US Fed creating another bubble

Here’s an interesting article showing the huge effect that interest rates have on house prices.

Record low interest rates help to support high housing prices and higher rates reduce the amount of money that can be borrowed, all other things being equal.

When rates return to normal levels home prices will be depressed.

And when you see the impact record low rates have on purchase prices, you might be as concerned as I am.

I never thought I’d see the day when you could get a 30-year fixed rate loan at just 3.31 percent, but that was the case last week according to Freddie Mac’s weekly survey of mortgage lenders. While most people probably just shake their head at these astonishingly low numbers, it is homebuyers who are seeing the kind of impact they have on monthly mortgage payments and, as shown below, this effect is profound.

Based on a constant mortgage payment of $1,100 per month (what seemed to be a good national average based on this story and others like it), today’s 3.31 percent 30-year mortgage rate will finance a house at almost double the price that the 40-year average mortgage rate would!

Read the full article here.

39 Responses to “US Fed creating another bubble”

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    Group Masterbator #43 Says:
    1

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 2 Thumb down 30

    On one hand, I find it a little frustrating that the site seems to be attracting a lot of online “thugs” who are side-tracking the conversation on this board onto personal attacks etc.

    However, on the other hand, it just is clear evidence that the bears are finally winning. As the Mahatma said:

    First they ignore you,

    Then they laugh at you,

    Then they fight you,

    Then you win

    Well-loved. Like or Dislike: Thumb up 47 Thumb down 7

    Surprise, surprise, surprise!

    Chinese miners asked to pay for Canadian jobs

    The BC and Federal governments are enabling this. Indentured labour is exploited labour.

    Well-loved. Like or Dislike: Thumb up 32 Thumb down 1

    Anonymous Says:
    4

    Something has been wrong with this site for days and it is not getting bored. At best, the site is extremely slow. Often, the site does not load at all. I get a page that says “Internal Server Error”. Sometimes I can’t load the site at all, sometimes I can load the homepage but I can’t get the comments. I tried to load it this morning about 5 times before I was able to successfully load it and post this comment. The first five times, I got “Internal Server Error”. Same thing last night and the night before. I haven’t posted about it yet because I don’t want to be a complainer and I trust VCI Admin will take care of it. But it’s getting worse, not better. It’s to the point now where I just don’t have the time to visit this site anymore because I can’t sit here and wait 5 times for a site to load. Given the increased troll activity (first comment of the day was from a troll), I am pretty sure this site is under attack from hackers/trolls.

    Well-loved. Like or Dislike: Thumb up 60 Thumb down 6

    Anonymous Says:
    5

    @patriotz: “The BC and Federal governments are enabling this. Indentured labour is exploited labour.”

    Yes, its unreasonable that Canadians should expect to have first crack at Canadian jobs.

    Hot debate. What do you think? Thumb up 12 Thumb down 1

    @#4 Anonymous

    Agreed, this has been going on intermittently for the past few weeks. Personally, I dont mind more ads on the site if it provides the necessary revenue to beef up the sites performance/security.

    Hot debate. What do you think? Thumb up 15 Thumb down 0

    Mick Murphy Says:
    7

    Foreign Consulates in china hold charity sale for disabled children in Chinese province. Receive counterfeit money for their trouble.

    http://shanghaiist.com/2012/12/11/foreign_consulates_disappointed_at.php

    Like or Dislike: Thumb up 9 Thumb down 0

    Bull! Bull! Bull! Says:
    8

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 2 Thumb down 21

    Many Franks Says:
    9

    Mark Carney continues to talk about raising rates to curb household borrowing. I’m a little surprised he’s continuing to bang this particular gong — I don’t think he’s got the leeway to raise rates, and I don’t believe he thinks continued threats from him of higher rates will actually change consumer behavior.

    Hot debate. What do you think? Thumb up 15 Thumb down 0

    Many Franks Says:
    10

    @Many Franks: Heh, and here we have the answer: “Carney says warnings about rates may have driven homeowners to lock in mortgages.” I guess he views sustained bellowing as a viable strategy.

    Like or Dislike: Thumb up 5 Thumb down 1

    Anonymous Says:
    11

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 9 Thumb down 24

    Bear! Bear! Bear! Says:
    12

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 3 Thumb down 16

    Anonymous Says:
    13

    Well clearly some people are unhappy with the opinions and information here.

    Like or Dislike: Thumb up 3 Thumb down 1

    Landbaron Says:
    14

    @Anonymous:

    I suggest you read previous postings. I’m a bear and have never lived under a bed, I’ve had sex under one, but never slept.

    I sold a place in PM a year and a half ago. I admit I was speculating when I first bought it and enjoyed a nice run up in price. Had the market turned in 2008 (and not been propped up by cheap money) I would have lost my shirt.

    I got lucky and realized it, so I sold as soon as I reasonably could. Once again I got lucky as prices rebounded and I got even more than I expected for the property. Would I buy the same place now? HELL NO!

    Therefore I won!

    Hot debate. What do you think? Thumb up 17 Thumb down 1

    Reality Bull! Says:
    15

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 4 Thumb down 13

    I doubt we are getting hacked. I suspect the problem is more technical in nature, or related to broader internet troubles.

    However, it would be great to hear from the administrator whether they have looked into the problems at all and what has been done about it.

    Like or Dislike: Thumb up 6 Thumb down 3

    Slightly Bullish Says:
    17

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 1 Thumb down 15

    Apologies to the bears, bulls and especially the very sensitive trolls. We seem to have a few problems that we are trying to take care of. Popularity of the site is up which means more visitors and at the same time someone from Belarus seems to have taken a great interest in vancouver real estate. We’ve blocked some IPs and shut down Vancouver Peak for the time being.

    Hopefully VCI will have better responsiveness now and time permitting we’ll be doing further improvements to the efficiency of the site.

    Vague enough for you? Thanks all for your patience.

    Well-loved. Like or Dislike: Thumb up 55 Thumb down 4

    Wow – trolls re-routing their attacks through Belarus IP addresses….

    It seems this site has caught the attention of a few Skyfall wannabes…

    Hot debate. What do you think? Thumb up 18 Thumb down 5

    OT
    A bit of reassuring news in G&M today:
    “Boom in public servants under Harper about to end, watchdog says”
    http://bit.ly/UzJ1jP

    “The number of “full-time equivalent” positions in the federal public service is projected to drop from 380,000 in 2010-11 to 349,000 in 2014-15 at the end of the government’s current cost-cutting plans. Even that level will still be slightly higher than the historical average of 336,400 full time public servants over the period from 1990-91 to 2011-12.”

    “Looking south of the border, the PBO report found that the average U.S. federal public servant receives $110,400 (Canadian) in total compensation, compared to $111,300 for full time federal public servants in Canada.”

    Hot debate. What do you think? Thumb up 7 Thumb down 7

    @admin:

    Belarus? Oh, those Russian hackers!
    Well, I’ll just throw it out there…
    Is there even remote possibility that someone interested in high RE prices hired hackers to shut down VCI?
    I know, conspiracy theories suck big time, but that’s a first thought came to my mind.

    Hot debate. What do you think? Thumb up 11 Thumb down 0

    Homer Klaidel Says:
    22

    How is that a conspiracy theory? A lot of people have done a lot worse for a lot less.

    Like or Dislike: Thumb up 5 Thumb down 0

    Landbaron Says:
    23

    @Aleksey:

    I’ve noticed way more bulls lately on this site (not a problem) but have also noticed trolls springing up like crazy. I’m guessing rogue realtors with too much time on their hands?

    Hot debate. What do you think? Thumb up 10 Thumb down 7

    Patiently Waiting Says:
    24

    @Aleksey: I suspect its someone interested in the level of sales activity rather than just prices. Prices haven’t fallen that much so just about any worried homoaner should probably be able to still get out in one piece, especially if they have deep pockets. If they don’t have deep pockets, they got more pressing problems than this blog.

    This could be an action of some rogue part of the real estate industry. Some wealthy, sleazy people own real estate agencies and home lending businesses.

    Like or Dislike: Thumb up 6 Thumb down 0

    patriotz patriotz Says:
    25

    @C.Junta:
    In the past reductions in federal public service staff have usually been matched pretty closely by increases in consultants – often the same people who were let go. We will see whether the walk matches the talk this time.

    Note that the “federal public service” does not include the military, RCMP, or Crown Corporations. The Feds recently purchased the old Nortel complex in Ottawa for DND.

    Assuming that the feds really do plan to cut the payroll (including consultants), it makes the recent disproportional runup in RE prices in Ottawa even more illogical. It’s the areas that are closer to downtown – i.e. which house the most public sector employees – which have gone up the most, compared to say Kanata where the high tech workers live.

    Hot debate. What do you think? Thumb up 9 Thumb down 11

    RaggedyRenter Says:
    26

    Probably it’s just some spammer trying to post comments or possibly steal logins/e-mail address. No Hot Belarussian Money here

    Like or Dislike: Thumb up 2 Thumb down 1

    Let’s rack this one up to Karma. When you vote down legit debate, you just might get voted down yourself.

    Hot debate. What do you think? Thumb up 23 Thumb down 21

    Anonymous Says:
    28

    @RaggedyRenter: “Probably it’s just some spammer trying to post comments or possibly steal logins/e-mail address. No Hot Belarussian Money here”

    Come on, it’s the West Coast, everybody want to hack here. ‘Blogs’, they’re not making any more of them.

    Hot debate. What do you think? Thumb up 18 Thumb down 5

    oneangryslav2 Says:
    29

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 3 Thumb down 11

    This site is not working for me either

    Like or Dislike: Thumb up 5 Thumb down 1

    Couldn’t access the site earlier…

    New Listings 84
    Price Changes 44
    Sold Listings 60
    TI:15505

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 74 Thumb down 1

    BRITTANNY Says:
    32

    Having a hard time accessing this site as well. I am not a conspiracy theorist but it makes yo wonder, don’t it…………….

    Like or Dislike: Thumb up 5 Thumb down 1

    Total days	19
    Days elapsed so far	7
    Weekends / holidays	4
    Days missing	0
    Days remaining	12
    7 Calendar Day Moving Average: Sales	66
    7 Calendar Day Moving Average: Listings	82
    SALES	
    Sales so far	489
    Projection for rest of month (using 7day MA)	797
    Projected month end total	1286
    NEW LISTINGS	
    Listings so far	670
    Projection for rest of month (using 7day MA)	979
    Projected month end total	1649
    Sell-list so far	73.0%
    Projected month-end sell-list	78.0%
    MONTHS OF INVENTORY	
    Inventory as of December 11, 2012	15505
    Current MoI at this sales pace	12.06
    

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 1

    Sidelines Says:
    34

    The thumbs up/down aren’t working for me… Could it be Belarus? Cue the spooky music!

    Like or Dislike: Thumb up 3 Thumb down 5

    From my records, 2011 saw 1658 reported sales (82.9/day), the first 10 days of December had 898 “paulb” sales for average daily sales of 89.8 (1.083 above monthly reported average). 2010 was 1899 (90.4) with 100 (1.106). Projecting 10 days gets us to about 687 or 68.7/day, using the blended ratio (1.094) would put us at 62.79/day or 1193 sales for December.

    December 2012 is a shorter month than normal — only 19 business days assuming Boxing Day is a statutory — which is why sales will appear weaker.

    The wheels are not falling off this market, but it looks like one of the wheel lugs has loosened a bit. My prediction: 2013 will be an odd year.

    Hot debate. What do you think? Thumb up 12 Thumb down 1

    midnite toker midnite toker Says:
    36

    Phew. It’s back, that made for a boring bus ride earlier. I’ll try to click on more ads to help u out brother.

    Like or Dislike: Thumb up 4 Thumb down 1

    patriotz patriotz Says:
    37

    http://www.nytimes.com/2012/12/09/realestate/in-miami-using-the-south-american-playbook.html?hp&_r=0

    So Miami developers have taken a page from the South American playbook — a handy strategy, given how many willing buyers are flocking to Miami from that continent. Developers of several condos downtown and at the beach are requiring initial deposits of 40 percent or more, and more as they get closer to completion. By the time the building is finished, buyers are forking over as much as 80 percent of the total price of their apartments.

    Because the banks aren’t willing to hold the bag during construction any more. Coming soon north of the border?

    Like or Dislike: Thumb up 3 Thumb down 1

    patriotz patriotz Says:
    38

    http://seattlebubble.com/blog/2012/12/11/non-distressed-median-up-less-than-5-from-2011/

    As of November, the non-distressed median price for King County single family home sales sits at $430,000, up 4.9% from a year earlier. November matched this year’s high point from June.

    King County is the core area of metro Seattle, including Seattle city and Bellevue. It excludes Pierce County (including Tacoma) to the south and Snohomish County (including Everett) to the north, both of which are cheaper.

    Like or Dislike: Thumb up 1 Thumb down 1

    Many Franks Says:
    39

    More on Carney’s recent divergent messages on interest rates — “be careful, we might need to raise rates” on one hand, “we need to firmly commit to continued low rates” on the other — courtesy of a derisive Mish.

    Like or Dislike: Thumb up 2 Thumb down 1

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