More rate increases ahead, next in September 21: Fed will keep raising rates until inflation cools down, minutes show (axios.com) Rightfully claims gas prices can go back up again. Smart people. They may raise .50% this close to the midterm election, but more rate increases are on the way.
I read that gas is expected to increase again. The impact that will have on the currently dropping (stopped?) inflation is unknown. The feds will have more data before a rate decision is made. These notes pretty much just say everything is on the table. May increase. May lower. May stay the same.
Although the minutes were recently released the meeting took place a month ago. With the slowdown in housing the rate hike although likely will be very modest, maybe 0.25%. US home prices could sink as much as 15% in a market crash but a moderate downturn is still more likely, Fitch says The Fed Sees Housing Trouble Ahead
I've been down this road with you before. It's always ends with you moving the goalposts with semantics. Where does it say rate increases in September? Their comment was about how lower commodity prices cannot be relied on as "a basis for sustained lower inflation". They made no comments on the likelihood of gas prices going up. They don't mention the midterms or any timing whatsoever. They make no comments on a .5% increase. They merely said they will continue to raise interest rates to combat inflation, as warranted. All in all, just poor form.
Even 15% isn’t much of a “crash” in areas that are up as much as 100% or more in barely a year. Giving back 15% would hardly be “a crash”, I’d call that a very modest correction. A crash would require to give up that 100% gain and beyond (ala 2007-2009 re bubble)
"The big picture: The minutes largely reflect the tone of Fed chairman Jerome Powell, who told reporters after the policy meeting the central bank would eventually slow the pace of interest rate hikes. That sparked a stock market rally, with some traders interpreting that comment to mean the Fed would soon ease up its aggressive stance." [snip] "The bottom line: The minutes show Fed officials' commitment to bring inflation down and point out the downside of wavering on this stance. The Fed faced a "significant risk" that high inflation could become entrenched if the public started to doubt the Fed's commitment to adjusting interest rates, the minutes say."
In our market, prices have yet to fall. The market has slowed down, but prices haven't stopped going up. A home in my neighborhood that sold for $440,000 a year ago in spring just sold in August for $650,000. I live in Florida so I expect a correction, not a bust. There are too many people moving to Florida for a bust to occur. Tampa which led the nation in housing increases may be the exception. They probably have room for a bigger correction. To be sure, some states will see some busts. Mortgage applications and mortgage originations hit bottom back in the spring. The markets are bound to slow down resulting in corrections and busts.
It actually means that the rate of inflation is dropping quicker than originally anticipated obviating the need for a larger interest rate hike. In view of your obsession with the inflation rate (a very real problem by the way) one would think that you would be pleased that the rate is dropping.
Despite the same demographics of retirees migrating south, FL (along with Arizona, a state with similar retiree settlements) was one of the epicenters of the real estate collapse in 2007. The only difference this time is I don’t think the builders overbuilt, if anything the years of under-building (reaction to ‘07 crash) contributed to tighter supply and a sharper increase in prices. Builders now want to build more, but they are supply-chain constrained which stopped them from keeping up (let alone overbuild). So that is likely to create some choppiness as they bump up to the limits of housing affordability and balance sheet risk if they have to start spec-building (no contract, or buyer without financing).
The biggest differences between 08 and now are that homeowners have a significantly greater equity cushion in their homes today (upon acquisition, not based on price inflation), and strippers in Vegas aren't buying 6 homes with no deposits and 110% financing. (ny favoritew scene in The Big Short)
Im guessing that “equity cushion” is not entirely true as to people who bought in the last 12 months or particularly at the peak of this market. Although at least we can (hopefully) assume there won’t be a subprime crisis driven by financially illiterate “investors” or homebuilders gone wild. I remember back in ‘07 I used to make fun of “hairdressers turned real estate moguls”. With many seemingly thinking this cycle has peaked, I could see some of the corporate landlords deciding to shift to capital preservation mode instead of acquisition mode, and that would apply negative pressures on real estate prices. Who knows though. My original inclination was a pandemic would be more devastating to real estate, didn’t predict it to be pretty stable followed by a quick bubble.
I took the time to highlight your OP was factually invalid and/or fallaciously manipulative. And this is your response? I'd rather you acknowledge your errors or apologize to the board. You have an established history of misrepresenting facts, calling people names and falsely spiking the ball. What are your motivations for posting here? Why should anyone engage with you?
Take out the fact that Biden sold down the US SPR to achieve higher oil supply and I'd be ecstatic that inflation could come down all by itself without higher interest rates. It's 100% certain that the dems fiscal policies haven't helped and have only hurt. The fed is in this fight by itself. Biden said as much when he asked for a meeting with Jerome Powell back about 3 months ago.
