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[deleted] t1_jcaifwz wrote

[deleted]

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ttyp00 t1_jcan8yb wrote

I just said that same thing to my wife. And added, "Let's wait to buy a house. Mortgage rates are just about to come crashing down."

edit: great advice below. I so dum. Thanks y'all

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nigelthornberrynose t1_jcbppua wrote

Probably not this time actually. Mortgage rates largely follow the Fed rate and the Fed has precisely two goals (the “dual mandate”):

  1. Keep inflation about 2%.

  2. Keep unemployment about 4%.

That’s it. There’s nothing in the Fed mandate about protecting banks. Inflation is still at 6% yoy (yes that’s down from about 9% yoy a few months ago, but still too high) meanwhile unemployment is still very low at less than 4%. Thinking that the Fed will abandon its goal of price stability (aka 2% inflation) by suddenly cutting interest rates in order to save banks would be a very strange move. IF we see a massive unemployment spike as a result of bank failures then they would have a reason to cut rates. Until then, cooling inflation is a very high priority issue for both ordinary people and politicians so I don’t see a drastic rate cut before an even more painful unemployment report comes out.

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DickJohnsonPI t1_jcbx58g wrote

Is it true that there are problems with the way unemployment numbers have been presented, and that 2022 employment gains were counted in 2023 figures?

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nigelthornberrynose t1_jcc1o22 wrote

There is always debate about how both inflation and unemployment are calculated. People argue the reported numbers are wrong all the time, they have done for as long as I’ve been reading financial news, and probably some of those people are right. Sometimes unemployment numbers are retroactively revised after more information becomes available, that certainly has happened before.

But in terms of predicting monetary policy I’m not sure it matters. What matters is if the numbers the Fed has are above or below their target, not whether the numbers are 100% accurate, as far as their accuracy can even be measured.

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peepjynx t1_jcbxfmu wrote

Btw, something like 99% of homeowners are locked in to fixed interest rates between 3-6%. This is actually a problem. But there will not be any sort of housing market collapse because, after 2008, they kneecapped housing supply.

No one is building jack shit.

For anyone interested in this stuff though, seriously check out this guy's YouTube channel. Even go back a few months. I don't remember who shared this link with me, but I quietly thank them every day.

https://www.youtube.com/@clearvaluetax9382/videos

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Johns-schlong t1_jcdf4nz wrote

Yeah, something a lot of people like to ignore regarding housing pricing is the lack of supply. This isn't like 2008 where there are a surplus of houses. And like you said, most owners are now locked in at historically low rates that make moving less likely.

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jlbuery t1_jcbod22 wrote

Would it be better to buy a home prior to a crash for lower cost and refi for lower interest?

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ArenSteele t1_jcdh6ig wrote

You’ll want to buy a house BEFORE the rates crash. As soon as rates fall, house prices are going to skyrocket again.

If you are psychic and can time up your purchase to a couple of months before they announce an intention to drop rates, you’ll probably get your best possible deal.

Eat the high rates for a couple of years, then refinance at a lower rate if/when they do come down

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Austoman t1_jcanyef wrote

What do you mean that immediately after the housing collapse people realized that there was a far larger debt bubble? Its a good thing we've spent the last 15 years reducing the bubble and preparing for the risk of it.... oh wait Im now being told we did none of that. Uh huh... we increased our debt... mm hm and further increased the bubble both for financial institutions and for the general populace via credit card debt.... glass-steagall would have really helped keep things in check.... no new safety net in place....

Huh so it turns out that we have a far larger, multi industry sweeping debt bubble both for individuals and for banks as banks lend out 10x their value to people and companies that operate on razors edge thin margins when it comes to risk absorption/adaptability. Add into that massive shorting from major institutions that if their valuations shift could result in significant margin calls leading to a cycle of loss.

Cycle of loss being that a heavily leveraged and shorting company would be forced to pull/sell their investments (bonds/stocks) to hold more liquidity/cash. Doing so usually results in a loss, especially with a declining market, thus resulting in lower than expected revaluations. The revaluations lead to the company being margin called as their collateral value declines, which would force them to close their shorts, which in turn would reduce their cash/liquidity, and the process repeats.

Soooo yeah turns out the government giving the banks a blank cheque by bailing them out in 2008 may have resulted in an far broader reaching economic collapse.

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Rickshmitt t1_jcboq1j wrote

Trump and republicans repealed the Dodd Frank regulations that would have kept us from just such a collapse, again!

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WestCoastBestCoast01 t1_jcbjvf4 wrote

I was merely a teenager at the time and I’m definitely getting anxiety tied back to that time. Thankfully, the experience of ‘08 fueled me to be careful financially in my 20s and pay off debt ASAP and save up an emergency fund.

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