More than anyone else on this forum, you have held strong views the US housing market would recover this year (price and volume) - and you were absolutely right. Well done.
But do you think he housing market can rebound from here given US mortgage rates are up 100bpts over the past six months? What would 4 rate hikes over six months do to the Aussie market?
More than anyone else on this forum, you have held strong views the US housing market would recover this year (price and volume) - and you were absolutely right. Well done.
But do you think he housing market can rebound from here given US mortgage rates are up 100bpts over the past six months? What would 4 rate hikes over six months do to the Aussie market?
That's an interesting question. Perhaps just as interesting, what's going to happen when people realise that they might never get a 4.5% fixed mortgage again? There seems to be some consensus that volumes of existing home sales will drop off from August, not because of rising rates but because stock has become very tight and credit is still quite hard to get. Prices are expected to keep rising despite lower volume.
More than anyone else on this forum, you have held strong views the US housing market would recover this year (price and volume) - and you were absolutely right. Well done.
But do you think he housing market can rebound from here given US mortgage rates are up 100bpts over the past six months? What would 4 rate hikes over six months do to the Aussie market?
Even without rate rises the rate of price improvement must slow markedly. Prices are still 20% below the peak but it could take some years to reach the peak nationally.
The rising rates will obviously be an impediment to further growth and if rates rose even more again then we could even see a small dip.
Funding is still a major issue. Almost 9% of transactions are funded by cash, and without the government in the market growth would be a lot slower. I have heard that underwriting standards are still too high.
Predicting a comeback was easy enough, but predicting where house prices go to from here is more difficult. I see that independent research such as Trulia leads the Case Shiller index, so there may be a lag in the data used by Case Shiller. What I mean is that the prices could be a little better than what the Case Shiller index suggests. Trulia also give me considerably different price/household income ratios. I did email Trulia to ask them where they got their income data from and they said that they use the Census data which is the data that others also claim to use.
Because small business is so reliant on the family home to secure business overdrafts, I don't think that the USA can see a full recovery until we see prices back to peak levels, or close to it. Small mum and dad business is still collectively a major employer, so the house price and employment recovery are linked IMHO.
You are a better interest rate predictor than I ever have been - what do you think will happen to rates in the USA. Will they re-adjust after a little panic when they eventually do taper, or will we see a period of rising rates. I doubt that Bernanke/Yellen will want rates much higher than they are now, but nothing is set in concrete.
Any expressed market opinion is my own and is not to be taken as financial advice
Even without rate rises the rate of price improvement must slow markedly. Prices are still 20% below the peak but it could take some years to reach the peak nationally.
The rising rates will obviously be an impediment to further growth and if rates rose even more again then we could even see a small dip.
Funding is still a major issue. Almost 9% of transactions are funded by cash, and without the government in the market growth would be a lot slower. I have heard that underwriting standards are still too high.
Predicting a comeback was easy enough, but predicting where house prices go to from here is more difficult. I see that independent research such as Trulia leads the Case Shiller index, so there may be a lag in the data used by Case Shiller. What I mean is that the prices could be a little better than what the Case Shiller index suggests. Trulia also give me considerably different price/household income ratios. I did email Trulia to ask them where they got their income data from and they said that they use the Census data which is the data that others also claim to use.
Because small business is so reliant on the family home to secure business overdrafts, I don't think that the USA can see a full recovery until we see prices back to peak levels, or close to it. Small mum and dad business is still collectively a major employer, so the house price and employment recovery are linked IMHO.
You are a better interest rate predictor than I ever have been - what do you think will happen to rates in the USA. Will they re-adjust after a little panic when they eventually do taper, or will we see a period of rising rates. I doubt that Bernanke/Yellen will want rates much higher than they are now, but nothing is set in concrete.
Cheers peter.
I think the housing market is key for the us recovery. The multiplier effect from housing construction is very powerful in both directions.
Household debt is too high IMO so My guess is us long rates are too high, and will have to come down. That will happen via fed signalling (they use QE to do that these days), or we start to see soft data.
I think the housing market is key for the us recovery. The multiplier effect from housing construction is very powerful in both directions.
Household debt is too high IMO so My guess is us long rates are too high, and will have to come down. That will happen via fed signalling (they use QE to do that these days), or we start to see soft data.
The key is housing - hence my question.
No arguments from me on the multiplier effect of new housing.
My concern though is that eventually the USA will get housing back to where they want it, and then they can allow rates to rise. Borrowers are protected by long term fixed loans so that might slow new tranactions but it won't put existing home borrowers at risk, but it will here as we also have a lot of debt and our variable loans will react immediately as rates rise.
That's the point in time that concerns me for Australia. It's probably years away but the moment will come. If the debt level isn't sorted out in the meantime it will hurt people. Deficits for a long time perhaps? That doesn't match the political rhetoric.
Any expressed market opinion is my own and is not to be taken as financial advice
No arguments from me on the multiplier effect of new housing.
My concern though is that eventually the USA will get housing back to where they want it, and then they can allow rates to rise. Borrowers are protected by long term fixed loans so that might slow new tranactions but it won't put existing home borrowers at risk, but it will here as we also have a lot of debt and our variable loans will react immediately as rates rise.
That's the point in time that concerns me for Australia. It's probably years away but the moment will come. If the debt level isn't sorted out in the meantime it will hurt people. Deficits for a long time perhaps? That doesn't match the political rhetoric.
It is for that reason Australian interest rates will not increase for any sustained period. Remember the RBA is in charge
It is so obvious to me interest rates are heading to zirp.
Pending home sales in the US down 1.6%. Looks like the progostications are being vindicated.
On the other and, new jobless claims at 305k with no taint from computer glitches this time. Seems to have taken a definite leg down from the 330k numbers from earlier in the year and 350k+ numbers from 12 months ago.
Its like a woman feeding her children arsenic until they become addicted. She then stops giving them arsenic and they die.
Not from arsenic poisoning but rather from withdrawal. QE is the arsenic and the economy is fully addicted now. The economy won't die from QE it will die from withdrawal.
Additionally the suggestion of lowering the QE billions was a test.
Its like a woman feeding her children arsenic until they become addicted. She then stops giving them arsenic and they die.
Not from arsenic poisoning but rather from withdrawal. QE is the arsenic and the economy is fully addicted now. The economy won't die from QE it will die from withdrawal.
Additionally the suggestion of lowering the QE billions was a test.
It's that view that will keep you consistently wrong.
You're not trying to understand QE or the other measures, and people always become negative about things they don't understand.
Make the effort.
b_b
27 Sep 2013, 12:26 AM
It is for that reason Australian interest rates will not increase for any sustained period. Remember the RBA is in charge
It is so obvious to me interest rates are heading to zirp.
Yep I understand that, but if rates in the USA are almost as high as our rates, won't that force our dollar well down - I mean below 0.70 USD Why would an investor buy Aussie bonds when they can get the same return (or similar) in US treasuries?
And that will cause another issue - long term borrowings by banks will be way too high in the market to attract borrowers to use fixed loans. I'm OK with that but will that cause an issue with APRA, or will it help kick start a proper term bond market here.
miw
27 Sep 2013, 01:06 AM
Pending home sales in the US down 1.6%. Looks like the progostications are being vindicated.
On the other and, new jobless claims at 305k with no taint from computer glitches this time. Seems to have taken a definite leg down from the 330k numbers from earlier in the year and 350k+ numbers from 12 months ago.
I'd like to see the look on Santelli's face if and when jobless claims fall below 300,000
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