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  1. #7476
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    Quote Originally Posted by spanky View Post
    We’re neighbors. I work above the Victoria’s Secret. That store and the new Nike flagship on the other corner befuddle me as to how the renovation costs and rents can be covered.
    they dont have to make money, they're public companies...lol
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  2. #7477
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    Quote Originally Posted by liv2ski View Post
    80% LTV with a $400k loan amount. Green is a credit towards costs and red are points paid for a buy down,

    Attachment 283086


    please run that chart at 8% with the same payment and tell me what price house that buys....

    imo when interest rates hit 8% , a house that was purchased for 8% and $400,000 aint worth $400,000 anymore

    then the jacked up building supplies that are propping up the earnings per share estimates aren't going to hold and well......it's bad

    here's the thinking behind this .... so if the entry level home in a town is $400,000 and building supplies and labor, land have all increased prices to support this and interest rates go up, people cant buy a house anymore because there are no $200,000 houses and their pay did not increase at a pace to handle the same monthly mortgage expense on a less valuable house...the ltv ratios dont work. fine just build $200,000 but they cant be built anymore because land, labor, and materials prices are all inflated...so the land costs plummet , great that's one piece of the puzzle, but now if labor lowers their charged price they cant make payroll, pay their bills, people are now out of work, materials prices have risen and support the earnings per share of the Lowes, Home Depots, Georgia Pacifics, USG's etc....cant meet earnings, revenue, stock prices fall hard and cut labor force....silly things like gold , precious metals go up, fuel/oil goes up...adjustable rate loans interest rates sky rocket, people losing jobs cant pay rent , mortgages, air bnb landlords arent renting their 2,3,4,5th houses, go into default, those companies stocks follow suit...cause deefaults, bankruptcies....the sky is falling kind of stuff.....but now $200,000 houses can be built because land , labor, and materials are now cheap...but hardly anyone is buying houses except the start up people that dumped their pre IPO stocks after the lockups lapse, fab wealthy, and other huge liquid wealth holders

    historical interest rates... avg is about 8% for this 47 year time period (but interestingly not the average for last 15 yrs) Looks like interest rates were lowered post 911 and then again for recession to prevent melt down type scenario
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    Last edited by MiCol; 05-19-2019 at 07:42 PM.
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  3. #7478
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    Those assumptions could leave you very disappointed waiting for a collapse. 8% rates are anything but guaranteed. Central banks are willing to inflate assets ad infinitum as a means of sustaining demand needed to buoy GDP. Just read their statements on potentially using NIRP to do just that. That desperation is in stark contrast to prior decades where monetary policy was driven by a very different set of priorities. We're in more immediate danger of increased financialization (think 50yr, 100yr mortgages & interest only options) than we are of mortgage rates doubling. Avoiding a housing collapse - or any massive asset market collapse, really - is priority number one for central banks and legislatures worldwide. The goal is 'not on my watch' rather than the historical norm of balancing that ever-present aim against sustainable policy.

  4. #7479
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    Quote Originally Posted by leftfield View Post
    -pandemic
    -large scale natural disaster
    -aliens attack
    US Civil War

  5. #7480
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    Quote Originally Posted by Bromontane View Post
    Those assumptions could leave you very disappointed waiting for a collapse. 8% rates are anything but guaranteed. Central banks are willing to inflate assets ad infinitum as a means of sustaining demand needed to buoy GDP. Just read their statements on potentially using NIRP to do just that. That desperation is in stark contrast to prior decades where monetary policy was driven by a very different set of priorities. We're in more immediate danger of increased financialization (think 50yr, 100yr mortgages & interest only options) than we are of mortgage rates doubling. Avoiding a housing collapse - or any massive asset market collapse, really - is priority number one for central banks and legislatures worldwide. The goal is 'not on my watch' rather than the historical norm of balancing that ever-present aim against sustainable policy.
    nirp looks insane


    on another note, here's your buying power spending $2600 a month on a mortgage at 4.5% and then 8%
    at 8% people cant buy as much house. But if $400K is the entry level home cost threshold, there's going to be trouble
    ( i realize that i am not taking down payments into consideration - but i guess that can be like 3% or something now anyway)

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  6. #7481
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    I don't know shit for sure and I didn't sleep last night, but IMO, rates will likely never exceed 5% again and will likely average below 4%. Why? Because the deficit is so damn large and growing. Murica can not afford its dept payments, especially with higher rates. If the World ever gets sick of this countries shit, just sell all the debt, so it has to self finance. BK, the end.
    That is why Dumpz was elected, to see over the BK of Murica.
    Quote Originally Posted by leroy jenkins View Post
    I think you'd have an easier time understanding people if you remembered that 80% of them are fucking morons.
    That is why I like dogs, more than most people.

  7. #7482
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    Quote Originally Posted by spanky View Post
    We’re neighbors. I work above the Victoria’s Secret. That store and the new Nike flagship on the other corner befuddle me as to how the renovation costs and rents can be covered.
    Nature Works fan?
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  8. #7483
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    Yeah, I don't see rates hitting 8% again either. We have better odds of being Japan with negative rates before we see 8 again IMO.
    Live Free or Die

  9. #7484
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    Quote Originally Posted by St. Jerry View Post
    Nature Works fan?
    Not really. Dig Inn, yes.
    Because rich has nothing to do with money.

  10. #7485
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    Quote Originally Posted by AdironRider View Post
    Yeah, I don't see rates hitting 8% again either. We have better odds of being Japan with negative rates before we see 8 again IMO.
    It would be great I guess not to, but how can you say for sure. Bromontane certainly presented a compelling argument i.e. that the powers that be wont let America bankrupt or the World. But, I say it is out of the hands of regulators due to the large scale. I don't think there's a way to control some things, like the wind. At best we can hope to get a piece of it sometimes i.e. sailing , windfarms, etc. But, in reality there is no way to truly harness and fully control it.

    30% of Households economies (zero or negative networth) are so fragile just a slight shift can destroy their ability to fully participate or repay
    True that few of those households own homes, however they pay rent somewhere to someone. Many times they are paying to someone that has debt. Therefore they are mortgage payers by "proxy" imo and still have a powerful and important position in the economy. ( a good read: https://www.fool.com/retirement/2017...-net-wort.aspx )

    Here are some things related to ability to pay mortgages, rent withstand downturns unemployment, etc....

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  11. #7486
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    Quote Originally Posted by spanky View Post
    Not really. Dig Inn, yes.
    I could go for that. Next week?

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  12. #7487
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    Looks like 'Merkens could stand to save some money.

  13. #7488
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    Quote Originally Posted by MiCol View Post
    It would be great I guess not to, but how can you say for sure. Bromontane certainly presented a compelling argument i.e. that the powers that be wont let America bankrupt or the World. But, I say it is out of the hands of regulators due to the large scale. I don't think there's a way to control some things, like the wind. At best we can hope to get a piece of it sometimes i.e. sailing , windfarms, etc. But, in reality there is no way to truly harness and fully control it.

    30% of Households economies (zero or negative networth) are so fragile just a slight shift can destroy their ability to fully participate or repay
    True that few of those households own homes, however they pay rent somewhere to someone. Many times they are paying to someone that has debt. Therefore they are mortgage payers by "proxy" imo and still have a powerful and important position in the economy. ( a good read: https://www.fool.com/retirement/2017...-net-wort.aspx )

    Here are some things related to ability to pay mortgages, rent withstand downturns unemployment, etc....

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    I'm not sure what your point is here. I'm not saying rising rates wouldn't be a problem, just that we stand a better chance of them hitting zero than 8 in say the medium term future.

    The Fed typically isn't raising rates in times of recession, they typically do the opposite to get money moving. Sure everyone could just stop lending despite that, but that is more a liquidity trap than a raised rate environment. Given this, and the fact that the Fed has already decided to hold rates steady in the short term, leads me to believe we won't hit 8, as we would need higher rates currently to even get there on a glide path prior to the next inevitable recession.
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  14. #7489
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    Quote Originally Posted by skaredshtles View Post
    Looks like 'Merkens could stand to save some money.
    or slow/quit spending lol
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  15. #7490
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    Quote Originally Posted by MiCol View Post
    or slow/quit spending lol
    Well... that's implied. 'Cause it's really the only way to save money.

    I guess you could always argue they could just *make* more money... but that seems overly-optimistic.


  16. #7491
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    FWIW. We got married out of college with negative net worth and two new jobs. Bought a house 3 years later with 20% down at about 8% and a point or two by saving one salary for a year. CC, auto loan and student loan interest was all deductible so that helped a lot. TV was free too. If it was today we would be fkd. Banks are winning.
    thnx Capt. Chuck Shunstrom

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  17. #7492
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    The rules would change if rates rise too much. 100 year mortgages, deferred principal, higher tax deductions.


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  18. #7493
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    Quote Originally Posted by AdironRider View Post
    I'm not sure what your point is here. I'm not saying rising rates wouldn't be a problem, just that we stand a better chance of them hitting zero than 8 in say the medium term future.

    The Fed typically isn't raising rates in times of recession, they typically do the opposite to get money moving. Sure everyone could just stop lending despite that, but that is more a liquidity trap than a raised rate environment. Given this, and the fact that the Fed has already decided to hold rates steady in the short term, leads me to believe we won't hit 8, as we would need higher rates currently to even get there on a glide path prior to the next inevitable recession.
    i dont think we are in a recession now, if thats what you mean., i think the fed wants interest rates up and I think 8% is the historic average with 20% being an unlikely unreasonable high that was almost hit in past 47 years

    8% could do a lot of damage to the way everyone is operating today especially in housing
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  19. #7494
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    Quote Originally Posted by MiCol View Post
    i dont think we are in a recession now, if thats what you mean., i think the fed wants interest rates up and I think 8% is historic average with 20% being an unlikely unreasonable high, but 8% could do a lot of damage to the way everyone is operating today
    The only problem with your theoretical is that it's extremely unlikely to happen. We're more likely to see NIRP stateside than a FFR > 5%. Way too much leverage throughout the system to let rates normalize to historical averages. Central banks outside the US are almost all easing, putting that much more pressure on the Fed to be accommodative lest they trigger a debt crisis in foreign-debt that's serviced in USD.

    Also, keep in mind we're in the later stages of a long term debt cycle (see Dalio). Meaning rate averages of the last 70 years are not as applicable to the present as the rates experienced in the 1920-1940 period, which is the last time a long term debt cycle matured.

  20. #7495
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    China growing at 6% has a ten year rate at 3.3. Germany , Oz, UK, Japan and others all have 10 year rates below their growth rate. USA 10y is right about equal to its growth rate.

    I’m bullish US Treasury bonds. Only some structural or external catastrophe will cause a significant rate rise.


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  21. #7496
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    Quote Originally Posted by 4matic View Post
    China growing at 6%

  22. #7497
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    Quote Originally Posted by 4matic View Post
    The rules would change if rates rise too much. 100 year mortgages, deferred principal, higher tax deductions.


    Sent from my iPhone using TGR Forums
    And that would be good how? It is not the only way to enable increased profits.
    thnx Capt. Chuck Shunstrom

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  23. #7498
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    It's truly a miracle that China's growing at 6% while Singapore, Taiwan, Korea, Australia, Japan all reflect either recessionary or stagnating PMIs.

    Or maybe people touting the 6% figure have no idea that Asian growth has taken a u-turn?

  24. #7499
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    Quote Originally Posted by Bromontane View Post
    The only problem with your theoretical is that it's extremely unlikely to happen. We're more likely to see NIRP stateside than a FFR > 5%. Way too much leverage throughout the system to let rates normalize to historical averages. Central banks outside the US are almost all easing, putting that much more pressure on the Fed to be accommodative lest they trigger a debt crisis in foreign-debt that's serviced in USD.

    Also, keep in mind we're in the later stages of a long term debt cycle (see Dalio). Meaning rate averages of the last 70 years are not as applicable to the present as the rates experienced in the 1920-1940 period, which is the last time a long term debt cycle matured.
    I guess i just see lots of micro signs and am looking at macro data that seems to be somewhat foretelling of a broader scale issue(s). I don't have a background in economics or profess to be anything other than a small time perceptive business person and investor. The things I see don't lend themselves to long term smooth sailing and it frightens me to thing I could get hung out to dry or stuck with some of my investments longer than I want to keep them thus tying up capital. I need to keep my cash working for me, yet the opportunity to create a return gets riskier and riskier and there seem to be no safe harbors for more than a 1-2% return. Anything else looks somewhat like rolling the dice. I am (oops edit for typo) NOT interested in long term investing with my small capital warchest.

    I watched the Berkshire shareholders meeting in its entirety and thought it was quite compelling when a guy from ny had a question that went like this (remember pretty much any question is within reason) went something like this:

    Guy: You were quoted as saying if someone gave you a million dollars you could produce $500,000 profit in a year. Outline exactly how you would go about doing that.....

    Buffet: Uhhh , uhha , (no real complete thought or sentence)... uhhh...real estate...urrrr..uhhh.....then with finality and frustration: Look that is not relevant, we deal with a lot bigger sums of transactions than a million dollars , you're question does not apply....

    and yep they do

    $115 billion in cash ready to buy a business, company , public equities whatever....
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  25. #7500
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    Quote Originally Posted by dunfree View Post
    So what is their growth rate? Are you just making stuff up?

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