Replies to post #694370 on Fannie Mae-No Politics (FNMA)

[Donotunderstand]

so what is driving prices up and up and further up

demand exceeds supply is a factual answer

so

why does demand so dramatically exceed supply ??

people are getting paid 15% more all over the place and we have no lost jobs (forget those 5MM still lost)

no one is selling or no one is building or fire in CA destroyed a million houses

OR
as I believe - the ability to afford a much higher price --- and thus keep bidding an bidding prices up - grows BIG And BIGGER at these crazy low interest rates ................. so IMO -- without research - that is the reason for higher prices ---- it always is demand > supply

It may be an indirect cause ? or THE indirect cause

And in terms of causality - research is hard when you can not have a control group --- so there is no way to compare to what would things look like if interest rates were 6% v current

?

[Patswil]

Aren't we due for a Collins decision today?

[Donotunderstand]

If this article - with this result - which they note is an outlier to the user cost model (they call theoretical) is indeed -- an outlier

It is is either very important research - a fluke - amazing - or a bad design in their (unique to them) model

It will be interesting to see - if you follow such articles and such - if this gets printed in some periodical where comments can be seen

I would expect a ton of criticism - if only because this cuts against the grain of common held thinking by the vast majority of housing economic thinkers

[Donotunderstand]

that -- unless I missed it in the article is your added line

that buy back is not having a substantial impact


they studied - researched - impact of lower interest rates per the new model

any strong tie to buy back of paper on the market must assume that is the key way interest rates are kept low

I suggest Fed Rate and other activity may be more powerful - but that is only a guess

My guess - if the buy backs stopped slowly - the interest rates we see would not rise fast unless the FED took other bigger steps ---- (why? Companies are awash with CASH -- big time --- thus have little need to issue bonds and create a price rising (interest rate rising !!!) market