Wall Street warns of downturn

[ukgimp]

https://www.bloomberg.com/news/articles/2017-08-22/wall-street-banks-warn-winter-is-coming-as-business-cycle-peaks

[Mackin USA]

What goes up, comes down.

It seems to be a GLOBAL thing.

Needs watching closely.

Might wish to buy gold/silver/altcoin  

[rcjordan]

Lots of signals out there. Here's a quick cut-n-paste from business news headlines:

Orders for durable goods sink 6.8% in July, the most in nearly three years

US existing home sales unexpectedly fall in July

Mortgage rates plunge to 2017 low

[Drastic]

We seem due, unfortunately.

[rcjordan]

UK's situation is particularly dicey because of Brexit.

Britain heads back to the Brexit table, plans in hand, economy in decline
https://www.reuters.com/article/us-global-economy-outlook-idUSKCN1B512N

[rcjordan]

I find this fellow to be an extremist economist, but he does a good job of highlighting the macro stuff that's whirling around out there.  

http://www.oftwominds.com/blogaug17/recession-inevitable8-17.html

[Mackin USA]

"it will be a devastating meteor storm"

[ergophobe]

>>Mortgage rates plunge to 2017 low

And sooner or later, those will go up, and when they do, home prices in high-priced, overheated markets, will come tumbling back down

In my neighborhood, homes that should be valued at about $600,000* are currently selling for more like $800,000. An older, run-down house that will need a lot of work in coming years and could be built brand new for $600,000 sold in two days for $850,000 to investors from China. The last time we saw those sky-high prices, they returned to earth with alarming rapidity. One year a house was selling for a $200K premium on cost to build, and a year later they were selling for $200K under the cost to build (short sales and foreclosures... shoulda bought a house, but all cash sales and I didn't have that much cash).

Anyway, an $800K mortgage today at 3.95% is quoting at $3,783 monthly payment. At 5%, the payment goes to $4,295. Or put another way...

If my budget is $3000/mo, I can afford $634,800 at 3.92%, but only $550,000 at 5% interest. Which means that right there, with wages stagnant, $84,800 of my house has to be gone. But if you couple it with an economic downturn and, therefore, fewer buyers, you get some big drops. I don't think you get the follow-on effects you did in 2008, because you have a lot fewer people leveraged to the hilt with ARM. That will be the killer in the housing market though - if interest rates adjust strongly upward and a lot of people have ARMs.

Of course... in hindsight, I wish I had gotten an ARM. I think the house would be paid off by now if I had!

*cost of construction is the killer here - we pay 1.5 hours per day for guys to sit in cars whether framers or concrete delivery. Concrete is about 30% cheaper just an hour down the hill.

[ergophobe]

And here we go....

This morning, mortgage rates are down... except 30-year fixed, which is up. In other words, lenders are getting nervous about guaranteeing low rates. Rates in general are higher than a year ago though.
http://www.bankrate.com/mortgages/refinancing/rates/refinance-rates-for-saturday-august-26/
https://www.washingtonpost.com/news/where-we-live/wp/2017/08/24/30-year-fixed-mortgage-rate-sinks-to-its-lowest-level-in-nine-months/

PS - "30-year fixed" does mean "30-year loan" - it usually means 6-9 years. As Keith Fears, Director of Regional Economic and other stuff at the National Realtors Association said in 2013

Historically the average tenure for a home before resale was 6 years. That figure increased to 9 in recent years due to turmoil in the housing market and the recession.