments.
A lot of the value is in the fixed vs adjustable behavior. The stability of fixed rate allows families to focus on other parts of their lives and gives peace of mind which is great for discretionary income spending in capitalism. I'm always baffled other developed nations don't even experiment with it let alone offer it.
If there is a cut then that unleashes demand which will drive up prices. The builders need help from municipalities in building more affordable housing. Our biggest 80 year problem is suburban sprawl. Is a vicious cycle of eating land and booms and busts.
And they don't need municipalities trying to create housing that discriminates people because they only want multiple neighborhoods of millionaires. So they force builders to make high priced MCmansions. Well that's done because even too earners can't afford this new junk. Stop the silly ordinances, stop the excessive permit costs, and let them build what the market demands.
@@peterbedford2610 It's a work in progress. Also, we don't do doom porn here; most of the interviews are business-related, and only Sarah and I talk about economics in general terms.
Nicely produced guys. I am a podcast subscriber but glad I found you here. I prefer this medium.
Keep going , you are doing a great job with the interviews
where do you think the fed funds/SOFR needs to drop to get permits/new supply started up again? Developers in construction loans are usually pricing off of SOFR no? I would think single family developers have a little more wiggle room as they can do rate buy-downs vs multi-family who just sell?
In late 2022, mortgage rates fell from 7.37% to 6%, and permits started to grow. Not that it was working from a really low base; the forward-looking builder survey data had a slight uptick in the last report, so if rates keep on heading lower toward 6%, that should be able to grow permits after these last four-month declines in permits.
The problem with crashbros is they’re thinking median wages is for both couples, everybody is making the same pay and everybody is working at tech jobs 😂.
Transactions slowing down even more this year.
Total existing-home sales will be up this year, not a lot, but it will be a positive year; with rates falling now and not heading toward 8% like it did last year, it will create a shallow bar to show positive YoY data prints with some of the weekly and monthly data in October & Early November, which I would mostly ignore because it's simply a low bar
Thanks for clearing that up. So, this year transactions will be slightly up ..
@@peterbedford2610 Only because it's the lowest bar ever recorded in history. I know many people had higher sales forecasts early on, but I wrote that article in March about February sales being the monthly year peak because of rates. Now, if rates drop in the 2nd half of the year and we get a 12-14 week pick up on apps, then you rise up a degree, this is why weekly apps and our pending contract data is an early indicator of sales that will take months to show up in the reports
Can you explain why our 30 year fixed is so great and why it makes us unique compared to other countries?
Other countries are tied to short-term debt products, which gives them more buying power during low interest rate periods.
However, that only works if rates never go higher
Many countries have higher short-term rates, and their loans are recasting, which is a significant payment shock. For example, Canada is now trying 90-year loan modification to keep the cost of homeowners low enough for them to stay in their homes.
30-year fix, even though the rate is higher vs a short-term debt product. It's a fixed debt cost, and your wages rise yearly, so naturally, your debt cost becomes less as you age.
Also, when your wages rise more during an inflationary period, it's a significant cost hedge against inflation.
Mainly, there is no recast risk in payments.
A lot of the value is in the fixed vs adjustable behavior. The stability of fixed rate allows families to focus on other parts of their lives and gives peace of mind which is great for discretionary income spending in capitalism. I'm always baffled other developed nations don't even experiment with it let alone offer it.
If there is a cut then that unleashes demand which will drive up prices. The builders need help from municipalities in building more affordable housing. Our biggest 80 year problem is suburban sprawl. Is a vicious cycle of eating land and booms and busts.
And they don't need municipalities trying to create housing that discriminates people because they only want multiple neighborhoods of millionaires. So they force builders to make high priced MCmansions. Well that's done because even too earners can't afford this new junk.
Stop the silly ordinances, stop the excessive permit costs, and let them build what the market demands.
No wonder your viewership is this low with daily video cadence. 😂😂
Top 10 national business news podcast, but that's the audio side, We are working on our UA-cam game
I think you guys are improving quite a bit. I subbed
@@peterbedford2610 It's a work in progress. Also, we don't do doom porn here; most of the interviews are business-related, and only Sarah and I talk about economics in general terms.