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Daniel
ParticipantI have to say that I’ve noticed some very odd moves on Zillow as well. In my neighborhood, one house “went down” by $45K over the last 30 days, while an identical house a couple of blocks away “went up” by $45K. One is now valued at $800K, while the other is valued at over $1M. The funny thing is, I know both houses, and the cheaper one is the better one (better location, upgrades, etc). It seems that the grain of salt for Zillow estimates grows larger by the day.
ParticipantI have to say that I’ve noticed some very odd moves on Zillow as well. In my neighborhood, one house “went down” by $45K over the last 30 days, while an identical house a couple of blocks away “went up” by $45K. One is now valued at $800K, while the other is valued at over $1M. The funny thing is, I know both houses, and the cheaper one is the better one (better location, upgrades, etc). It seems that the grain of salt for Zillow estimates grows larger by the day.
ParticipantI have to say that I’ve noticed some very odd moves on Zillow as well. In my neighborhood, one house “went down” by $45K over the last 30 days, while an identical house a couple of blocks away “went up” by $45K. One is now valued at $800K, while the other is valued at over $1M. The funny thing is, I know both houses, and the cheaper one is the better one (better location, upgrades, etc). It seems that the grain of salt for Zillow estimates grows larger by the day.
ParticipantI’m not too concerned about raising the conforming limit for Fannie and Freddie. These are still private enterprises, and they have pretty good incentives not to guarantee junk loans. They’re trying to make a buck first, and appease the politicians second. Sure, if they fail, we’re on the hook for their losses, but I bet they won’t fail.
However, I’m very concerned about the new FHA limits and the entire down-payment assistance issue. The FHA is an arm of the government, and they could potentially underwrite or guarantee a lot of junk loans. If they take big losses, they’ll just get money allocated in next year’s budget to cover them (like the Post Office, for instance). It wouldn’t be even called a bailout. It would simply be the government (us) paying the bill for some government expense, like the Iraq war. I bet there wouldn’t even be an uproar over it (there would certainly be one if Fannie or Freddie went under and got bailed out).
Truth to be said, the FHA has done a pretty good job historically, as it’s been mostly in the black over the years. But that was partly because they were dealing with small loans. Can they correctly price risk for jumbos? I doubt they can, and I’m sure there will be great political pressure for them to be lax. That’s why it’s the FHA that worries me, not the GSEs.
ParticipantI’m not too concerned about raising the conforming limit for Fannie and Freddie. These are still private enterprises, and they have pretty good incentives not to guarantee junk loans. They’re trying to make a buck first, and appease the politicians second. Sure, if they fail, we’re on the hook for their losses, but I bet they won’t fail.
However, I’m very concerned about the new FHA limits and the entire down-payment assistance issue. The FHA is an arm of the government, and they could potentially underwrite or guarantee a lot of junk loans. If they take big losses, they’ll just get money allocated in next year’s budget to cover them (like the Post Office, for instance). It wouldn’t be even called a bailout. It would simply be the government (us) paying the bill for some government expense, like the Iraq war. I bet there wouldn’t even be an uproar over it (there would certainly be one if Fannie or Freddie went under and got bailed out).
Truth to be said, the FHA has done a pretty good job historically, as it’s been mostly in the black over the years. But that was partly because they were dealing with small loans. Can they correctly price risk for jumbos? I doubt they can, and I’m sure there will be great political pressure for them to be lax. That’s why it’s the FHA that worries me, not the GSEs.
ParticipantI’m not too concerned about raising the conforming limit for Fannie and Freddie. These are still private enterprises, and they have pretty good incentives not to guarantee junk loans. They’re trying to make a buck first, and appease the politicians second. Sure, if they fail, we’re on the hook for their losses, but I bet they won’t fail.
However, I’m very concerned about the new FHA limits and the entire down-payment assistance issue. The FHA is an arm of the government, and they could potentially underwrite or guarantee a lot of junk loans. If they take big losses, they’ll just get money allocated in next year’s budget to cover them (like the Post Office, for instance). It wouldn’t be even called a bailout. It would simply be the government (us) paying the bill for some government expense, like the Iraq war. I bet there wouldn’t even be an uproar over it (there would certainly be one if Fannie or Freddie went under and got bailed out).
Truth to be said, the FHA has done a pretty good job historically, as it’s been mostly in the black over the years. But that was partly because they were dealing with small loans. Can they correctly price risk for jumbos? I doubt they can, and I’m sure there will be great political pressure for them to be lax. That’s why it’s the FHA that worries me, not the GSEs.
ParticipantI’m not too concerned about raising the conforming limit for Fannie and Freddie. These are still private enterprises, and they have pretty good incentives not to guarantee junk loans. They’re trying to make a buck first, and appease the politicians second. Sure, if they fail, we’re on the hook for their losses, but I bet they won’t fail.
However, I’m very concerned about the new FHA limits and the entire down-payment assistance issue. The FHA is an arm of the government, and they could potentially underwrite or guarantee a lot of junk loans. If they take big losses, they’ll just get money allocated in next year’s budget to cover them (like the Post Office, for instance). It wouldn’t be even called a bailout. It would simply be the government (us) paying the bill for some government expense, like the Iraq war. I bet there wouldn’t even be an uproar over it (there would certainly be one if Fannie or Freddie went under and got bailed out).
Truth to be said, the FHA has done a pretty good job historically, as it’s been mostly in the black over the years. But that was partly because they were dealing with small loans. Can they correctly price risk for jumbos? I doubt they can, and I’m sure there will be great political pressure for them to be lax. That’s why it’s the FHA that worries me, not the GSEs.
ParticipantI’m not too concerned about raising the conforming limit for Fannie and Freddie. These are still private enterprises, and they have pretty good incentives not to guarantee junk loans. They’re trying to make a buck first, and appease the politicians second. Sure, if they fail, we’re on the hook for their losses, but I bet they won’t fail.
However, I’m very concerned about the new FHA limits and the entire down-payment assistance issue. The FHA is an arm of the government, and they could potentially underwrite or guarantee a lot of junk loans. If they take big losses, they’ll just get money allocated in next year’s budget to cover them (like the Post Office, for instance). It wouldn’t be even called a bailout. It would simply be the government (us) paying the bill for some government expense, like the Iraq war. I bet there wouldn’t even be an uproar over it (there would certainly be one if Fannie or Freddie went under and got bailed out).
Truth to be said, the FHA has done a pretty good job historically, as it’s been mostly in the black over the years. But that was partly because they were dealing with small loans. Can they correctly price risk for jumbos? I doubt they can, and I’m sure there will be great political pressure for them to be lax. That’s why it’s the FHA that worries me, not the GSEs.
ParticipantVery nice charts, esmith. But why change the colors on the last plot? It confused me quite a bit until I figured it out.
ParticipantVery nice charts, esmith. But why change the colors on the last plot? It confused me quite a bit until I figured it out.
ParticipantVery nice charts, esmith. But why change the colors on the last plot? It confused me quite a bit until I figured it out.
ParticipantVery nice charts, esmith. But why change the colors on the last plot? It confused me quite a bit until I figured it out.
ParticipantVery nice charts, esmith. But why change the colors on the last plot? It confused me quite a bit until I figured it out.
ParticipantOh, Joe Middle Class certainly experiences the 12% increase, no doubt about that. I’m arguing that it’s a fair increase (not inflation), because he’s fatter and older than he used to be, and he gets MRIs and CAT scans that he didn’t used to get.
So yes, in a nutshell, the overall cost of living is going up faster than the CPI, because people’s standards have gone up. They consume more of everything. Even if inflation were absolutely zero, people would still pay way more on health care now than 10 years ago, because they go to the doctor way more often and gobble pills like there’s no tomorrow.
That’s my main point: the increase in cost of living that people “feel” is not necessarily inflation. They do get more or better goods or services.
And on to your last point: of course they’re not the same goods as 20 years ago. They don’t make Oldsmobiles anymore. But as long as the change is continuous, the CPI makes sense. Let me give you an example: say the Olds Cutlass is in the CPI basket. It costs $11,000 in 1990, and same model costs $11,220 in 1991, so the 1991 CPI is 2%. But they stop making it in 1992. What to do now? Answer: change the car to a Camry. But a Camry costs much more (say, $14,420) in 1992, is that fair? Answer: find out how much the same model Camry cost in 1991 and use that info. If the Camry was $14,000 in 1991, then the 1992 CPI is 3%. Joe Middle Class, who bought a Cutlass in 1991 and a Camry in 1992, feels a much bigger price increase than 3%, but he changes from one car to another. Only 3% is inflation. The rest is improvement.
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