[mtdjed]

Originally Posted by mvbird

If the Federal Reserve finally lowers (and continues to lower) interest rates in September, I think house prices may increase. If buyer's monthly financing costs are lower they qualify to buy at a higher price.

Another part of my argument is that money market rates will continue to sink, causing some to want to invest in real estate instead, hoping or renting, for a better return.

The other side of this argument is Villages house prices will remain the same because many buy Villages homes with cash, no financing, and they won't care.

Discussion ?

We all have an expectation that we will continue to have an increasing standard of living. If that increase is due to increased skills and promotions, we move up the ladder. If that increase is cost of living it is inflation. More taxes, higher House prices is inflation and thus need for more cost of living increases. Fed rates lower allow for higher house/car/commodity prices and higher inflation. That means need for more cost of living increases.

The beat goes on. The people outside of the Cost of Living increase adjustments continue to fall behind. They then look to higher home prices when they sell, which keeps the cycle going.

You can't beat it, but you can ride the wave smartly.

[spinner1001]

Originally Posted by mvbird

If the Federal Reserve finally lowers (and continues to lower) interest rates in September, I think house prices may increase. If buyer's monthly financing costs are lower they qualify to buy at a higher price.

Another part of my argument is that money market rates will continue to sink, causing some to want to invest in real estate instead, hoping or renting, for a better return.

The other side of this argument is Villages house prices will remain the same because many buy Villages homes with cash, no financing, and they won't care.

Discussion ?

Doesn’t realize the Fed has no control over mortgage lending rates.

Mortgage interest rates are set by market participants (i.e., the market).

[joeinil]

Or as Truman once said….”give me a one handed economist “

[SaucyJim]

Originally Posted by mvbird

If the Federal Reserve finally lowers (and continues to lower) interest rates in September, I think house prices may increase. If buyer's monthly financing costs are lower they qualify to buy at a higher price.

Another part of my argument is that money market rates will continue to sink, causing some to want to invest in real estate instead, hoping or renting, for a better return.

The other side of this argument is Villages house prices will remain the same because many buy Villages homes with cash, no financing, and they won't care.

Discussion ?

Rates matter, sure. But the inventory here is through the roof. Until we work through that inventory (which is still trending upward), house values must fall. Painful medicine.

[BillyGrown]

Originally Posted by SaucyJim

Rates matter, sure. But the inventory here is through the roof. Until we work through that inventory (which is still trending upward), house values must fall. Painful medicine.

It should level out in about 2 years. We will continue to decline for a while with the pandemic correction and jobs will settle with the economic changes in place. Then we should see a moderate climb. Nothing like the lightning fast drop back in 08 though.

[oneclickplus]

Originally Posted by mvbird

If the Federal Reserve finally lowers (and continues to lower) interest rates in September, I think house prices may increase. If buyer's monthly financing costs are lower they qualify to buy at a higher price.

Another part of my argument is that money market rates will continue to sink, causing some to want to invest in real estate instead, hoping or renting, for a better return.

The other side of this argument is Villages house prices will remain the same because many buy Villages homes with cash, no financing, and they won't care.

Discussion ?

Inflation is much higher than the government will ever admit. The fed should be raising rates. Yes, lower rates means housing prices (not values) go up. Higher rates produce the opposite effect. Why?

Because housing prices don't reflect actual value. We are not on a gold standard (or any standard). Same with cars and many large purchases. We are a debt-driven society. It's no longer "how much can you afford", rather it's "how much can you borrow". It's perverse. It's been that way since gold backing was removed. The constitution reads that all money must be gold or silver. The framers were very wise. But, we ignored them and put a private bank (Federal reserve) in charge so that we could borrow and spend more than we have (and not have to relinquish gold to foreign countries). It's just paper that much of the world has accepted as valuable since WW2. But the USD is slowly being removed as the world's reserve currency. Don't be deceived. When housing prices rise, all that means that the dollars you have are worth less and less. The higher prices go, the closer we come to the day when the dollar will buy NOTHING. It will continue to be this way until the collapse of the dollar. This is a mathematical certainty. If anyone thinks it's ok to continue borrowing and spending, those are the folks that skipped math class.

[chuckpedrey]

The Fed should have NEVER been created. Let The Villages banks determine what rate they will charge to do business and let Chase decide what rate they will charge to do business with you and let Wells Fargo decide what rate they will charge to do business with you.

[RoboVil]

Originally Posted by tophcfa

The fed should not be lowering rates with the inflation we are experiencing. I don’t care what inflation numbers are being officially reported, inflation is real and badly needs to come under control. Also, the Fed needs to act as an independent agency and not bow to outside influences, lowering rates now would be a very bad look.

The Fed needs to reduce interest rates so young people can afford to buy a house. Inflation is not that high, and Powell has said he wanted to wait until he sees the effects of tariffs. Now with the weakening labor market it is time to start lowering rates. Not because of pressure, but because it is common sense.

[Ptmcbriz]

Compounding the inflation are the tariffs. I recently bought a E-bike from Germany. When the time came for DHL to deliver it, I got an email from our lovely government (and confirmation from DHL) that I had to pay a $1800 import fee (aka tariff) before they could release it for delivery. The tariffs are skyrocketing prices for citizens. This is crazy on top of our high expense of interest rates. If the whole idea is to get US citizens to stop buying things, these tariffs will definitely do it. Unfortunately, that means many businesses going out of business as a result.

[opinionist]

Cutting short-term interest rates will reduce payments on the national debt, but the long-term rates will only decrease if QE (money printing) is used to buy long-term debt. We would not have a national debt if non-interest-bearing treasury notes were used in place of debt notes. The bankers scammed us with the First Bank of the United States, the Second Bank of the United States, and the Federal Reserve. They are a parasite on the economy, having collected an inflation-adjusted $30 trillion in national debt interest payments.

Seniors are being forced into higher-risk assets with lower returns on money markets. Price inflation is a killer, driving people to seek higher returns. Purchasing rental homes has been a success for some people, but it is a business that has risks and requires considerable effort to remain profitable.

I purchased my home with cash, but I do care about interest rates because I worry about the fiscal health of the United States. There is no budgetary restraint at the Federal level, and all the "free money" will get shut off when the inevitable crash happens.

[Aces4]

Originally Posted by Ptmcbriz

Compounding the inflation are the tariffs. I recently bought a E-bike from Germany. When the time came for DHL to deliver it, I got an email from our lovely government (and confirmation from DHL) that I had to pay a $1800 import fee (aka tariff) before they could release it for delivery. The tariffs are skyrocketing prices for citizens. This is crazy on top of our high expense of interest rates. If the whole idea is to get US citizens to stop buying things, these tariffs will definitely do it. Unfortunately, that means many businesses going out of business as a result.

Don't you mean many businesses in Germany will be going out of business? It really pays to shop American.

[kingofbeer]

Originally Posted by mvbird

If the Federal Reserve finally lowers (and continues to lower) interest rates in September, I think house prices may increase. If buyer's monthly financing costs are lower they qualify to buy at a higher price.

Another part of my argument is that money market rates will continue to sink, causing some to want to invest in real estate instead, hoping or renting, for a better return.

The other side of this argument is Villages house prices will remain the same because many buy Villages homes with cash, no financing, and they won't care.

Discussion ?

Lower interest rates will encourage first time home buyers to buy. And will encourage investors to move their money from money market and cd's into the stock market. Real estate investors is not the focus of lower interest rates.

[kingofbeer]

Originally Posted by Pugchief

The Fed should be abolished and let the free market set rates on short term securities like it currently does on longer term ones. Government manipulation of the free market rarely works as intended.

The Fed works. When inflation is sky high, lowering interest rates has proven to be the best way to lower inflation. This is economics 101.

[kingofbeer]

Originally Posted by Topspinmo

IMO Government spending always causes inflation. Until government stops spending more than takes in prices will continue to go up. Course prices always go up anyway but, with government out of control it’s 3 fold or more. IMO need go back to gold standard, IMO that would limit government spending (they couldn’t just print paper money by train loads and give it away like Halloween candy.).

Gold standard ? Let's all have a beer and laugh about that.

[joshgun]

Trump will replace Powell next year with someone who will drastically cut interest rates. Prices(inflation) will soar we will soar. We will be in a recession by 2027.