Agree - but the market doesn’t seem to care (yet) and barely blinked at the banking turmoil. If the market is truly forward looking I’m surprised bank failures and credit tightening didn’t result in a pull back.
I’ll play. are those people selling to rent? If not, aren’t they just going to add to the demand side. How does that help?
This whole RE market is buyer-seller gridlock. IMO, sellers with no where to go is the biggest driver. Rates are double what potential sellers are currently paying. And there’s nothing on the market to choose from. And if something comes on the market that checks the right boxes it’s a bidding war and total sh!t-show. What incentive do sellers have to list their homes? I do think a meaningful drop in rates could help. Or, if companies forced workers to come back to the office. WFH has upended the RE market not to mention corporate relos are basically dead. Brokers have been telling me the market is easily 20-30% overvalued but buyers don’t care.
Your argument is counterintuitive. On one hand, you said the market is overvalued but you are also arguing for lower rates so people can keep it overvalued. A home is not just an investment.
www.wsj.com
Exactly the point I was driving. Yes, the notion that lower rates = price stabilization or even decreases would be the product of increased supply. Right now we have higher rates = higher prices and that’s the worst possible scenario.
At $4.78 per share as of this morning.
If rates dropped to 3% tomorrow I think you’d probably see a short term spike in home prices based on current inventory…then followed by a flood of supply which would actually lead to price decreases or stabilization. Personally, I’d like to trade up and would list my house. But I have a 15 year at 2%. There are no houses to choose from. And I’m not desperate so the thought of getting dragged through bidding wars on a few good overpriced houses just isn’t appealing.
Pretty much inline with expectations. Last month was a huge drop, so this month was a tiny one (YoY).
Rate isn’t going back into the 2plus interest rates again because it was too low unless we have a severe recession or depression. Might be high 3+ or 4 % interest which may keep houses prices higher than expected.
Increasing housing supply, especially if we are expecting a flood of it, requires more workers.
Why do we think CPI inches upward in May?
See my post above. Came in as expected, which is good. However, the CPI math looks outstanding for the next 2 prints (May and June). These months in 2022 experienced massive increases, so the base effect is huge. The data is public, so everyone can do the math for themselves.
Silly post. CPI dropped a full 1% last month. Stuck? Also, based on the May and June 2022 prints, CPI YoY will plummet again with the next 2 prints due to base effect. Math is math.
www.wsj.com
But inflation is a comparison of price yoy, not percentage increase yoy.
Yes, you use the actual CPI not the percentages. CPI is now 303.363. After the 2 large CPI increases in May and June 2022, the comparator CPI print pumps to 296.311.
tradingeconomics.com
Core CPI seems sticky. It’s been between 5-6.5% for a year. That’s problematic.
Only "sticky" due to the garbage CPI shelter metric which is 40% of CPI core. Use real-time shelter data and CPI YoY core is well below 3%.
As per yesterday's Compound show, earnings are well above expectations and are starting to be projected upwards now (which means, earnings may have "bottomed" in April).
Rate hike probability fell from 22% yesterday to 14% today, after the CPI number.
BOOM! Thanks for the heads up. The only thing worse than people believing the garbage CPI shelter metric, is the members of the Fed actually using it to make forward-looking policy decisions! LOL.
I’ll explain. The rate of increase have slowed significantly. The higher rates is doing its job. The strong job market is keeping prices up. If people are selling because they can’t afford to, prices will come down. If people are selling to trade up, the prices will continue to go up.
