The Stock Market Is Not The Economy Thread II

[Zealot]

One of our clients at work is a fairly large national mortgage lender and there was a lot of open talk on a call today about how they're all expecting the next big crash to happen.

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[Mythe_Seraph]

https://twitter.com/johngramlich/sta...96928340410370

the MAJORITY of Americans think unemployment, which is at a rock-bottom 3.6%, is a moderately or very big problem in America today.

I don't even know what you do about a populace that is that disconnected from reality.

A MAJORITY think all those things are problems. Look at the way that survey was created. You’re probably going to get a MAJORITY for any question you put on there.

[Mythe_Seraph]

One of our clients at work is a fairly large national mortgage lender and there was a lot of open talk on a call today about how they're all expecting the next big crash to happen.

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ARMs at all time highs. Rates increasing. Inflation increasing. Real take home decreasing. Inelastic prices increasing. Something’s gotta give eventually. Writing has been on the wall for well over a year.

[synistar]

Lest not forget about logistics/supply chains still out of balance. Baby formula is the latest item that's low on stock. The effects of the pandemic on raw materials production and crude oil deliveries continue to impact a very unstable manufacturing sector.

[archibaldcrane]

There well may be a recession, but I don't expect a housing "crash" at all, people getting mortgages are more credit-worthy than at any other time in US history.

[Kaslo]

Lest not forget about logistics/supply chains still out of balance. Baby formula is the latest item that's low on stock. The effects of the pandemic on raw materials production and crude oil deliveries continue to impact a very unstable manufacturing sector.

Baby formula also got hit with the double whammy of large product recalls as well.

[Salodin]

Where is the crash supposed to happen? Everyone refinanced at 3%, they ain't going anywhere anytime soon.

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[Mythe_Seraph]

There well may be a recession, but I don't expect a housing "crash" at all, people getting mortgages are more credit-worthy than at any other time in US history.

While I agree with the sentiment, and I don’t expect a full blown housing collapse like 2008, disagree with the supporting logic. Credit worthiness doesn’t matter much when external variables are so volatile, as they are right now.

[archibaldcrane]

While inflation is pounding consumer goods, the thing it isn't pounding is your fixed-rate mortgage. Any wage gains at all relative to your mortgage make it even more affordable.

[Mythe_Seraph]

Where is the crash supposed to happen? Everyone refinanced at 3%, they ain't going anywhere anytime soon.

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This is the argument I see a lot, and it’s sound when there are consistent variables. The problem is they’re not right now. Housing affordability and savings is being incrementally eroded by inflation, rising goods and services, etc. These types of things take time to show their effects but with every small increase, you have a portion of home owners who now cross a threshold that they cannot support when it comes to their monthly expenses.

Go to Redfin, Zillow, anywhere really and start tracking your towns auction/for sale foreclosure listings. They’ve started to accumulate in a surprising number over the last 6 months, and that was before the “Putin price hikes.” Things aren’t looking good for a lot of American families, and it’s something I feel a lot of members of BG are relatively disconnected from because a lot of people here seem relatively financially literate and responsible/disciplined.

[Mythe_Seraph]

While inflation is pounding consumer goods, the thing it isn't pounding is your fixed-rate mortgage. Any wage gains at all relative to your mortgage make it even more affordable.

I’m not sure why you’re assuming every homeowner in America is at a sub 3% interest rate, or a fixed rate. Look at ARM data. It’s at its highest lending volume in the past decade.

[archibaldcrane]

All of 17% of mortgages are ARMs right now? That doesn't feel particularly alarming - but yes with rates up over the past two months people will start doing more ARMs.

https://twitter.com/reteamly/status/1519360333806243843

[Boyiee]

My house is going to be worth 50% more than I paid for it soon. My rate is 2.5%. Is this when I take out a home equity loan for a $40,000 kitchen and in-ground pool?

[Mythe_Seraph]

My house is going to be worth 50% more than I paid for it soon. My rate is 2.5%. Is this when I take out a home equity loan for a $40,000 kitchen and in-ground pool?

If you can find a HELOC I’d say go for it. I don’t know of any lenders doing them that don’t have absurd pre-reqs. Last I saw banks were asking for 75% reserves on what was being borrowed which is like… what’s the point (this was before they discontinued them).

[Mertron]

im amazed that many people care about the deficit

[archibaldcrane]

My house is going to be worth 50% more than I paid for it soon. My rate is 2.5%. Is this when I take out a home equity loan for a $40,000 kitchen and in-ground pool?

if you can get a new kitchen reno and an in-ground pool for 40k yes go for it

[Boyiee]

if you can get a new kitchen reno and an in-ground pool for 40k yes go for it

Oh no the kitchen would be 40k I think the pool would be upwards of 80-100k.

[archibaldcrane]

You might have to Ksandra it up then

[Boyiee]

Knocking down an above ground 16x32 to put an in-ground in to use 2 months of the year.

[Mertron]

do it, and invite me over to pee in it