Fed plans to ‘reset’ the housing market–raising likelihood of falling homeprices

Re:Fed plans to ‘reset’ the housing market–raising likelihoo... by yrgulation on Friday June 17, 2022 @08:42AM (#31777248)

Oooh, i just sold a flat here in europe with the intention to buy something bigger. It would be fun if i bought it back next year at a lower cost or if house prices dropped just as i buy a new one. With rising interest rates and inflation it will be the little people that will suffer. Because those with liquidity available will buy properties at a discount, while regular folks wont afford them anyway since everything else costs more.

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Re:Fed plans to ‘reset’ the housing market–raising likelihoo... by lukas099 on Friday June 17, 2022 @08:52AM (#31777353)

My wife and I just started saving to buy a house, and I was resigned to the fact that we would have to buy into a super-inflated market. From my perspective, hearing this from the Fed is great news, but I realize that my own personal bias probably clouds my view quite a bit.

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Re:Fed plans to ‘reset’ the housing market–raising likelihoo... by FlyingAvatar on Friday June 17, 2022 @09:09AM (#31777579)

Realistically, the only real power they have to decrease house prices is to massively increase interest rates.

Unless you've saved enough to buy a house outright, you'll probably end up paying in interest what you would have paid in principle. Whether it ends up being better or worse for the average buyer remains to be seen.

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Re:Fed plans to ‘reset’ the housing market–raising likelihoo... by RhysU on Friday June 17, 2022 @10:59AM (#31779174)

> you'll probably end up paying in interest what you would have paid in principle

Is that a better outcome from a mortgage interest deduction perspective?

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Re:Fed plans to ‘reset’ the housing market–raising likelihoo... by gizmo686 on Friday June 17, 2022 @08:56AM (#31777407)

Long term, inflation tends to reduce income inequality (up to a point, I've generally seen 10-15% quoted as the sweet spot).

The problem with inflation and poor people is more short term: wages are one of the last things to inflate, so there is still a short term drop in buying power. This applies to everyone relying on wage income, but the poor have the least slack to manage it.

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Re:Fed plans to ‘reset’ the housing market–raising likelihoo... by ekianjo on Friday June 17, 2022 @09:47AM (#31778077)

> wages are one of the last things to inflate

of alternatively they dont inflate at all and you lose a lot of purchasing power.

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Re:Fed plans to ‘reset’ the housing market–raising likelihoo... by thebigspacefuck on Friday June 17, 2022 @08:52AM (#31777359)

Do US rates affect the price of housing in Europe?

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Re:Fed plans to ‘reset’ the housing market–raising likelihoo... by yrgulation on Friday June 17, 2022 @09:18AM (#31777692)

All of europe is having similar issues. Many eu countries and the uk have increased their rates to try and stop inflation and as a result fewer people afford mortgages driving prices down. But the issue in some places is that builders have stopped building due to increased costs and as such the offer is lower. No clue how things will play out.

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Re:Fed plans to ‘reset’ the housing market–raising likelihoo... by excuses_ on Friday June 17, 2022 @09:03AM (#31777498)

Depends but overall the US rates put pressure on euro and generally all other currencies. In my country, which does not have euro, the last hike of the US rates got the currency to drop over 2% (which is already super weak). This means that our central bank will need to bump its rates even further.

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Re:Fed plans to ‘reset’ the housing market–raising likelihoo... by ddek on Friday June 17, 2022 @08:58AM (#31777425)

There is a relationship, yes, but it’s fairly indirect. More important is simply that the ailments of the US are suffered by the west in general. The UK raised its interest rate this week, by less than the US, but with a feeling that a much larger rise will come in August.

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