Do you see the housing market crashing since everyone is in it.
I mean people need to rent houses to live in, but if they are getting laid off, they cant afford rent, and will end up moving into a worst place, which for the landlord will impact on not having a tenant and force them to sell at a discount because now they cant afford mortgage?
I am not a real estate expert so I would not be able to answer the specifics.
But I think the housing datas lately are quite negative. Inventory are building up. The rate hikes are making mortgage harder to afford for more people. So the odds are that housing might be going up against some headwinds coming up.
Crypto is still quite a volative asset. I think unless crypto starts to show negative correlation with the equity market and risk-on assets, macro environment still dictates the direction of crypto.
Agree there. Hopefully we can get a bit of this negative correlation soon. Recent paper came out discussing how FED's liquidity creates higher correlation across the board. And risk gets pushed in different ways that makes removing liquidity harder and harder.
There are quite a few tools that are at the FED's disposal. Hiking interest rate is the obvious one. Another one is stop buying the mortgage backed securities (MBS).
You think any legislation could happen to do this? Not that Congress would want it in the first place nor would the FED likely push public policy to seek this... higher LTV requirements is one method, but I don't see anybody that would advocate for this type of responsible fiscal policy.
Wow it now makes sense, thanks
Do you see the housing market crashing since everyone is in it.
I mean people need to rent houses to live in, but if they are getting laid off, they cant afford rent, and will end up moving into a worst place, which for the landlord will impact on not having a tenant and force them to sell at a discount because now they cant afford mortgage?
Hi Chekov,
I am not a real estate expert so I would not be able to answer the specifics.
But I think the housing datas lately are quite negative. Inventory are building up. The rate hikes are making mortgage harder to afford for more people. So the odds are that housing might be going up against some headwinds coming up.
Crystal clear. Thanks for the explanation. Looking forward for the next...
Great piece! thanks for the update,
Had a great time reading it, looking foward for the next one
Thank you!
Thank you for this looking forward to your upcoming writeups!
Thank you!
Just wanna say thank you :)
You are welcome and thank you!
Great points, I agree, thx for your insights and thoughtful article.
Thank you!
CPI is definitely not the go to benchmark for the Fed. its PCE. big mistake here
Hi DD.
Thank you for your note about PCE. Much appreciated.
PCE is the primary gauge for the FED on inflation.
The sentence should've read: "CPI is one of the go-to benchmarks of inflation for Federal Reserve".
Housing cost is approximately 16% of the PCE components.
Interesting perspective.
If this is what they day, what happens to crypto? Do we just need to wait for all of this to wash out before crypto starts to rally properly?
Crypto is still quite a volative asset. I think unless crypto starts to show negative correlation with the equity market and risk-on assets, macro environment still dictates the direction of crypto.
Agree there. Hopefully we can get a bit of this negative correlation soon. Recent paper came out discussing how FED's liquidity creates higher correlation across the board. And risk gets pushed in different ways that makes removing liquidity harder and harder.
Excellent article.
What tools could used to slow down the housing market?
Thank you!
There are quite a few tools that are at the FED's disposal. Hiking interest rate is the obvious one. Another one is stop buying the mortgage backed securities (MBS).
You think any legislation could happen to do this? Not that Congress would want it in the first place nor would the FED likely push public policy to seek this... higher LTV requirements is one method, but I don't see anybody that would advocate for this type of responsible fiscal policy.
Great piece, man! Did not know about money velocity and how that has been on a downward trend for the past decade!
Thank you!