Look for Trump to begin the war of words against the Fed this week….

[-lowcountrydawg]

He needs interest rates to drop. And there is a whole generation of would be first time homebuyers that will be on his side.

At the very least he needs to challenge the way they calculate cpi and the fed’s reliance on that archaic data which relies on surveys rather than real-time publicly available market pricing.

Furthermore, the higher interest rate environment severely limits the supply of both existing and newly built housing - homes and apartments for rent.

 

[Georgia Knight]

The problem Trump is going to have is that the Fed has far less control over interest rates than they did in 2017.

The Fed cut interest rates in 2024 (probably to try to bailout Biden) and mortgage rates increased? Why? Treasury yields climbed.

He is going to have to cut spending. The good thing is that any cuts will have a major postive effect, because most of the world is as addicted to government spending as we are.

 

[55dawg]

The problem Trump is going to have is that the Fed has far less control over interest rates than they did in 2017.

The Fed cut interest rates in 2024 (probably to try to bailout Biden) and mortgage rates increased? Why? Treasury yields climbed.

He is going to have to cut spending. The good thing is that any cuts will have a major postive effect, because most of the world is as addicted to government spending as we are.

Yep. The 10 year continued to rise through the recent fed cuts. And mortgage rates climbed.

 

[-lowcountrydawg]

The problem Trump is going to have is that the Fed has far less control over interest rates than they did in 2017.

The Fed cut interest rates in 2024 (probably to try to bailout Biden) and mortgage rates increased? Why? Treasury yields climbed.

He is going to have to cut spending. The good thing is that any cuts will have a major postive effect, because most of the world is as addicted to government spending as we are.

True to an extent. Markets definitely zeroed in on deficit spending and growing debt load…although a lot of that is interest expense which is helped by lower fed funds.

America first policy theoretically should provide foreign sovereigns an incentive to buy US bonds. Plus Doge.

Market is underestimating the extent to which Trump can affect Fed policy. He can’t replace Powell right now. But he can signal that his replacement in 18 months will look to drop rates. And he has a lot of support on both sides of the aisle from wannabe homeowners and folks who make a living in some form or fashion in the housing industry.

 

[RedcoatOf94]

Cut that spending down the Effing Bone!

Do it! DOGE to the moon, baby!

 

[Georgia Knight]

True to an extent. Markets definitely zeroed in on deficit spending and growing debt load…although a lot of that is interest expense which is helped by lower fed funds.

America first policy theoretically should provide foreign sovereigns an incentive to buy US bonds. Plus Doge.

Market is underestimating the extent to which Trump can affect Fed policy. He can’t replace Powell right now. But he can signal that his replacement in 18 months will look to drop rates. And he has a lot of support on both sides of the aisle from wannabe homeowners and folks who make a living in some form or fashion in the housing industry.

The mistake is viewing Fed lowering rates as an easy button for fixing the housing situation, the Fed's insane low interest rates post-2008 is itself a big cause for our problems today. Using that as the major lever to address the first-time home owner issue will have its own consequences.

Unfortunately the whole situation is a big mess, not made easier by the inherent generational tension of the housing market. The goal should be lower housing prices. There are things beyond mortgage rates that can help with that: make it easier to build houses, immigration crackdowns could open up housing stock, local rules against AirBnbs in residential neighborhoods would open up them to become homes (a particular pet peeve of mind.)

Of course, current home owners don't want the price of their house to decline.

I hope Trump is successful at improving both the supply side of housing, and that DOGE works. The latter in particular will ultimately require Congress to be willing to do its job, and that's hard to believe.

 

[MaitlandFloridaDawg]

The mistake is viewing Fed lowering rates as an easy button for fixing the housing situation, the Fed's insane low interest rates post-2008 is itself a big cause for our problems today. Using that as the major lever to address the first-time home owner issue will have its own consequences.

Unfortunately the whole situation is a big mess, not made easier by the inherent generational tension of the housing market. The goal should be lower housing prices. There are things beyond mortgage rates that can help with that: make it easier to build houses, immigration crackdowns could open up housing stock, local rules against AirBnbs in residential neighborhoods would open up them to become homes (a particular pet peeve of mind.)

Of course, current home owners don't want the price of their house to decline.

I hope Trump is successful at improving both the supply side of housing, and that DOGE works. The latter in particular will ultimately require Congress to be willing to do its job, and that's hard to believe.

Affordability of housing should be the goal, not necessarily lower housing prices. The last time we saw a massive drop in home values it wasn’t good for the economy. It is tough to take advantage of lower housing costs when you don’t have a job. Lower interest rates will make mortgage payments lower, but it will also raise asset prices. My business benefits from lower interest rates, but artificially low rates create bubbles which aren’t good in the long run. Trump needs to walk a tight rope with his war against the Fed.

 

[-lowcountrydawg]

Affordability of housing should be the goal, not necessarily lower housing prices. The last time we saw a massive drop in home values it wasn’t good for the economy. It is tough to take advantage of lower housing costs when you don’t have a job. Lower interest rates will make mortgage payments lower, but it will also raise asset prices. My business benefits from lower interest rates, but artificially low rates create bubbles which aren’t good in the long run. Trump needs to walk a tight rope with his war against the Fed.

It is counterintuitive but lowering interest rates some (not back to 3 percent but something like 5) I believe will actually keep house pricing flat. Why? Higher interest rates created a supply problem:

Existing home supply problem - the amount of inventory is historically low because folks holding 3 percent mortgages (a huge asset) don’t want to sell lest they trade into a 7 percent mortgage. The result - no competition that would result in more competitive pricing. Folks who can pay all cash dominating the market.

New supply problem - financing for new construction expensive or prohibitive from a return standpoint. If new homes and apartment communities can’t pencil, you put steroids into an already supply constrained market.

The fed raised too high and too fast. They needed to get away from a free money dynamic for sure. But the last 200 bps only limited housing supply, which is inflationary. Inflation would have done exactly what it did if they stopped at 3.25 fed funds.

Create more competition in the housing market and you will anchor price inflation.

 

[The Original SLC Dawg]

Sending 90,000 IRS agents to the border ought to reduce their number considerably. That’s a start

 

[oldmandawg]

The mistake is viewing Fed lowering rates as an easy button for fixing the housing situation, the Fed's insane low interest rates post-2008 is itself a big cause for our problems today. Using that as the major lever to address the first-time home owner issue will have its own consequences.

Unfortunately the whole situation is a big mess, not made easier by the inherent generational tension of the housing market. The goal should be lower housing prices. There are things beyond mortgage rates that can help with that: make it easier to build houses, immigration crackdowns could open up housing stock, local rules against AirBnbs in residential neighborhoods would open up them to become homes (a particular pet peeve of mind.)

Of course, current home owners don't want the price of their house to decline.

I hope Trump is successful at improving both the supply side of housing, and that DOGE works. The latter in particular will ultimately require Congress to be willing to do its job, and that's hard to believe.

Exactly. Congress will fight tooth and nail at any spending cuts. Unfortunately that includes repubs as well as the lovers of spending everybody else's money, the dims.