Jerome Powell is an idiot.
Only an idiot would look at spiraling tulip prices and define “price stability” as providing below-market loans for tulip buyers.
Alternately:
All previous economists, and all previous Fed chairs were wrong, and if the US is a prosperous country, then that is just dumb luck and happened despite 200 years of wrongness.
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Hmm, doesn’t seem likely.
Clearly, the present is a radical departure from the historical norms. A risky and never-tested experiment.
Maybe I am wrong to be pessimistic about the untried experiment, but an untried experiment is exactly what it is.
I predict it ends with home ownership becoming a thing for two groups those who currently own one and hands it down to their children or the top 7%.
Everyone else will have to do like most do in Ukraine and other second tier countries and get multiple roommates and rent forever. Home ownership will become a thing only for the few and will be a nation of renters.
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If we freeze the current situation in place, or continue in the current direction, something like that will likely happen. (See chart above.)
**WORST LEVEL EVER!!**
US pending home sales are lower than during the housing crisis
and lower than when . . .
checks notes
the entire country was shut down, including many banks, lenders, appraisers, realtors, and closing companies etc. , we had 13% unemployment and everyone thought they were going to die.
This chart shows us something our HS math teachers told us about and most of us promptly forgot: The Median is not The Mean
The fact that the Case Shiller Index (red below) differs from the blue line below (a rare occurrence) shows that upper-end homes are not selling right now.
But the fact that it is rising shows that homes generally are still rising.
(Good news for homeowners, bad news for their children, their grandchildren and the near-term future of the American economy etc.)
Bit of a deep dive here but . . . why not?
All three of the green arrows below are identical.
Same size, same shape, same color and most importantly . . . . same slope.
The point of this exercise is to show
- The current (Jan 1, 2024, June 30 2024) home price appreciation is a rapid and crazy as the one immediately post-pandemic.
- Both of them show home prices increasing waaay faster than they did during the crazy time 2004-2006 (that was a little baby minor 30% in 2 years. This is the truly fast one.)
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Is the Fed doing the right thing to cut rates?
