Booming jobs and falling gas prices make this the best economy in 15 years

[akphidelt]

In 2003 there is already irrational exuberance surrounding real estate, press clippings touting it as the best thing ever, stories of rags to riches all over the financial media, etc....By any reasonable estimation we can say in hindsight, it is a bubble forming (obviously if we could pick which bubbles would pop we would all be rich as that is easier said than done)

Then at the height of this hysteria, you cut rates and make the cost of speculation for investors and institutions alike even cheaper. You pretty much remove a major barrier to entry and get a bubble.

The problem with a chart like that is it isn't apples to apples because no two time periods are identical. If you just look at 2003 and then do some other research, you can see this is what happened. There are plenty of legitimate publications that put part of the bubble on artificially low rates.

As the cost of capital got abnormally cheaper with rates at lows not seen since post-WW2, this stoked demand.

It's like you think I'm speaking a foreign language because studies can't conclusively prove this.

They are telling you, that there is no conclusion you can make off interest rates. That lowering them or raising them does not necessarily cause the effects you are talking about. I mean wholly shit, we have lower interest rates right now than before the bubble and we don't have this crazy irrational exuberance. There is absolutely nothing surrounding interest rates that show they were the cause of this massive bubble.

However, it is much more logical that Wall Sts involvement in packaging up mortgages and selling them off to investors as a AAA rated security and a decent return was far more a factor of banks lowering their lending standards than lower rates causing a higher demand in housing.

There's simply just no evidence that lower interest rates causes an increase in demand for housing. However, a booming economy and the thought that housing prices will continue to rise definitely is more likely a cause for an increase in demand than small changes in mortgage rates.

There was never this irrational buying of houses until Wall St figured out a way to profit on it and banks figured out a way to pass off their risk. Simply cannot be explained by lower interest rates.

 

[PatsFan1283]

I never said main cause, I said exacerbated the problem several times. You keep responding as if I said it is the main cause, just that it was 1 of the symptoms. Also 7% to 4.5% isn't a small change. Might seem small at a glance but it is like a 30% different in monthly payment in your avg home buying scenario.

Also to shift gears, it is nothing like before because it is much harder to get a loan now and only credit worthy borrorowers have really been allowed to participate but real estate prices have certainly begun to creep back up thanks to low rates. Every region is different but there are areas that look rather frothy.

 

[PatsFan1283]

The housing recovery began losing steam toward the end of 2014. Rising home prices and tight credit combined to sideline potential buyers, especially those considering an investment in their first home. While hopes are high for 2015's spring market, there are several headwinds that could derail some of that optimism.


First and foremost is credit. While some claim credit is loosening, it is still far tougher to get a loan today than it was even before the heady days of the housing boom. Borrowers need higher credit scores, less overall debt, and full documentation of finances; the last one isn't quite as simple as it sounds.

Ross Miller, a mortgage broker in Metairie, Louisiana, described a client of his who was turned down for a loan.
"He had a 743 FICO score and was putting 50 percent down on a $200,000 home. A 743 FICO with a 50 percent loan to value," said Miller.
The trouble is, his client currently rents and pays his rent in cash. The bank wanted rent checks, which they could not provide.


[h=4]Tight credit[/h]"I believe that we are slowly moving toward more of a middle road when it comes to lending," said Miller.
The good news in the credit market is that the Federal Housing Administration (FHA), the government insurer of low-down-payment loans, is lowering its annual insurance premiums by half a percentage point, from 1.35 percent of the loan balance to 0.85 percent of it, effective January 26. That will make it easier for borrowers with less cash to purchase a home.
"It couldn't come at a better time. February is the start of the spring market," said David Stevens, CEO of the Mortgage Bankers Association in a recent interview.

Fannie Mae and Freddie Mac are also now offering a 3 percent down payment loan, but there are strict criteria for those borrowers: The borrower must be an owner-occupant of the home so it cannot be used for a rental home. The borrower must have a minimum FICO score of 680 and must carry mortgage insurance. The loan must be fixed-rate, no adjustables (ARMs), and the loan value cannot exceed $417,000. The borrower must also have debt-related costs of no more than 45 percent of his/her monthly income.
Low-down-payment loans are especially important now, as home prices rose higher in the past two years than most predicted. Mortgage rates are near-record lows now, hovering around about 3.75 percent on the 30-year fixed conforming loan, but they are expected to rise by the second half of the year if and when the Fed raises interest rates.


[h=4]Pricey markets[/h]While the price gains are easing, affordability joins credit as one of the top headwinds for housing in 2015. Home prices were rising in the double digits in 2013, thanks to investor activity on the low end of the market. Even in markets where there was not a lot of investor activity, prices soared. Several Texas cities, such as Houston and Austin, are seeing record-high home prices, and while there is some concern that layoffs in the oil market will derail that, the effects have not been seen yet. The median prices of both Houston and Austin homes are slightly above the national median of just over $200,000.
Price gains are easing because there are fewer distressed properties, and therefore investors are slowing their purchases at the low end of the market. All-cash sales, which are largely by investors in single-family homes, dropped to 35.5 percent of October home sales, down from a peak of 46.4 percent but above norm of 25 percent, according to CoreLogic, an analytics company.
Read MoreUS single-family starts hit 6 1/2-year high





[h=4]Low inventory[/h]Large-scale institutional investors do not seem to be selling their properties, especially since they've spent vast capital creating management infrastructures for the rental market. That should keep prices stable, but it does not help the inventory situation.
The supply of homes for sale is currently very low, just a five-month supply in December 2014, according to the National Association of Realtors (NAR), given the pent-up demand from younger buyers, who have been all but absent from the recovery. That is also holding back more robust sales now and potentially in the historically strong spring market. Rising home prices have given homeowners more equity and brought millions up from underwater on their mortgages, but that doesn't necessarily mean they have enough equity to afford a move up.


[h=4]Sagging income[/h]Younger buyers are also still cash-strapped, thanks to still weak employment in their age cohort.
A slow jobs recovery for Millennials has held back household formation for them, and it will slow down home ownership in the future," said Jed Kolko, chief economist at Trulia, a real estate sales and analytics company. "It takes a few years from when someone gets a job to when they're ready to buy a home."
Read More5 things to watch in housing in 2015
First-time buyers made up barely one-third of December home buyers, according to NAR. They are historically closer to 40 percent of the buying market.
Incomes have not kept pace with rising home prices, and rents are soaring to record highs. Rents rose more than 4.5 percent in 2014, according to Axiometrics. Continued high demand and limited supply will keep rents from falling in 2015, although their gains are slowing down.


That means that while renters may want to buy a home, they are precluded from saving for a down payment on that home. Again, low mortgage rates certainly help and low gasoline prices add to consumer savings, but until wages rise more dynamically, buying a home will still be out of reach for some potential buyers, not to mention for those who might be thinking about moving up to a better home.
Read MoreWill too many apartments pinch the rental market?
"Softness in consumer attitudes that drive housing demand will make for a subdued recovery and should persist absent more meaningful and sustained gains in household income," said Doug Duncan, chief economist at Fannie Mae.




Diana OlickCNBC Real Estate Reporter

 

[SheriffJoe]

We've had this conversation before but a lot of MBS/CDS was bought by private investors. Most of the MBS was priced based on previous foreclosure rates which were really low so it looked like a good deal.

I agree with you the gov't is to blame but I'm not sure why you don't think good ol fashion greed can cause bubbles either?

Just a few years earlier tech companies having 200 P/E ratios a good example of this.

Community Reinvestment Act (home ownership as a "human right"), Fannie and Freddie, Federal Reserve with artificial low interest rates...none of these disruptive factors had anything to do with the free market, but they all played their vital role in the housing crisis.

If the govt forces me to run my business a certain way and the outcome is less than desirable, the government is to blame, not me. Period.

Fannie and Freddie were dumping grounds for bad decision making...a safety net for reckless financial transactions... the place where ALL these toxic securities ended up. If you can lend someone 20K knowing no matter what the outcome, a bigger fish will bail you out if the deal goes south, you'll lend that money to a turd on a street. The uncritical thinking statists call it 'reckless greed'; I call it rational self-interest...because that is exactly what it is.

And just like the government socially-engineered the housing bubble, it is socially-engineering the current stock market bubble pumping all this money through the financial system.

Creating bubbles is what the government does best.

The Grilled Cheese Truck up 5%!! LMFAO!

 

[akphidelt]

Community Reinvestment Act (home ownership as a "human right"), Fannie and Freddie, Federal Reserve with artificial low interest rates...none of these disruptive factors had anything to do with the free market, but they all played their vital role in the housing crisis.

If the govt forces me to run my business a certain way and the results are poor, the government is to blame, not me. Period.

Fannie and Freddie were dumping grounds for bad decision making...a safety net for reckless financial transactions - the place where ALL these toxic securities ended up. If you can lend someone 20K knowing no matter what the outcome, a bigger fish will bail you out if the deal goes south, you'll lend that money to a turd on a street. The uncritical thinking statists call it 'reckless greed'; I call it rational self-interest...because that is exactly what it is.

And just like the government socially-engineered the housing bubble, it is socially-engineering the current stock market bubble pumping all this money through the financial system.

Creating bubbles is what the government does best.

Grilled Cheese Truck up 5%!! LMFAO!

There's been plenty of research done on this and the government played a minor role at best in the actions of the private sector. I'm glad you are willing to sell your soul for your wealthy cult leaders, lol. They have you by the balls. I want to know where my $5,000 gold is at!!!

 

[SheriffJoe]

There's been plenty of research done on this and the government played a minor role at best in the actions of the private sector. I'm glad you are willing to sell your soul for your wealthy cult leaders, lol. They have you by the balls. I want to know where my $5,000 gold is at!!!

Stick your biased classroom 'research' (Monday morning quarterbacking) and your faulty computer models up your ass.

Statists constantly interfere with the market and then blame the market when their endless 'tinkering' inevitably causes FAILURE.

Great Depression, housing bubble, skyrocketing health care costs, student loan bubble, "anti poverty" programs which inevitably destroy families...

Because we've never heard THAT song and dance before!

 

[SheriffJoe]

Pseudoscience is a claim, belief or practice which is presented as scientific, but does not adhere to a valid scientific method, lacks supportingevidence or plausibility, cannot be reliably tested, or otherwise lacks scientific status.[SUP][1][/SUP] Pseudoscience is often characterized by the use of vague, contradictory, exaggerated or unprovable claims, an over-reliance on confirmation rather than rigorous attempts at refutation, a lack of openness to evaluation by other experts, and a general absence of systematic processes to rationally develop theories.

THE STIMULUS WORKED!!!!!!!!!!

 

[akphidelt]

Stick your biased classroom 'research' (Monday morning quarterbacking) and your faulty computer models up your ass.

Statists constantly interfere with the market and then blame the market when their endless 'tinkering' inevitably causes FAILURE.

Great Depression, housing bubble, skyrocketing health care costs, student loan bubble, "anti poverty" programs which inevitably destroy families...

Because we've never heard THAT song and dance before!

Without government and regulation, capitalists would destroy everything in their path. The Great Depression and the recent recession are great examples of that. Anyone who understands what Wall Street did and still blames the government is simply someone that probably thinks gold would be $5,000 right now, lol.

The private sector is more than capable of destroying the economy.

 

[Acebb]

No, there is proof that jobs were created in terms of actual people getting paychecks from the Treasury. If the question is created relative to a starting figure or relative to a theory on how many jobs there would have been without the stimulus, that comes down to models and theories... which you will clearly not accept, so there is no point in going down that road.

The stimulus created zero jobs.

How do we know this?

Well, after the stimulus was passed the U/E rate went up and the labor force participation rate went down. That's how.

But I'm glad you have your models & theories enabling you to tell more outright lies on the topic.

It was funny when you were mocked so badly for being unable to source your idiotic "the $280 billion created 1+ million jobs" claim that you had to run away and stop posting.

But of course lying is who you are and what you do. So nobody was surprised.

 

[brucefan]

Without government and regulation, capitalists would destroy everything in their path. The Great Depression and the recent recession are great examples of that. Anyone who understands what Wall Street did and still blames the government is simply someone that probably thinks gold would be $5,000 right now, lol.

The private sector is more than capable of destroying the economy.

Right, we all know the Fed, FNMA and FHLMC are the purist example's of capitalism there is

 

[NFLTrends]

I wonder if AK can name 1 year the LPR was higher then the year Obama took office

 

[akphidelt]

I wonder if AK can name 1 year the LPR was higher then the year Obama took office

I don't think there is a group of people that really care that much about the "LPR" other than conservatives. I actually find it hilarious how that has become the biggest indicator of economic efficiency out there. Something we weren't taught in school. It was more about things like economic growth, standard of living, unemployment, etc. I honestly didn't know the biggest indicator for how well an economy is performing is the "LPR".

And because you guys are of questionable intelligence, I hope you realize this entire response is written with a facetious tone.

 

[SheriffJoe]

Right, we all know the Fed, FNMA and FHLMC are the purist example's of capitalism there is

Unfortunately this what a liberal arts college education gets you these days - government good; everything else bad.

These are the brainwashed Jon Stewart nitwits that gave us "President Obama"

:neenee:

 

[SheriffJoe]

 

[akphidelt]

Unfortunately this what a liberal arts college education gets you these days - government good; everything else bad.

These are the brainwashed Jon Stewart nitwits that gave us "President Obama"

:neenee:

That's not what we're taught at all... it's basically really simple.

Good Govt + Good Private Sector = Prosperity
Good Govt + Bad Private Sector = Failure
Bad Govt + Good Private Sector = Failure
Bad Govt + Bad Private Sector = Failure

Only one thing has proven to work and that is a mixture of good government with good private sector. In which one can lead to the other and vice versa. Your education leads you to $5,000 gold, hyperinflation, shit hitting the fan, and 5,000 Dow. I would rethink your thought process if I were you, lol.

 

[SheriffJoe]

That's not what we're taught at all... it's basically really simple.

Good Govt + Good Private Sector = Prosperity
Good Govt + Bad Private Sector = Failure
Bad Govt + Good Private Sector = Failure
Bad Govt + Bad Private Sector = Failure

Only one thing has proven to work and that is a mixture of good government with good private sector. In which one can lead to the other and vice versa. Your education leads you to $5,000 gold, hyperinflation, shit hitting the fan, and 5,000 Dow. I would rethink your thought process if I were you, lol.

You're a brainwashed big govt loon and derive all your knowledge from theory rather than reality. From teachers, not doers.

You believe govt employees, bureaucrats and politicians are "educated people making intelligent informed decisions", when in reality they're the dumbest bricks in the country. Harry Reid, Nancy Pelosi, Barry Soetoro face)(*^%...I'd rather have Larry the Cable Guy.

There isn't a single aspect of life you don't want the government to interfere with, which makes you a far left, brainwashed, Jon Stewart commie hack. In other words, a 'moderate' in your eyes.

"basically really simple"...nice grammar, Mister Educated, lol.

 

[SheriffJoe]

Guys, it's basically really simple...

I've been around very, VERY educated people my entire life.

Obama's handling of the recession was the epitome of perfection. Very, VERY smart economists in academia agree the stimulus worked.

I listen to smart people like Paul Krugman - educated people making intelligent informed decisions.

Never listen to those uneducated Cliven Bundy types. The government always knows what's best for us and the government is always right.

Pseudoscience is a claim, belief or practice which is presented as scientific, but does not adhere to a valid scientific method, lacks supportingevidence or plausibility, cannot be reliably tested, or otherwise lacks scientific status.[SUP][1][/SUP] Pseudoscience is often characterized by the use of vague, contradictory, exaggerated or unprovable claims, an over-reliance on confirmation rather than rigorous attempts at refutation, a lack of openness to evaluation by other experts, and a general absence of systematic processes to rationally develop theories.

 

[akphidelt]

Joe, until you figure out why you were wrong about gold, the dollar, hyperinflation, the stock market, and the economy there is nothing left to say. You have to learn why you are wrong about everything before trying to understand what I'm saying and why majority of smart people around the world come to these conclusions. Otherwise, you just come off like a psycho.

 

[SheriffJoe]

Joe, until you figure out why you were wrong about gold, the dollar, hyperinflation, the stock market, and the economy there is nothing left to say. You have to learn why you are wrong about everything before trying to understand what I'm saying and why majority of smart people around the world come to these conclusions. Otherwise, you just come off like a psycho.

You don't have a rudimentary understanding of the basic rules of economics.

The current market is a massive bubble. There is no 25 million dollar Grilled Cheese Truck. Your castle is built on sand and you're mocking anyone who tells you one day a storm will wash it all away.

Enjoy it while it lasts.

 

[The Guesser]

You don't have a rudimentary understanding of the basic rules of economics.

The current market is a massive bubble. There is no 25 million dollar Grilled Cheese Truck. Your castle is built on sand and you're mocking anyone who tells you one day a storm will wash it all away.

Enjoy it while it lasts.

It's hysterical. Casper found a ridiculous, meaningless, OTC stock that just started trading, and is getting punished by investors because it wasn't a viable company valuation, and he's trying to paint it as representative of the great performing market as a whole. That's why he's stupidly clings to his 5,000 DJIA and 5,000 Gold foilly. I hope he's invested whatever few $$$$ he's had left on those theories.