Vancouver considers putting housing before mountain views
Vancouver’s magnificent mountain vistas will be front and centre at city hall next week, when councillors will debate whether to ease view protection rules to make room for more construction.
So when’s the housing bubble bursting?
- Thread starter Dr. Truth
- Start date
Average asking rents in Canada reached $2,185 in June as growth slows to seven per cent: report
A new report says the average asking rent for a home in Canada reached $2,185 in June, up seven per cent compared with a year ago despite representing the slowest annual rate of growth in 13 months.
ECONOMY
Jeff Cox@JEFF.COX.7528@JEFFCOXCNBCCOM
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KEY POINTS
Jerome Powell, chairman of the US Federal Reserve, during a Senate Banking, Housing, and Urban Affairs Committee hearing in Washington, DC, US, on Tuesday, July 9, 2024.
Tierney L. Cross | Bloomberg | Getty Images
Federal Reserve Chair Jerome Powell on Tuesday expressed concern that holding interest rates too high for too long could jeopardize economic growth.
Setting the stage for a two-day appearance on Capitol Hill this week, the central bank leader said the economy remains strong as does the labor market, despite some recent cooling. Powell cited some easing in inflation, which he said policymakers stay resolute in bringing down to their 2% goal.
“At the same time, in light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” he said in prepared remarks. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”
The commentary coincides with the approaching one-year anniversary of the last time the Federal Open Market Committee raised benchmark interest rates.
The Fed’s overnight borrowing rate currently sits in a rage of 5.25%-5.50%, the highest level in some 23 years and the product of 11 consecutive hikes after inflation hit its highest level since the early 1980s.
Markets expect the Fed to begin cutting rates in September and likely following up with another quarter percentage point reduction by the end of the year. FOMC members at their June meeting, however, indicated just one cut.
“After a lack of progress toward our 2 percent inflation objective in the early part of this year, the most recent monthly readings have shown modest further progress,” Powell said. “More good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”
The statement is part of congressionally mandated semiannual updates on monetary policy. After delivering the remarks, Powell will face questioning from Senate Banking Committee members on Tuesday, then the House Financial Services Committee on Wednesday.
In past appearances, Powell has veered away from making dramatic policy announcements while having to dodge politically loaded questions from committee members. The questioning could get contentious this year as Washington is on edge amid a volatile presidential campaign.
Several Democratic committee members urged Powell to lower rates soon.
“I’m concerned that if the Fed waits too long to lower rates, the Fed could undo the undo the progress we’ve made on creating good paying jobs,” Sen. Sherrod Brown (D-Ohio), the committee chair, told Powell. “If unemployment trends upward, you must act immediately to protect Americans jobs. Workers have too much to lose if the Fed overshoots [its] inflation target and causes a completely unnecessary recession.”
However, Powell has stressed that the Fed is not political and does not get involved in taking policy sides outside of its own roles. In his prepared remarks, he emphasized the importance of “the operational independence that is needed” for the Fed to do its job.
His other remarks focused squarely on the stance of policy in relation to the broader economy. Recent data has shown the unemployment rate creeping higher and broad growth as measured by gross domestic product receding. Both the manufacturing and services sectors reported being in contraction during June.
But Powell said the data is showing that “the U.S. economy continues to expand at a solid pace” despite the deceleration in GDP.
“Private domestic demand remains robust, however, with slower but still-solid increases in consumer spending,” he said.
Fed Chair Powell says holding rates high for too long could jeopardize economic growth
PUBLISHED TUE, JUL 9 202410:00 AM EDTUPDATED TUE, JUL 9 20241:42 PM EDT
Jeff Cox@JEFF.COX.7528@JEFFCOXCNBCCOM
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KEY POINTS
- Federal Reserve Chair Jerome Powell on Tuesday expressed concern that holding interest rates too high for too long could jeopardize economic growth.
- “Reducing policy restraint too late or too little could unduly weaken economic activity and employment,” Powell said in remarks for appearances this week on Capitol Hill.
Jerome Powell, chairman of the US Federal Reserve, during a Senate Banking, Housing, and Urban Affairs Committee hearing in Washington, DC, US, on Tuesday, July 9, 2024.
Tierney L. Cross | Bloomberg | Getty Images
Federal Reserve Chair Jerome Powell on Tuesday expressed concern that holding interest rates too high for too long could jeopardize economic growth.
Setting the stage for a two-day appearance on Capitol Hill this week, the central bank leader said the economy remains strong as does the labor market, despite some recent cooling. Powell cited some easing in inflation, which he said policymakers stay resolute in bringing down to their 2% goal.
“At the same time, in light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” he said in prepared remarks. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”
The commentary coincides with the approaching one-year anniversary of the last time the Federal Open Market Committee raised benchmark interest rates.
The Fed’s overnight borrowing rate currently sits in a rage of 5.25%-5.50%, the highest level in some 23 years and the product of 11 consecutive hikes after inflation hit its highest level since the early 1980s.
Markets expect the Fed to begin cutting rates in September and likely following up with another quarter percentage point reduction by the end of the year. FOMC members at their June meeting, however, indicated just one cut.
‘Strengthen our confidence’
In recent days, Powell and his colleagues have indicated that inflation data has been somewhat encouraging after a surprise jump to start the year. Inflation as judged by the Fed’s preferred personal consumption expenditures price index was at 2.6% in May after peaking above 7% in June 2022.“After a lack of progress toward our 2 percent inflation objective in the early part of this year, the most recent monthly readings have shown modest further progress,” Powell said. “More good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”
The statement is part of congressionally mandated semiannual updates on monetary policy. After delivering the remarks, Powell will face questioning from Senate Banking Committee members on Tuesday, then the House Financial Services Committee on Wednesday.
In past appearances, Powell has veered away from making dramatic policy announcements while having to dodge politically loaded questions from committee members. The questioning could get contentious this year as Washington is on edge amid a volatile presidential campaign.
Several Democratic committee members urged Powell to lower rates soon.
“I’m concerned that if the Fed waits too long to lower rates, the Fed could undo the undo the progress we’ve made on creating good paying jobs,” Sen. Sherrod Brown (D-Ohio), the committee chair, told Powell. “If unemployment trends upward, you must act immediately to protect Americans jobs. Workers have too much to lose if the Fed overshoots [its] inflation target and causes a completely unnecessary recession.”
However, Powell has stressed that the Fed is not political and does not get involved in taking policy sides outside of its own roles. In his prepared remarks, he emphasized the importance of “the operational independence that is needed” for the Fed to do its job.
His other remarks focused squarely on the stance of policy in relation to the broader economy. Recent data has shown the unemployment rate creeping higher and broad growth as measured by gross domestic product receding. Both the manufacturing and services sectors reported being in contraction during June.
But Powell said the data is showing that “the U.S. economy continues to expand at a solid pace” despite the deceleration in GDP.
“Private domestic demand remains robust, however, with slower but still-solid increases in consumer spending,” he said.
Home Buyers Remain on Strike, Housing Market Still Frozen as Prices Are Too High, Mortgage Rates Still 7%
by Wolf Richter • Jul 10, 2024 • 5 Comments
Powell to Congress: Higher rates are “the absolute best thing we can do for the housing market…” – “…particularly for younger people who are not yet in the housing market.”
By Wolf Richter for WOLF STREET.
However we want to interpret this, it’s fascinating. Powell told Congress on Tuesday: “There’s no question that higher interest rates are making it harder to buy homes in the short term. But in the longer term, this is the best thing, particularly for younger people who are not yet in the housing market.”Did he mean that younger people would benefit from lower home prices, or at least an end of the home-price increases, and that higher rates are going to accomplish that? I don’t know. To speak that truth would be, sacrilege?
“Higher interest rates” means higher than they used to be, so even if the Fed cuts its rates a few times in the future, they’d still be much higher than before the pandemic, and mortgage rates would still be much higher as well.
The purpose of the higher rates is to “get back to 2% inflation for the whole economy,” he said, according to MarketWatch, “so that the housing market can be on a better foundation.”
These higher rates are “the absolute best thing we can do for the housing market and for the economy [so as] to sustainably bring inflation back down, so that people aren’t talking about it anymore,” he said.
Higher for Longer: 7% mortgages a year so far.
According to the Mortgage Bankers Association today, the average conforming 30-year fixed mortgage rate was 7.0% in the latest reporting week.The 7% mortgage has been a fixture in the housing market for a year. This measure of the average mortgage rate has hovered around 7% since July 2023, ranging from 6.75% at peak-Rate-Cut Mania in January 2024 to 7.9% in October 2024. It has been above 6% since September 2022.
People who financed a home purchase with mortgage rates at 6% or 7% or over 7% since September 2022, hoping that they would be able to refinance that mortgage quickly into a 4% mortgage, have gotten stock with their mortgage payments.
These new homeowners with 7% mortgages and big mortgage payments may be forced to cut back spending on other goods and services, thereby lowering demand for those goods and services. The Fed is counting on them to do that. They’re one of the official transmission channels of Fed policy rates to the overall economy, to lower demand, and thereby lower inflationary pressures.
Potential homebuyers today have to do the same calculus: When will mortgage rates drop far enough to make it worthwhile refinancing a 7% mortgage, given the points and expenses involved in a refi? This is a tough call – especially since renting an equivalent house is now a lot less costly on a monthly basis.
Compared to the pre-QE era, a 7% mortgage rate is not breaking new ground: From 1970 through 2001, mortgage rates ranged from 7% to 18%. Lower home prices made those higher mortgage rates work.
But ultra-low mortgage rates fuel housing bubbles. When mortgage rates dropped as low as 5.5% in 2005, they fueled Housing Bubble 1, which led to the Housing Bust from 2006-2012. The pandemic-era below-3% mortgages did a wonderful job inflating housing prices in a historic manner.
But now, these 7% mortgages conflict with the too-high prices. And something has to give.
With prices too high, buyers’ strike continues.
Mortgage applications to purchase a home in the latest reporting week remained near the historic lows in the data going back to 1995, and have been there over the past 12 months. The record lows in the data were set in November 2023 and February 2024. Note the mini-spike in January 2024 at the peak of Rate-Cut Mania.Mortgage applications to purchase a home in the latest week plunged by almost half from the same period in 2021 and 2019:
- From 2023: -13%
- From 2022: -36%
- From 2021: -47%
- From 2019: -48%
Inventory has been rising, as sales plunged amid rising new listings, and so active listings exploded in some metros on a year-over-year basis in June, and for the US overall, they jumped by 37% year-over-year. And there’s now plenty to choose from, but prices are too high.
Mortgage applications to refinance a home collapsed in 2022 when mortgage rates surged, and have remained steadfastly at these collapsed levels. Refis without cash-out have nearly vanished. Most of the few refis that are still taking place are cash-out refis.
In the latest reporting week, applications for refinance mortgages edged down further and were down by 84% from the same week in 2021 and by 70% from the same week in 2019.
Refis are a function of mortgage rates. They had experienced a historic boom when mortgage rates plunged to the 2.5%-3.0% range. And they collapsed when mortgage rates began to surge starting in early 2022.
The chart shows the inverse relationship between refi applications (red) and mortgage rates (blue).
The occupancy rates are down since demand didn't keep pace with the increase in listings.
I'd like to see it broken down by state or MetroThe occupancy rates are down since demand didn't keep pace with the increase in listings.
The occupancy rates are down since demand didn't keep pace with the increase in listings.
Interesting.
Boo hoo bitch, you’re wasting your whiteness crying about bullshit. No excuse for any honky to struggle
Supply and demand + rising insurance costs
Florida is going to be interesting next year.
Bag holders are in trouble.
Airbnb Foreclosures have begun
How to tell if an investment property was foreclosed on. Person selling this was complaining on public forums that they bought this as first Airbnb, overpaid in ‘22 & rentals totally dried up. From the start this was a BAD deal & here’s why:
At the beginning (and peak) of the Great Financial Crisis this cabin sold for $169,000. Here are the sales numbers and how you can easily translate this.
‘06 - $169,000
‘12 - $152,500 (this could be the foreclosure amount. Often the transaction of a DIL or foreclosure will show up in the transaction data and the amount remaining on the loan that the bank foreclosed on will be displayed)
‘14 - $92,800 Bank more than likely held on their books for a couple of years and sold as an auction. An individual called the “Asset Mgr” handles the disposal of real estate foreclosure for the bank. How do I know? I went through this with multiple homes in ‘09-‘10 that I lost to foreclosure.
‘17 - $135,000 - Buyer of the foreclosure in 2014 made a little profit. Made more if they rented it out some for the 3 yrs held.
‘22 - $432,500 - Perfect example of bubble purchase and Airbnb wannabe FOMO.
‘23 - Buyer started publicly posting on Facebook STR groups that she was very disappointed with how her Airbnb hustle had turned out. Said she was losing tons of money each month. Places cabin back on market.
‘24 - $405,142 - Foreclosure on note amount. If you look through the history of ‘23 and ‘24, you’ll see that someone almost bought in Oct 2023 but backed out (luckily for them) and someone again in Dec 2023. More than likely fell apart because of appraisal or buyers saw it wasn’t worth $400K at a 7% rate
If the bank note was in fact $405,142, the 2022 buyer put around $50,000 down. They lost ALL of that and now their credit is ruined for the next 5-7 years.
I could build this cabin for around $175,000. When you’re analyzing a potential investment, if you roll up and it looks like a nothing more than a cute little shack and the asking price is close to 1/2 million dollars…run.
So many people got sucked into the Airbnb craze and the chickens are coming home to roost in some of these vacation markets. The realtor’s firm who sold this in 2022 was very active on STR Facebook groups pushing this area as a great investment location. I’m sorry to say, but Mineral Bluff “ain’t” a worldwide vacation destination unfortunately. Be careful who you listen to.
How to tell if an investment property was foreclosed on. Person selling this was complaining on public forums that they bought this as first Airbnb, overpaid in ‘22 & rentals totally dried up. From the start this was a BAD deal & here’s why:
At the beginning (and peak) of the Great Financial Crisis this cabin sold for $169,000. Here are the sales numbers and how you can easily translate this.
‘06 - $169,000
‘12 - $152,500 (this could be the foreclosure amount. Often the transaction of a DIL or foreclosure will show up in the transaction data and the amount remaining on the loan that the bank foreclosed on will be displayed)
‘14 - $92,800 Bank more than likely held on their books for a couple of years and sold as an auction. An individual called the “Asset Mgr” handles the disposal of real estate foreclosure for the bank. How do I know? I went through this with multiple homes in ‘09-‘10 that I lost to foreclosure.
‘17 - $135,000 - Buyer of the foreclosure in 2014 made a little profit. Made more if they rented it out some for the 3 yrs held.
‘22 - $432,500 - Perfect example of bubble purchase and Airbnb wannabe FOMO.
‘23 - Buyer started publicly posting on Facebook STR groups that she was very disappointed with how her Airbnb hustle had turned out. Said she was losing tons of money each month. Places cabin back on market.
‘24 - $405,142 - Foreclosure on note amount. If you look through the history of ‘23 and ‘24, you’ll see that someone almost bought in Oct 2023 but backed out (luckily for them) and someone again in Dec 2023. More than likely fell apart because of appraisal or buyers saw it wasn’t worth $400K at a 7% rate
If the bank note was in fact $405,142, the 2022 buyer put around $50,000 down. They lost ALL of that and now their credit is ruined for the next 5-7 years.
I could build this cabin for around $175,000. When you’re analyzing a potential investment, if you roll up and it looks like a nothing more than a cute little shack and the asking price is close to 1/2 million dollars…run.
So many people got sucked into the Airbnb craze and the chickens are coming home to roost in some of these vacation markets. The realtor’s firm who sold this in 2022 was very active on STR Facebook groups pushing this area as a great investment location. I’m sorry to say, but Mineral Bluff “ain’t” a worldwide vacation destination unfortunately. Be careful who you listen to.
Took another L. 
The Bay!
I know where that is in Uptown.
That joint nice...
Why a 40-Year (or Longer) Mortgage Is a Terrible Idea
Non-conforming mortgages can offer longer terms (40 or even 50 years) that translate into smaller monthly payments. But the downsides are pretty steep.
Housing - Tips, Tricks and Hacks for Doing Everything Better | Lifehacker
Everything you ever wanted to know about Housing - Streaming. News, stories, photos, videos and more.
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That ain’t the Bay it’s the Central Valley FOH
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