Logan, you mentioned home prices (values) have risen every year since 1942 (minus 07-11 and 1990), but I searched the FRED and can only find data going back to 1965. Would you share the source(s) and/or site(s) where you can view housing data back to 1940? Thank you!
Case Shiller has data from 1890; the Shiller Index database can create the data set table for you to share with everyone. You don't want to use Fred for that
I find your expectation of a shrinking mortgage spread very interesting. The conventional wisdom is that during periods of economic stress, lenders will become less willing to lend leading to a higher return and growing spread. Grey Gordon, from the Federal Reserve, in an August 2023 report argues the primary driver of mortgage spread is the mortgage duration effect. As mortgage rates decline, more mortgagees will re-finance. Since a very large percent of mortgagees already have a mortgage below 6%, will this lead to re-financing? Sure some will take cash out due to higher home equity and tight household expenses, but my guess mortgage rates are unlikely to go below 6%. So re-financing will play a much smaller role. Would love to better understand driving factors to understand mortgage spread. IMHO, I do think extension of 2017 tax cuts will be easiest to pass. Perhaps some other types of tax cuts too. However, two largest campaign promises are tariffs and mass deportations. Both are inflationary, IMHO. As are tax cuts. So struggling to understand sans a big fall in the mortgage spread, how mortgage rates will come down much.
Looking back at historical trends, it's clear that during each cycle, when the Federal Reserve reduces rates and volatility subsides, we typically see an improvement in spreads. This year has shown a remarkable rebound in spreads, which has caught many by surprise. A potential shift of just 27 to 41 basis points in spreads from this point onward would help considering how much better the spreads got this year
Modeling the 10-year yield spread, we develop forecast ranges based on historical economic cycles spanning several decades. This approach highlights the importance of labor data, especially at critical levels of the 10-year yield, as labor conditions must change to break through those levels on the downside and rates stay in the range on top. Since mortgage rates don't stay the same all year round, I have this to be more effective
I am confused by your take on tariffs! Why are retailers increasing their prices to prepare increase in prices from tariffs? You appear to have a 2016 outlook.
They're one-time price adjustments, but regarding boosting inflation in the data, it's hard to scale that out unless it becomes a big trade war. Biden has had tariffs in place for a while now
Two in a day, nice! Great podcast. Crazy RUclipsrs need to get out of the housing market, it’s damaging and hurting people.
Logan, you mentioned home prices (values) have risen every year since 1942 (minus 07-11 and 1990), but I searched the FRED and can only find data going back to 1965. Would you share the source(s) and/or site(s) where you can view housing data back to 1940? Thank you!
Case Shiller has data from 1890; the Shiller Index database can create the data set table for you to share with everyone. You don't want to use Fred for that
I find your expectation of a shrinking mortgage spread very interesting. The conventional wisdom is that during periods of economic stress, lenders will become less willing to lend leading to a higher return and growing spread.
Grey Gordon, from the Federal Reserve, in an August 2023 report argues the primary driver of mortgage spread is the mortgage duration effect. As mortgage rates decline, more mortgagees will re-finance.
Since a very large percent of mortgagees already have a mortgage below 6%, will this lead to re-financing? Sure some will take cash out due to higher home equity and tight household expenses, but my guess mortgage rates are unlikely to go below 6%. So re-financing will play a much smaller role.
Would love to better understand driving factors to understand mortgage spread.
IMHO, I do think extension of 2017 tax cuts will be easiest to pass. Perhaps some other types of tax cuts too. However, two largest campaign promises are tariffs and mass deportations. Both are inflationary, IMHO. As are tax cuts.
So struggling to understand sans a big fall in the mortgage spread, how mortgage rates will come down much.
Looking back at historical trends, it's clear that during each cycle, when the Federal Reserve reduces rates and volatility subsides, we typically see an improvement in spreads. This year has shown a remarkable rebound in spreads, which has caught many by surprise. A potential shift of just 27 to 41 basis points in spreads from this point onward would help considering how much better the spreads got this year
What? Range between 5.75% to 7.25%?? Even I can predict that
Modeling the 10-year yield spread, we develop forecast ranges based on historical economic cycles spanning several decades. This approach highlights the importance of labor data, especially at critical levels of the 10-year yield, as labor conditions must change to break through those levels on the downside and rates stay in the range on top. Since mortgage rates don't stay the same all year round, I have this to be more effective
I am confused by your take on tariffs! Why are retailers increasing their prices to prepare increase in prices from tariffs? You appear to have a 2016 outlook.
They're one-time price adjustments, but regarding boosting inflation in the data, it's hard to scale that out unless it becomes a big trade war. Biden has had tariffs in place for a while now
Logan operates from a place of insecurity