What Happened To Counter-cyclical Policies When Confronted With Asset Bubbles?

By Anthony B. Sanders

House Prices Rising Rapidly and Gov’t LOWERS Down Payment Ratio??

One of the proposed solutions to prevent another financial crisis was to employ counter cyclical polices, particularly in the face of another house price bubble.

Remember, many economists denied there was a house price bubble even as late as 2007. “It’s the new normal!” they said. It wasn’t and house prices collapsed.

So as we sit here with house price growth at 3x wage growth, we are supposed to be adopting counter-cyclical measures like TIGHTENING lending standards.

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But not surprisingly, Freddie Mac just announced a 3% down payment mortgage plan. The program is called “HomeOne” where the mortgage has no geographic or income restrictions.

According to Housing Wire,

Continue reading What Happened To Counter-cyclical Policies When Confronted With Asset Bubbles?

How Much Should You Expect Your House to Appreciate?

By Charlie Bilello

You just bought a house. If you’re like most Americans, it will soon become the largest component of your net worth, and only increase as a percentage over time. Naturally, you would like to see it go up. But by how much?

Predicting future home prices is a difficult a game, made complicated by the myriad of factors influencing the housing market, including: the supply/demand for housing, affordability, inflation, economic/wage growth, availability of credit, mortgage rates, unemployment, demographics, location, etc., etc.

If a homeowner can’t predict such things, what can they reasonably expect in terms of appreciation over time?

A good starting point is the rate of inflation (CPI), which national home prices have tracked relatively closely over long periods of time.

Data Sources for all charts/tables herein: S&P/Case Shiller, BLS

From 1891 through 1996, national home prices only exceeded inflation by 15% on a cumulative basis, and few considered housing “an investment.”

Continue reading How Much Should You Expect Your House to Appreciate?