1. All I know is that land, farms, cabins, etc. are going for a premium in Ohio and Kentucky and are dirt-cheap in New York State.

   1. Check the truck/trailer rental cost at Uhaul from NY/Commiefornia/etc., to a red state. Then check the same rental from the red states back to the communist states. Eye opening.

2. I remember the 18% Mortgages of the Carter Years.

   My father was a Real Estste Broker. No one could afford to buy or sell houses if they were not almost desperate. He kept our family fed and my sisters in out of state college tuition by doing everything else in property management, except selling real estate. He wasn’t flipping real estate as much as fixing up wrecks and re-selling them.

   1. I bought my first house in that era. It was possible only because we could assume the first mortgage (a decent-rate VA mortgage). But the rate on the 2nd mortgage we needed to make up the difference was really horrible.

   2. I bought this house at the tail end of those years, when Paul Volker was raising rates even higher. We assumed the original owner’s mortgage at 13%, and re-financed at 9%. Cutting our payment by over $100/mo. at the time – this was ’86 or so and $100 went a lot farther than it does today.

      Eventually, we used that extra $100/month to pay off the house early.

3. Most home buyers have a cap on how much they can pay a month. That has to include the principal and interest on the loan, as well as insurance and property tax. P&I (summed together each month to a constant sum), property tax and to an extent insurance, all scale directly with selling price. P&I scales inversely with interest rate. So for a given buyer, the higher the interest rate is, the lower the price they can pay for the house.

   In aggregate, this means higher interest rates tend to depress home prices. As soon as the interest rates start going up the housing market is likely to experience a “correction.” That’s one reason the Fed is reluctant to raise rates; but with sufficient market force, the long term rates (which drive mortgage interest rates) can go up no matter what the Fed wants to happen.

   Now, as far as what’s happening to Zillow, one could attribute that to them making mistakes as they try to move into a new market segment. If you make decisions on buying and pricing algorithmically you can make mistakes faster and more broadly, with less time to realize something’s amiss.

   Interesting times.

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   1. I think there’s another really big reason interest rates must be kept low: the national debt. Isn’t most of that short-term nowadays, and constantly being refinanced? So if interest rates aren’t kept crazy low, the “interest on the national debt” line of the budget rapidly expands beyond recognition.
      Not that any of today’s influential politicians would understand that, but one might hope that some people at the Fed still do.

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4. This also has to do with Zillow thinking they could flip houses in the aggregate. Nope. And location matters. Which is why I want to bug out before the stazi ruin my state. They haven’t yet but they will if they can.

5. BTW call me catty but girlfriend shouldn’t have had that done to her lips. Collagen is not your friend.

6. “They assumed that housing prices would keep going up at the same rate as previously.” I’ve seen this movie before, most recently in 2008. Spoiler alert, it didn’t end well.

7. Nuke,

   Just wait until Evergrande and a few others in China implode.

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