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The question is....why are they pulling the money out?
Because they want a new boat, car, home improvements or ??? And they don't have to pay a penalty. Some others might need it. But when it happens, nearly always because the person is bad at managing money.
I've split the thread as best I could, the old thread may still be accessed and quoted from if need be but is closed for new postings to the old thread.
I cannot find a page on the Zillow website to predict 2023 but found pages that refer back to Zillow, like this one which says: "...According to Zillow's home value index, typical property values in Phoenix-Mesa-Scottsdale Metro grew by 3.6% over the last twelve months. The latest forecast is that Phoenix-Area home prices are projected to decline by 1.2% between January 2023 to January 2024...."
Per Zillow's figures for my home, I broke even in 2022, as listed in this posting, starting and ending 2022 at the same value. With higher interest rates now a reality, I expect the predicted value of my home to decline in 2023.
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Last edited by Mike from back east; 02-24-2023 at 06:18 PM..
I'm not retired, rather, I am working. Just not too hard. And yes, my income is based on income. I would not be going on multiple vacations, doing projects, or buying a new boat if I was retired.
My point is as an aggregate, people are still spending more. U.S. retail sales surprisingly increased by 3 percent in January 2023. Of course, people starting out are in worse financial conditions because of how expensive things are. But hey, they can find a job in this hot market. And therefore, they are spending. It could be a lot worse to have cheaper items without income. Therefore, that includes the working class.
From Feb 9th, 2023 here https://www.nytimes.com/2023/02/09/b...n-rebound.html"But there have been enough surprises pointing to continued momentum that Fed officials themselves seem to see a better chance that the nation will avoid a painful downturn. That resilience could even be a problem." And “They should be worried about how strong the U.S. labor market is,” said Ajay Rajadhyaksha, the global chairman of research at Barclays. “So far, the U.S. economy has proved unexpectedly resilient.” Followed by "That’s showing up in the economy. Mortgage applications have been bouncing around, but in general, they have ticked back up. New home sales are now hovering around the same level as before the pandemic. Used car prices had been declining, but they have begun to rise at a wholesale level — which some economists see as a response to some returning demand for those vehicles."
A lot of words to say that IMO, unless we have a recession, I don't see interest rates dropping a lot. And that is going to s-l-o-w-l-y depreciate PHX area home value. If the economy (job market) stays healthy, then that is going to have an impact on home prices because mortgages are going to be much higher than they were causing a lot of the run-up.
In my personal example, if I thought the economy was going into a deep recession, I'd push out my major buying decisions. Because I know the prices would drop AND my income will drop (I might not feel comfortable spending). So yea, I think my personal examples are relevant. Maybe not compared to an (an often) credit card leveraged person starting out. But I think I have a pulse on the economy.
I agree with most of what you said but lot of recent college graduates have lot larger student debt then anytime in the past. You can't really get high paying job 100k plus out of college maybe in certain industries. I work in IT and with many young people who graduated a year or two ago they can't afford to buy a home they are renting. They have 300k in student loans some even more college cost 10 - 15 times what it cost when I went in the early 90's. The collage I went to parking was $40 a semester now it's $1020 a semester at least last time I heard which was in 2019.
They latest thing to run up in cost is childcare because so many parents having to work full time to buy homes that cost 600-900k
I agree with most of what you said but lot of recent college graduates have lot larger student debt then anytime in the past. They have 300k in student loans some even more college cost 10 - 15 times what it cost when I went in the early 90's.
In 2022, the average college debt is $30K. See https://www.usnews.com/education/bes...ng-has-changed I know several dozen people who graduated with $300K+ in student loans. But you address them as doctors. Forgetting my last point for a moment, ignore what the sticker price says to attend college because there are all kinds of ways to dodge debt. And it's why tuition is so overpriced. When someone else pays for it (alumni donations, scholarships, state funding, FAFSA, etc), there is no pressure to control costs.
ASU costs a little over $12K per year for in-state tuition https://admission.asu.edu/aid/resident-first-year. Most pay a lot less. Our daughter UofMN cost us $5K a year a decade ago. The college gave her scholarships. Add another $6K for meals and dorms or $11K total. She could have sat at a desk while studying and received thousands more of her tuition. Many of her friends paid close to nothing with financial aid and they too lived on campus. It's why the average debt is so low.
As an example, our dentist daughter did something called HPSP https://www.airforce.com/careers/spe...B&gclsrc=aw.ds . Over 4 years, taxpayers funded her $290K in dental school tuition plus $100K+ in stipends for living expenses \. 4 years of payback later as a military dentist, she walked out debt free while being underpaid as a military dentist. A fraction of people would even consider that option and that it's why it has to be so generous in order to get people to sign-up. Oh, she was shooting people while in the military alright... But with novocaine.
For whatever reason, some young people are horrible at math and too many cannot figure out their ROI for education. But hey, let's bail people out with student loan forgiveness and toss it on the backs of the next generation as well as inflation. Everything can be free!
Quote:
Originally Posted by kell490
The latest thing to run up in cost is childcare because so many parents have to work full time to buy homes that cost 600-900k
Daycare is spendy. On the order of $35K for two kids. But what should we expect when babysitters make $16 an hour in AZ https://www.parents.com/parenting/mo...g-rate-states/ Money doesn't go far anymore and that is why people are making so much more of it. Forget "college" for a moment. Many people in trades are crushing it! If you are in the trades and are not making $100K, you are lazy or stupid. Go take a two-year crash course as an electrician and make $100K. Don't believe these worthless surveys https://www.indeed.com/career/electrician/salaries/AZ that say the range is $26 an hour when I pay by cleaner $45 an hour. Or that dentists make $200K https://www.indeed.com/career/dentis...AZ?from=top_sb when our 32-year-old daughter makes $400K. BOA tellers make $60K.
Those people starting out who are renting a house starting out are living in a $300K-$450K home. Not a $600K-$900K home. The average Surprise rental runs $2500 a month now. And a $400K home at 6.5% interest costs $2523. $2900 all in with no money down. I propose if they can afford to pay $2500 in rent, then they can pay $2900 with a tax write-off.
Let's not forget 28% of borrowers use gifted money to buy a home https://www.bankrate.com/mortgages/g...-down-payment/ . A lot of words to say there are still a lot of new home buyers. But we agree, higher interest rates really reduced affordability. And that is applying pressure for driving down the costs. But it's not going to be a "crash" unless something wild happens. Like an invasion in Tiawan or a nuke dropped by Russia.
Last edited by MN-Born-n-Raised; 02-26-2023 at 05:02 AM..
With the ramifications of higher interest rates and banking problems, all of this ties into your home values. It's suspected that the FED's hands are tied-up for more interest rate hikes. No one needs to explain why mortgage interest rates heavily influence the value of your home.
For the story...
For those who haven't been following, the collapse of SVB was primarily caused by this large institution buying mortgage-backed securities. Later, the mrtgage rates skyrocket while the banks were sitting on these low-yield bonds. No, this bank isn't alone. And when the list of leveraged banks is released, watch people make a run on those banks, too. To make matters worse, back in 2020, the FED board reduced reserve requirement ratios to zero percent. This action eliminated reserve requirements for all depository institutions. No, I didn't make it up. Read about it here https://www.federalreserve.gov/monet...reservereq.htm By the way, who asked for that idiotic move? Here you go.. His name rhymes with Rump. As a reminder, that guy claimed bankruptcy more than once. A brilliant businessman and a hero to many. Lol https://reason.com/2020/03/15/trump-...drops-to-zero/
Keeping it balanced, at 9AM, Biden said, "there isn't anything to worry about". As Stephen Cobert said, that's like a babysitter calling you early in the morning and starting out with "there is nothing to worry about". What's the saying: "Privatize the profits, socialize the losses." $250K FDIC be damned, everyone will be bailed out again. More debt. I mean, what can go wrong?
Big picture. The FED's learned that raising rates has major ramifications in the financial sector. And that probably means, mortgage rates are not going to go up. If more banks tank and the financial institutions are heavily stressed, I could see a recession (by way of the stock market drop and wealth evaporation) which softens the economy and inflation. If inflation cannot be curbed because the FED cannot raise the rates, inflation is going to put a floor on home values. As in, you cannot rebuild your home when everything costs so much. Either way, this event is a game changer on your arguably overpriced PHX area home.
A lot of words to say no one can predict the future beyond a certain point. The cards have just been reshuffled.
Last edited by MN-Born-n-Raised; 03-14-2023 at 07:35 AM..
With the ramifications of higher interest rates and banking problems, all of this ties into your home values. It's suspected that the FED's hands are tied-up for more interest rate hikes. No one needs to explain why mortgage interest rates heavily influence the value of your home.
For the story...
For those who haven't been following, the collapse of SVB was primarily caused by this large institution buying mortgage-backed securities. Later, the mrtgage rates skyrocket while the banks were sitting on these low-yield bonds. No, this bank isn't alone. And when the list of leveraged banks is released, watch people make a run on those banks, too. To make matters worse, back in 2020, the FED board reduced reserve requirement ratios to zero percent. This action eliminated reserve requirements for all depository institutions. No, I didn't make it up. Read about it here https://www.federalreserve.gov/monet...reservereq.htm By the way, who asked for that idiotic move? Here you go.. His name rhymes with Rump. As a reminder, that guy claimed bankruptcy more than once. A brilliant businessman and a hero to many. Lol https://reason.com/2020/03/15/trump-...drops-to-zero/
Keeping it balanced, at 9AM, Biden said, "there isn't anything to worry about". As Stephen Cobert said, that's like a babysitter calling you early in the morning and starting out with "there is nothing to worry about".
Big picture. The FED's learned that raising rates has major ramifications in the financial sector. And that probably means, mortgage rates are not going to go up. If more banks tank and the financial institutions are heavily stressed, I could see a recession (by way of the stock market drop and wealth evaporation) which softens the economy and inflation. If inflation cannot be curbed because the FED cannot raise the rates, inflation is going to put a floor on home values. As in, you cannot rebuild your home when everything costs so much. Either way, this event is a game changer on your arguably overpriced PHX area home.
A lot of words to say no one can predict the future beyond a certain point. The cards have just been reshuffled.
Regional bank shares have gone up about 50% today. One could have made bank (pun) by buying the drop instead of listening to the gloom and doom prognosticators.
As for the Fed, they should have stopped the rate increases a couple cycles back. Wrecking the economy was never the right medicine for this inflationary spiral. . So if this banking hiccup gives Powell pause to pause, it is a good thing.
Regional bank shares have gone up about 50% today. One could have made bank (pun) by buying the drop instead of listening to the gloom and doom prognosticators.
As for the Fed, they should have stopped the rate increases a couple cycles back. Wrecking the economy was never the right medicine for this inflationary spiral. . So if this banking hiccup gives Powell pause to pause, it is a good thing.
If I was smart enough to be in that camp, I would get out and wait for the next (possible) drop back down. The profiteers are not investing in regional banks. Rather, they are day trading.
At the end of the day, the FED's overheated the market, and inflation took off like mad. I am in the camp that was always the FED's desire to inflate the national debt by getting at your wallets without taxation. But when they could not stop the out-of-control inflation, they had to resort to raising the rates FAST. Now, they seem to be in a headlock. I don't study this topic for a living like the FED does. But I'm convinced we all need a recession to reset inflation. And maybe this banking problem is what needed to happen. At the end of the day, money needs to be removed from people's pockets or they will spend, spend, spend. IMO, big $$ spending is happing at the top of the food chain (jets, boats, 2nd and 3rd homes, etc).
I'm sensing a storm coming and personally, I'm starting to squeeze my wallet. I going to button up a couple of bigger projects I have on each house and call it quits. When people do this in mass, inflation will come down. And I expect there will be a lot of pain for at least some people. I think the stock market dropping fast is needed to some level. When people open up their statements, that will take a bite out of inflation. Because my effective net worth is dropping every time inflation increases fast. I want inflation to stop even if they kill the economy (within reason).
If I was smart enough to be in that camp, I would get out and wait for the next (possible) drop back down. The profiteers are not investing in regional banks. Rather, they are day trading.
At the end of the day, the FED's overheated the market, and inflation took off like mad. I am in the camp that was always the FED's desire to inflate the national debt by getting at your wallets without taxation. But when they could not stop the out-of-control inflation, they had to resort to raising the rates FAST. Now, they seem to be in a headlock. I don't study this topic for a living like the FED does. But I'm convinced we all need a recession to reset inflation. And maybe this banking problem is what needed to happen. At the end of the day, money needs to be removed from people's pockets or they will spend, spend, spend. IMO, big $$ spending is happing at the top of the food chain (jets, boats, 2nd and 3rd homes, etc).
I'm sensing a storm coming and personally, I'm starting to squeeze my wallet. I going to button up a couple of bigger projects I have on each house and call it quits. When people do this in mass, inflation will come down. And I expect there will be a lot of pain for at least some people. I think the stock market dropping fast is needed to some level. When people open up their statements, that will take a bite out of inflation. Because my effective net worth is dropping every time inflation increases fast. I want inflation to stop even if they kill the economy (within reason).
Prior to this you were confident in the housing market that prices that went up last 24 months are here to stay. Is that still your opinion of the Phoenix market?
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Therefore, that includes the working class. 
