patrick.net

It's different this time.

Clearly prices can come down a lot more and still be above the inflation rate.

Or stay flat for another 20 years or so.

gregpfielding says

Or stay flat for another 20 years or so.

In nominal terms. What about after inflation?

My belief is that the Fed will keep trying to prop up housing by devaluing the dollar. The Fed is a private bank that was created to benefit the banks.

So it might be somewhat rational to buy rather than rent...as a hedge against inflation. But what if the Fed decides to tighten for whatever reason? We're at the mercy of the Fed.

The theory makes sense if there are no transformative changes between 1980 and now.

For starter, mortgage interest was around 12% in 1980 vs 4% now. There are other transformative changes (favorable and unfavorable) unaccounted for.

Maybe we can predict what they will do by what will create maximum benefit for the banks. Keeping asset prices super high and interest rates super low seems to be the key.....ZIRP forevermore.

They arent actually trying to destroy people financially (it feels that way when u get 1% on a CD and used to get 6-7% a handful of years ago) but the people being destroyed (savers, first time buyers) are really just fuel in the fire to keep the banks warm and cozy.

Under which scenario will mortgage rates ever be >7% again? According to the default numbers being 4 to 10 times higher than pre 2007 mortgage rates should be in double digits and down payments shoule be 30%+ (basically thats private hard money rates). But taxpayers are giving loans to people with poor credit, 3.5% down or less at 3% - also mods at 2%. The cost must be enourmous to subsidize all these bad loans that were written and are continuing to be written. Expensive as in you can have free healthcare for all OR subsidize banks/asset holders..... #2 was chose for us.

PockyClipsNow says

Maybe we can predict what they will do by what will create maximum benefit for the banks. Keeping asset prices super high and interest rates super low seems to be the key.....ZIRP forevermore.
They arent actually trying to destroy people financially (it feels that way when u get 1% on a CD and used to get 6-7% a handful of years ago) but the people being destroyed (savers, first time buyers) are really just fuel in the fire to keep the banks warm and cozy.

That sums it up well.