rates moving up fast

[SDEngineer]

[quote=AN][quote=JohnAlt91941]

Prices may take a few months to adjust to higher interest rates, but they will adjust. And lots of folks just on this blog have been waiting for years to buy, not just a few months.

I can remember earning close to 10% on a CD in the mid 1980’s. What were mortgage rates then?
[/quote]
Mortgage rates in the mid 80s was around mid teens.[/quote]

It’s important to note though that in past cycles, even when interest rates were sky-high, it didn’t lead to a significant deflationary effect on price.

I think the issue is that in a growing population (and our population continues to grow), housing needs to continually be built – and an inflationary environment makes new homes even more expensive to build, which can lead to a supply shortage. It’s the old supply vs. demand curve.

[4plexowner]

“It’s the old supply vs. demand curve.”

If you want to reduce the issue to simple supply vs demand you need to address the 14 million housing units that are currently sitting vacant

You also need to address the fact that as the economy declines housing density increases (more people living in each housing unit) so the demand for new housing decreases as economic conditions decline

It’s also worth noting that the last time mortgage interest rates were high (mid-teens + in the 1980’s) inflation was feeding into wages so increasing incomes could support larger mortgage payments and the PSYCHOLOGY of rising wages made the rising interest rates less onerous – contrast that environment with today’s where incomes are not only NOT rising but people are in fear of losing their jobs and not finding another one

[4plexowner]

“It’s the old supply vs. demand curve.”

If you want to reduce the issue to simple supply vs demand you need to address the 14 million housing units that are currently sitting vacant

You also need to address the fact that as the economy declines housing density increases (more people living in each housing unit) so the demand for new housing decreases as economic conditions decline

It’s also worth noting that the last time mortgage interest rates were high (mid-teens + in the 1980’s) inflation was feeding into wages so increasing incomes could support larger mortgage payments and the PSYCHOLOGY of rising wages made the rising interest rates less onerous – contrast that environment with today’s where incomes are not only NOT rising but people are in fear of losing their jobs and not finding another one

[4plexowner]

“It’s the old supply vs. demand curve.”

If you want to reduce the issue to simple supply vs demand you need to address the 14 million housing units that are currently sitting vacant

You also need to address the fact that as the economy declines housing density increases (more people living in each housing unit) so the demand for new housing decreases as economic conditions decline

It’s also worth noting that the last time mortgage interest rates were high (mid-teens + in the 1980’s) inflation was feeding into wages so increasing incomes could support larger mortgage payments and the PSYCHOLOGY of rising wages made the rising interest rates less onerous – contrast that environment with today’s where incomes are not only NOT rising but people are in fear of losing their jobs and not finding another one

[4plexowner]

“It’s the old supply vs. demand curve.”

If you want to reduce the issue to simple supply vs demand you need to address the 14 million housing units that are currently sitting vacant

You also need to address the fact that as the economy declines housing density increases (more people living in each housing unit) so the demand for new housing decreases as economic conditions decline

It’s also worth noting that the last time mortgage interest rates were high (mid-teens + in the 1980’s) inflation was feeding into wages so increasing incomes could support larger mortgage payments and the PSYCHOLOGY of rising wages made the rising interest rates less onerous – contrast that environment with today’s where incomes are not only NOT rising but people are in fear of losing their jobs and not finding another one

[4plexowner]

“It’s the old supply vs. demand curve.”

If you want to reduce the issue to simple supply vs demand you need to address the 14 million housing units that are currently sitting vacant

You also need to address the fact that as the economy declines housing density increases (more people living in each housing unit) so the demand for new housing decreases as economic conditions decline

It’s also worth noting that the last time mortgage interest rates were high (mid-teens + in the 1980’s) inflation was feeding into wages so increasing incomes could support larger mortgage payments and the PSYCHOLOGY of rising wages made the rising interest rates less onerous – contrast that environment with today’s where incomes are not only NOT rising but people are in fear of losing their jobs and not finding another one

[4plexowner]

[img_assist|nid=11184|title=Bond bubble bursts?|desc=|link=node|align=left|width=460|height=284]

I find this chart interesting – this is the weekly price of the 30 yr US treasury bond

one of my beliefs is that financial bubbles ALWAYS fully retrace themselves – notice how the bond bubble rally that started in Nov ’08 has pretty much been retraced now – also notice the blip in Mar ’09 after Bernanke said the Fed would be buying bonds – that blip was pretty short lived – what is Ben going to do next?

[4plexowner]

[img_assist|nid=11184|title=Bond bubble bursts?|desc=|link=node|align=left|width=460|height=284]

I find this chart interesting – this is the weekly price of the 30 yr US treasury bond

one of my beliefs is that financial bubbles ALWAYS fully retrace themselves – notice how the bond bubble rally that started in Nov ’08 has pretty much been retraced now – also notice the blip in Mar ’09 after Bernanke said the Fed would be buying bonds – that blip was pretty short lived – what is Ben going to do next?

[4plexowner]

[img_assist|nid=11184|title=Bond bubble bursts?|desc=|link=node|align=left|width=460|height=284]

I find this chart interesting – this is the weekly price of the 30 yr US treasury bond

one of my beliefs is that financial bubbles ALWAYS fully retrace themselves – notice how the bond bubble rally that started in Nov ’08 has pretty much been retraced now – also notice the blip in Mar ’09 after Bernanke said the Fed would be buying bonds – that blip was pretty short lived – what is Ben going to do next?

[4plexowner]

[img_assist|nid=11184|title=Bond bubble bursts?|desc=|link=node|align=left|width=460|height=284]

I find this chart interesting – this is the weekly price of the 30 yr US treasury bond

one of my beliefs is that financial bubbles ALWAYS fully retrace themselves – notice how the bond bubble rally that started in Nov ’08 has pretty much been retraced now – also notice the blip in Mar ’09 after Bernanke said the Fed would be buying bonds – that blip was pretty short lived – what is Ben going to do next?

[4plexowner]

[img_assist|nid=11184|title=Bond bubble bursts?|desc=|link=node|align=left|width=460|height=284]

I find this chart interesting – this is the weekly price of the 30 yr US treasury bond

one of my beliefs is that financial bubbles ALWAYS fully retrace themselves – notice how the bond bubble rally that started in Nov ’08 has pretty much been retraced now – also notice the blip in Mar ’09 after Bernanke said the Fed would be buying bonds – that blip was pretty short lived – what is Ben going to do next?

[Rt.66]

[quote=4plexowner][img_assist|nid=11184|title=Bond bubble bursts?|desc=|link=node|align=left|width=460|height=284]

I find this chart interesting – this is the weekly price of the 30 yr US treasury bond

one of my beliefs is that financial bubbles ALWAYS fully retrace themselves – notice how the bond bubble rally that started in Nov ’08 has pretty much been retraced now – also notice the blip in Mar ’09 after Bernanke said the Fed would be buying bonds – that blip was pretty short lived – what is Ben going to do next? [/quote]

Great chart, thanks.

Benny had to move heaven and earth to get rates down in an environment that dictates high rates. Seems it couldn’t last.

[Rt.66]

[quote=4plexowner][img_assist|nid=11184|title=Bond bubble bursts?|desc=|link=node|align=left|width=460|height=284]

I find this chart interesting – this is the weekly price of the 30 yr US treasury bond

one of my beliefs is that financial bubbles ALWAYS fully retrace themselves – notice how the bond bubble rally that started in Nov ’08 has pretty much been retraced now – also notice the blip in Mar ’09 after Bernanke said the Fed would be buying bonds – that blip was pretty short lived – what is Ben going to do next? [/quote]

Great chart, thanks.

Benny had to move heaven and earth to get rates down in an environment that dictates high rates. Seems it couldn’t last.

[Rt.66]

[quote=4plexowner][img_assist|nid=11184|title=Bond bubble bursts?|desc=|link=node|align=left|width=460|height=284]

I find this chart interesting – this is the weekly price of the 30 yr US treasury bond

one of my beliefs is that financial bubbles ALWAYS fully retrace themselves – notice how the bond bubble rally that started in Nov ’08 has pretty much been retraced now – also notice the blip in Mar ’09 after Bernanke said the Fed would be buying bonds – that blip was pretty short lived – what is Ben going to do next? [/quote]

Great chart, thanks.

Benny had to move heaven and earth to get rates down in an environment that dictates high rates. Seems it couldn’t last.

[Rt.66]

[quote=4plexowner][img_assist|nid=11184|title=Bond bubble bursts?|desc=|link=node|align=left|width=460|height=284]

I find this chart interesting – this is the weekly price of the 30 yr US treasury bond

one of my beliefs is that financial bubbles ALWAYS fully retrace themselves – notice how the bond bubble rally that started in Nov ’08 has pretty much been retraced now – also notice the blip in Mar ’09 after Bernanke said the Fed would be buying bonds – that blip was pretty short lived – what is Ben going to do next? [/quote]

Great chart, thanks.

Benny had to move heaven and earth to get rates down in an environment that dictates high rates. Seems it couldn’t last.

[Author]

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