digital services is the only category where consumer growth isn’t slowing down. and by itself digital books are eliminating a gigantic slice of industrial printing and delivery. it would shock you how relevant that category js.
i cannot cite it because it was internal research done by my teammates. although you would be take it skeptically due to pro-amazon bias.
How do interest rates doubling result in home prices only declining ~5%? This has been such a weird housing market.
Nobody is selling. If unemployment goes up there will be a housing crash.
Well off people don’t need to sell at something that’s not their price.
Interest rates at 6%+ mean less well off people aren’t incentivized to trade up when their existing rate is half that.
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The housing market crashes when folks can no longer afford to make their silly priced mortgage payments. That takes time and doubling rates isn’t going to instantly cause that to happen.
A lot of chatter at my work from folks wanting to see the market drop down to June lows so they won’t make that “mistake” of not buying at what they feel is a possible bottom. I’d imagine there’s a legit chance we see one of the largest drawdowns from that point if we don’t hold those june levels because the market always seems to find a way to eloquently rek those people that have that type of collective thought that’s strong enough to actually influence the market.
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Not a bad idea as long as they are referring to June 2009.
Those people never buy… they just keep waiting and saying the same thing.
yeah we’re only like 3-4% off the June lows right now, if June was a good time to buy then its still a good time to buy right now, it sounds like they are trying to time the exact bottom and will find another excuse not to buy when we reach June levels again. I made the opposite mistake last year trying to time the top and sold a lot thinking theres no way the market can keep going up, I wont be doing that again
[quote=“Formula72, post:9228, topic:3997, full:true”] I’d imagine there’s a legit chance we see one of the largest drawdowns from that point if we don’t hold those june levels because the market always seems to find a way to eloquently rek those people that have that type of collective thought that’s strong enough to actually influence the market.
[/quote]
i guess im more optimistic than most people here ive been piling in anytime spy goes under 400, 15% above pre-covid levels seems like a pretty good deal to me.
I think the winners out of this are going to be the ones who guess most accurately what unemployment does from here. Folks aren’t going to get blown out of their houses from ARM’s like in 08 so i’d imagine people would be hunkering down and would naturally adjust their spending to the realization that they’re going to be underwater for possibly 10+ years with reduced access to credit - and businesses will have to adjust to that. I’d guess the degree of job loss determines whether we avert or enter a legit recession.
I predict normal people come through relatively fine but leveraged people who own income producing assets will feel real pain. Anyone who owns something with maturing debt, or who has floating rate debt, who bought with maximum leverage is in trouble. But the prices of those assets won’t crater because there are tons of cash rich buyers who have dry powder.
Rates keep spiking.
3.67% 10 year yield
One thing some American home owners will want to look into is the trade off of paying down mortgage debt faster before your rate rises vs. keeping the big mortgage and at least the interest is tax deductible.
In Canada the situation is a bit clearer because we don’t get the tax benefit from mortgage debt. My mortgage renews in May 2024 so I have about a year and a half before I will be exposed to these higher rates. We are definitely looking for opportunities to knock some of our outstanding mortgage debt off before that happens.
Finance is so weird, the human brain just isn’t equipped to think in terms of 10+ year cycles. Every informed person knew rates couldn’t be zero forever yet here we are, it feels incomprehensible the 10 year UST is approaching 4% (still well below historical averages).
Human brains instinctively project things to be linear. When something is stable, people assume it will remain stable. It’s very hard work to examine and understand that systems might be unstable beneath their surface, and that things might change quickly or by a lot or both. Given the choice between doing the hard work and, I don’t know having a beer or watching TV, it’s not hard to guess what choice most people are going to make.
Because of the elimination of SALT, and the increase in the standard deduction and elimination of personal exemptions, in most cases the interest is not, in fact, tax deductible.
The vast majority of us don’t have adjustable rate mortgages so that question isn’t one that we have to think about either.