patrick.net

Dumb question: Can anyone confirm a source where I can track the federal interest rate (i.e. the rate that the fed gives to the banks to borrow money)?

The rates that the banks give to borrowers, of course, is heavily advertised everywhere.

Notices of default are up a little bit in my area.

turtledove is deplorable says

Notices of default are up a little bit in my area.

Excellent contributing data :-)

It's the FOMC "overnight" loan and currently sits at 1/2 percent, or 50 basis points (each basis point one one-hundredth of a % point).

landtof says

zillow has my shack valued at $1.6M

How much do you owe?

BayArea says

dumb question: what is the best source to track the federal interest rate (rate that fed gives to banks)? And what is that interest rate today?

A simple question, but certainly not a dumb one.

The Fed Funds Rate is what you're looking for. Here's a good link for that.
http://www.moneycafe.com/personal-finance/fed-funds-rate/

For the Prime Rate, the lowest rate commercially available, here's a good link.
http://www.moneycafe.com/personal-finance/prime-rate/

The graphs are particularly good.

0% interest in a depreciating currency. The fed is paying banks to take out loans whereas the rest of us have to pay for money. And people wonder why the rich get richer and the poor get poorer and the middle class is squeezed.

Dan, excellent, thank you.

I have it bookmarked now.

Dan8267 says

What do you think? Will housing tank in 2017?

Yes and no.
Estate agents love to use the phrase "imperfect market" when deflecting questions from inexperienced buyers. Their claim is that the housing market is always inherently imperfect. There are differing opinions about the voracity of that statement.

However moving forward I believe the market will become even MORE imperfect. That is to say until 2020 or even 2025, it's going to be a bumpy ride. Area's in high demand will overheat quicker and to higher degrees. Conversely, areas in low demand will stagnate worse and in come cases... cease to exist.

If you're curious... Here's something interesting I found.
2 towns... 1hour drive away from one another. Both in New York state.
One town is the 2 best property market in Q2 nationwide
The other town is the 2 worst property market nationwide Q2.

So this begs the question. Why is the hottest Q2 market one hours drive away from the worst market (nationwide)?

I haven't dug deeper so I don't know the circumstances, but I don't think that's as important and the stark contrast...
1hr drive = best and worst nationwide?

Now some will jump on me and say something like "San Francisco's property market was almost the strongest in the nation and in Oakland you wouldn't venture after dark" (Back in the day) I'd say you're right, but if San Francisco was the most expensive market, Oakland was never the lowest in the nation, the west, California or even central California.

I could add more theories, but I'll save my time and see the feedback on this.

junkmail says

Why is the hottest Q2 market one hours drive away from the worst market (nationwide)?

My guess -- and this is only a guess -- is the jobs market in each area. Most people won't commute an hour to work. Almost no one will commute more than that. So these two areas are largely disjoint. One hour, ten hours, a hundred hours, it doesn't make a difference once you past a certain threshold. If the two markets were less than 30 minutes away then jobs could not explain the difference.

Dan8267 says

an hour to work. Almost no one will commute more than that.

Oh boy, have you heard of a place called the Bay Area?

junkmail says

If you're curious...Why is the hottest Q2 market one hours drive away from the worst market (nationwide)?

I'm always curious but the most likely answer to your question can be found in Daniel Kahneman's Thinking, Fast and Slow. If you compare all the many towns and cities in the USA, the extremes up and down will probably be smaller places because of the small sample sizes.

Binghamton has 50k people, Elmira 30k. If you figure household size between 3 and 5, that's around 10k housing units in each, and they sell probably once a decade, so 1k sales per year, mostly in summer due to weather and school calendars, so maybe 300 in April-June. If a significant employer closed or opened in either place, or maybe moved from one to the other, that could do it.

Two samples of 100 transactions each don't tell you much about the larger picture, but the presentation of them can tell you a lot about the presenters.

Elmira vs Binghamtom. Markets in New York state that are very localized, with no real relationship to the NYC greater metro area, and have lower sales volume and lower median pricing, and populations below 45,000. Looks like statistical noise to me.

curious2 says

I'm always curious

Oops. Simultaneous post.

HEY YOU says

How much do you owe?

2.6M

HEY YOU says

How much do you owe?

just under $1M

dan the pussy mullet man has me on ignore so i can't respond

Dan8267 says

0% interest in a depreciating currency. The fed is paying banks to take out loans whereas the rest of us have to pay for money. And people wonder why the rich get richer and the poor get poorer and the middle class is squeezed.

Not to punch a hole in such a popular and simple narrative, but it's hogwash. Data on Discount Window usage is freely available (https://www.federalreserve.gov/newsevents/reform_discount_window.htm) and it's well known why banks prefer not to use the discount window.

www.richmondfed.org/-/media/richmondfedorg/publications/research/region_focus/2011/q1/pdf/federal_reserve.pdf

The real reason the middle class is struggling is obvious. No wage growth. That's it.

I think you misinterpret Dan's brevity as him trying to illuminate primary grand cause, versus showing one example of the imbalance. Are you not both talking about the same thing, in the end? Wages are stagnant, why?

Pointed back toward the original question: housing not a bubble, but going to take it on the chin (like everything else, especially stocks) when the imbalance starts to right itself.

I love the Fed's recent comments about having more room for inflation and the economy not becoming overheated. This is the obvious stated as if it were critical analysis.

#LogansSwan

Rew says

I think you misinterpret Dan's brevity

Ooooh, careful... When you say things like this... Dan starts posting 10,000 word essays.

False alarm, Dan. It's all good.

Another thing that might be worth noting is the fact that numbers of vacant, foreclosed/bank owned properties have been going down. They've gone down by 30% since last year. So, why the sell off? The banks have been holding onto these for a long while now. The fact that they are selling these properties makes me think it's possible that they know that -- right now -- is the most money they can expect to unload them for. If they thought they could double their money by holding off another year, history would suggest that they would continue to hold the properties.

http://www.realtytrac.com/news/foreclosure-trends/q2-2016-u-s-residential-property-and-zombie-foreclosure-report/

658b says

dan the pussy mullet man has me on ignore so i can't respond

I put you on ignore for being a troll. I've run out of patience for idiots like you.

However, if you want a response, here it is.

landtof says

zillow has my shack valued at $1.6M - not bad for a poor guy with no college degree and no job (literally none of that is true). what's your house worth, dan?

1. It does not matter how much Zillow values your house. Market prices fluctuate greatly with bubbles and busts and do not reflect true value, only what the greatest fool is willing to pay.

2. It does not matter what the market price of your house is unless and until you actually sell it. Unrealized market gains are not gains at all and do not affect your wealth. Your house's market price only benefits you at the moment you sell your house. As long as you are living in your house it doesn't make a damn bit of different if your house's market prices is ten trillion dollars.

3. Unless you have fully paid off your mortgage, it's not even your house. It's the bank's.

4. How much wealth you have in a particular asset class, real estate vs stocks vs bonds vs cash, does not determine your overall wealth. I'd say it's highly probably that I have more wealth in wealth-producing assets like stocks than you have in wealth-consuming assets like your house.

5. Wealth is not indication of intelligence or moral character, especially not in our society.

6. A college degree means nothing. I don't think you are an idiot because you lack a college degree. I think you are an idiot because you say idiotic things and have the values of a moron.

Oh, and it doesn't matter how many alts you create. Every time you act like an ass, I'm going to ban you.

I have no problem with people who challenge my ideas like an adult. Hell, that's the main reason I come to PatNet, for intellectually stimulating discussions and debates about various subjects. I like a challenge. However, I am not going to tolerate trolling anymore. You're wasting my time and everyone else's. And if you don't like that, tough shit.

Tampajoe says

The real reason the middle class is struggling is obvious. No wage growth. That's it.

There are multiple reasons for the squeezing of the middle class. Monetary policy is one contributing factor and a fine example of how we are not truly a society of equals, but rather still a society of nobilities and peasants with different rules and opportunities for each class.

The most significant reason for the decline of the middle class is that income is based on bargaining power rather than productivity. This is an intrinsic flaw of capitalism and is caused by the very definition of capitalism, giving the power over distribution of resources to owners rather than producers.

Rew says

I think you misinterpret Dan's brevity as him trying to illuminate primary grand cause, versus showing one example of the imbalance. Are you not both talking about the same thing, in the end? Wages are stagnant, why?

True, and there are multiple reasons for stagnant, even decreasing in real terms, wages. But most, if not all, of these reasons can be traced back to bargaining power.

Rew says

Pointed back toward the original question: housing not a bubble, but going to take it on the chin (like everything else, especially stocks) when the imbalance starts to right itself.

What's the difference between this and a bubble?

turtledove is deplorable says

Ooooh, careful... When you say things like this... Dan starts posting 10,000 word essays.

You say that as if it were a bad thing. Isn't the real problem that today everyone expects wisdom to be distilled in a 250-character tweet? Wisdom comes from knowledge, and knowledge has details.

I'd rather read one 10,000 word essay that gives me deep insights into a subject than a thousand meaningless tweets.

turtledove is deplorable says

The fact that they are selling these properties makes me think it's possible that they know that -- right now -- is the most money they can expect to unload them for.

insightful

I think this is the case as well. I'm seeing more articles pop up about housing price declines expected next year.

Dan8267 says

You say that as if it were a bad thing. Isn't the real problem that today everyone expects wisdom to be distilled in a 250-character tweet? Wisdom comes from knowledge, and knowledge has details.

I'd rather read one 10,000 word essay that gives me deep insights into a subject than a thousand meaningless tweets.

I was just ribbing you.

Dan8267 says

There are multiple reasons for the squeezing of the middle class. Monetary policy is one contributing factor and a fine example of how we are not truly a society of equals, but rather still a society of nobilities and peasants with different rules and opportunities for each class.

We are a society of nobles and peasants, but monetary policy has zero to do with it. Banks don't borrow from the Fed and use it to invest. That theory is pure BS. Loan data from the discount window are readily available and it's easy to see that no banks are using it in this method. Further, even if they did, the beneficiary is a corporation, not an individual. If you want to argue against government policy favoring some corporations while hurting others, I'm on board. But, sadly, our country has had that problem since it was founded. And, yet, we had a great period of prosperity from the end of WWII until Reagan.

Dan8267 says

The most significant reason for the decline of the middle class is that income is based on bargaining power rather than productivity. This is an intrinsic flaw of capitalism and is caused by the very definition of capitalism, giving the power over distribution of resources to owners rather than producers.

100% agree. Well said.

curious2 says

If a significant employer closed or opened in either place, or maybe moved from one to the other, that could do it.

Yup, sounds about right. Some others put up possible solutions. My point is beyond that. Admittedly is low volume and a short period of time.
I'm not going to connect the dots for everyone and I'm not addressing the cause. All I'm saying is 1 hour separates hottest and coldest market. In the nation.

Something is wrong.

Let's take just one city. New York. (Manhattan Island)
The most densest urban environment in the US.
It has the highest level of inequality and bifurcated class structure in the US.
If it were a nation it would have the 15th highest level of inequality (out of 134)

Here's some more Hi-contrast statistical noise.

How we change our lives to afford a home
Some interesting studies are coming out about sacrifices individuals and families make to be able to afford a home.

Matthew Rognlie (MIT) has put forward his theory as to why there is a massive redistribution of housing wealth away from the middle class. This after reading some statistics put together by Thomas Piketty - Capital in the 21st Century (good read btw...)

Rognlie lays the blame at the feet of 'land regulation', in point, he deduced that stringent land-use regulations were directly correlated to areas of least affordability. Most noticeably that of coastal California, where cities like LA and San Fran, where house prices are 3 to 4 times higher than other metropolitan areas (when adjusted for income).

The supply of housing suffers, due to the over-regulation, mainly affordable SFR. California permits issued = 2.2 per 1000 compared to Texas which is almost 7 per 1000.

These "exclusionary zones" make it difficult to build middle class, multiple occupancy, homes. And in the end what goes up are luxury homes and units. New York is a great example of this. I forget the statistic but a HUUGE chunk of the luxury units is being sold to foreigners. Conversely between 2010 and 2015 rents increased 50% and renters incomes rose only 8%. Locals more likely to rent. Investors more likely to buy.

Statistics have also shown that CBDs areas are showing a decrease in children 5-14 (7% of pop), less than half in the suburbs and continues to fall. So the demographics are shifting.

Washington DC 70% of women over 40 are childless. Even neighborhoods are loosing kids. NY, San Fran and Seattle less than 10% of population are under 18%

San Francisco has 80,000 more dogs than children. (Loss of 40% of kids since 1970)

The opposite is happening in newer suburbs, lower-cost cities in the Sunbelt, the Rockies and Texas. Suburbs = growing. Urban = stagnant.

44M live in 51 metropolitan cities. 122M live in suburbs. Not including exurban and commuter districts.

As I said before, IMHO there is a bubble, but it’s misshapen, some areas are going to burst some are still struggling to make it back from the last one (Nevada)

Google “dublin ireland housing market” and compare house prices to renting.

junkmail says

All I'm saying is 1 hour separates hottest and coldest market. In the nation.

What we are saying is why does it matter if the hottest market is some small town that trades like 500 houses a year (random number for sake of making a point)? And even if it does, all real estate is local. And the medians are $100k, versus national of $190k?

Philistine says

all real estate is local

That's part of my point.

Love to hear your theory tho...

Tampajoe says

but monetary policy has zero to do with it.

Monetary policy causes the savings and wages of productive members of society, the actual workers, to decrease. Merely by not getting a raise, your salary is being lowered. Merely by saving money in the bank, even in bonds that have 1% interest, you are losing money. Monetary policy forces you to gamble with your money simply to maintain its purchasing power. This is not just and it does not promote healthy finances for the masses.

I'm in real estate development biz, and have close friends in c-suites at auto manufacturers & suppliers, other RE development firms & REITs, large law firms (partner level), etc.

The next crash is already underway. It will be bigger than '08 downturn.

The globe is drowning in debt at the government/sovereign, corporate and household sectors - DROWNING.

The entire "recovery" is literally a house of cards built on top of the foundation of quicksand that is historically epic levels of debt/credit, much of will be defaulted upon in just a few short years.

Smart money got in and cashed out 3 to 5 years ago.

There are just bagholders and dumb-money buy ins now.

I fully expect that banks, pension funds, insurance companies (all dumb money entities) and nations will have to be bailed-out again on a magnitude much larger than '08 to '10 soon.

As the wise men told me in Miami 3 weeks ago, "you ain't seen nothing yet."

freespeechforever says

The next crash is already underway. It will be bigger than '08 downturn.

Do you mean the economic crash in general or housing prices specifically?

How much do you think housing will drop in hot areas like CA, AR, FL, and why?

General, disperse, widespread crash, Dan.

Trigger will be layoffs caused by inflationary pressures in cost-push manner in inflexible goods/services coupled with massive public + private debt levels (nothing worse than massive debt loads at time of stagflation and then declining productivity and then declining revenue and then declining profits).

Watch for job losses to be announced en masse after election.

To exacerbate the next crisis, Japan is literally going bankrupt, the EU is on the very real cusp of facing an existential crisis that threatens to really pull it apart, and China has a private debt crisis whereby its central government may have to utilize the entirety of the surplus it has built during the last 18 years to bail out state-owned enterprises.

China and exporting-dependent nations (China, S.Korea, Japan, Asian Tigers, Mexico, etc.) devalue currencies aggressively to boost exports and export deflation while developed nations will threaten sanctions, trade tensions will rise even more so, Greece, Portugal, Italy & Spain will re-enter expressionist times, France will march towards a Frexit referendum, and so on.

http://www.telegraph.co.uk/business/2016/09/21/un-fears-third-leg-of-the-global-financial-crisis-with-epic-debt/

https://www.ft.com/content/fc825300-7e44-11e6-8e50-8ec15fb462f4

https://www.ineteconomics.org/ideas-papers/blog/the-private-debt-crisis

http://www.nakedcapitalism.com/2016/09/the-private-debt-crisis.html

freespeechforever says

"you ain't seen nothing yet."

Peter Schiff subscriber?

Dan8267 says

1. It does not matter how much Zillow values your house. Market prices fluctuate greatly with bubbles and busts and do not reflect true value, only what the greatest fool is willing to pay.

2. It does not matter what the market price of your house is unless and until you actually sell it. Unrealized market gains are not gains at all and do not affect your wealth. Your house's market price only benefits you at the moment you sell your house. As long as you are living in your house it doesn't make a damn bit of different if your house's market prices is ten trillion dollars.

3. Unless you have fully paid off your mortgage, it's not even your house. It's the bank's.

4. How much wealth you have in a particular asset class, real estate vs stocks vs bonds vs cash, does not determine your overall wealth. I'd say it's highly probably that I have more wealth in wealth-producing assets like stocks than you have in wealth-consuming assets like your house.

Wealth is not indication of intelligence or moral character, especially not in our society.
6. A college degree means nothing. I don't think you are an idiot because you lack a college degree. I think you are an idiot because you say idiotic things and have the values of a moron.

Oh, and it doesn't matter how many alts you create. Every time you act like an ass, I'm going to ban you.

I have no problem with people who challenge my ideas like an adult. Hell, that's the main reason I come to PatNet, for intellectually stimulating discussions and debates about various subjects. I like a challenge. However, I am not going to tolerate trolling anymore. You're wasting my time and everyone else's. And if you don't like that, tough shit.

1. only a renter dumbass says things like this
2. only a renter dumbass says things like this
3. only a renter dumbass says things like this
4. oh yeah i bet you are a multi-millionaire jet setter with all the money you've saved from renting versus buying
5. it's a very good indicator as smart people don't like to eat shit and pay increasing rent for their entire lives
6. i do have a college degree, you fucking moron - so does everyone you assume does not just because they are conservative and disagree with your pussy posts

so good for you, you fucking homo - run away and censor those who call you out on your catty bullshit - on a free speech forum nonetheless. i bet you'll still reply to this even though you'll continue to "ignore" me which just proves how much of a little bitch you are. gotta have your safe space threads to gossip and left-wing-out with the chemically imbalanced dead-weights like jazz music.

freespeechforever says

The next crash is already underway. It will be bigger than '08 downturn.

the problem with this argument is that some people have been making it every single year since 2010.

aca6 says

4. oh yeah i bet you are a multi-millionaire jet setter with all the money you've saved from renting versus buying

I'm making far more money on my investments then you are paying your mortgage, dumb ass.

Only losers keep creating new accounts when they are banned.

@Patrick

You really need to bring back the delete function so that trolls that create new accounts just to get around bans get their posts deleted. It's the one thing that really pisses off trolls.

It's really sad there are some people with so little going for them that they feel compelled to create alts just to post to a conversation they were kicked out of. I've always wondered if maternal neglect was the cause of people becoming trolls. landtof has just confirmed this theory.

Dan8267 says

It's really sad there are some people with so little going for them that they feel compelled to create alts just to post to a conversation they were kicked out of. I've always wondered if maternal neglect was the cause of people becoming trolls. landtof has just confirmed this theory.

Yep, it's science.

http://www.ncbi.nlm.nih.gov/pubmed/26403842

attention-conflict seeking, low self-confidence, viciousness, uneducated

The perfect description of trolls like landtof.

Dan8267 says

Monetary policy causes the savings and wages of productive members of society, the actual workers, to decrease. Merely by not getting a raise, your salary is being lowered. Merely by saving money in the bank, even in bonds that have 1% interest, you are losing money. Monetary policy forces you to gamble with your money simply to maintain its purchasing power. This is not just and it does not promote healthy finances for the masses.

That's not really true and should be clearly proven during the time period between WWII and the late 1970s. For 25-30 years, wages and salaries showed nice real gains despite monetary policy and inflation. In fact, there is a slightly positive correlation between real gains and inflation---workers did better during times of moderate to high inflation than during times of low inflation.

Banks will never pay more than the inflation rate for savings accounts, regardless of what that inflation rate is. If inflation were zero, banks would charge a fee to keep your money. They are providing a service for you, so of course they won't do it for free.

Tampajoe says

-workers did better during times of moderate to high inflation than during times of low inflation.

That was real or natural inflation due to economic boom times. The artificial inflation in asset prices driven by ZIRP/NIRP or generally suppressed rates correlates negatively with the status quo of the middle class worker.

mell says

That was real or natural inflation due to economic boom times. The artificial inflation in asset prices driven by ZIRP/NIRP or generally suppressed rates correlates negatively with the status quo of the middle class worker.

You're attributing it to the wrong causes. Asset inflation is due to inequality, which is due to the mechanism Dan described earlier. Corporations no longer pay wages to their workers, but instead pay dividends to their owners. This has caused inequality to rise steadily over the last 30-40 years. Money is hoarded by a relatively small number of people who have nowhere to spend it so they buy assets.

There may be a correlation there because as inequality increases, interest rates will fall as there is more money chasing fewer and fewer investments. But it's certainly not a causation.

Tampajoe says

That's not really true and should be clearly proven during the time period between WWII and the late 1970s. For 25-30 years, wages and salaries showed nice real gains despite monetary policy and inflation.

This is not proof. The amount by which currency is based affects how much real wages are adjusted. It's not a binary system that can be measured by "are real wages going up or not". You have to compare and contrast how much real wages are adjusting as a function of currency debasement. What would real wages be if currency purchasing power remained constant? What would real wages be under 1%, 2%, 5%, and 10% debasement? There is no data on this, thus there is no evidence, nonetheless proof, that currency debasement has no effect on real wages.

Tampajoe says

Banks will never pay more than the inflation rate for savings accounts, regardless of what that inflation rate is.

Irrelevant. Merely maintaining purchasing power would financially empower hundreds of millions of middle class and poor Americans. Furthermore, above zero interest rates under zero currency debasement would be widely available in the form of short and long term bonds.

Tampajoe says

If inflation were zero, banks would charge a fee to keep your money. They are providing a service for you, so of course they won't do it for free.

And you are providing a loan to the bank which is necessary for them to make money by loaning to others. If capitalism fails at making an efficient banking system, which is necessary for commerce and economic growth, then simply don't use capitalism as the basis of your banking system or at least place heavy restrictions on it. For example, make the cost of having a banking license providing completely free checking. Cost-free access to electronic money is essential for facilitating efficient commerce and driving both consumption and GDP. Any costs for simply performing monetary transactions imposed by a bank on the consumer has all the disadvantages to the economy of a sales tax but without any of the public revenue generating advantages. Why should our laws encourage such waste and drive down economic activity?