Trouble in Housing? It’s More 1994 Than 2007

The economy in 1994 is remembered largely for financial market turmoil brought about by sharp increases in the federal funds rate by the Federal Reserve. During that year, the Fed increased its target rate for lending between financial institutions to 5.5 percent from 3 percent, a 2.5 percent increase in one calendar year. Perhaps not surprisingly, mortgage rates increased sharply as well. The average 30-year fixed mortgage rate increased by around 2 percentage points in 1994, ending the year north of 9 percent. New home sales slumped. In December 1993, the seasonally adjusted annual rate of new single-family-home sales was 812,000. A year later, in December 1994, it had fallen over 20 percent to 629,000.

The other noteworthy story of the 1994 economy was what happened to the yield curve. Because of the sharp increase in short-term interest rates, the yield curve flattened significantly. The spread between two-year and 10-year Treasury rates at the end of 1993 was 1.58 percent. By the end of 1994 the spread was at 0.15 percent — close to zero, but not quite inverted.

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Very reasonable analysis and it is good to buy primary home between this month and next December.

This is the main reason I am thinking to come out of stock market and stay with cash ! Worst case, I will hold 50% and balance 50% in cash.

I want to buy one more home during this recessionary/correction period.

Market timing :slight_smile:

Perfect time to liquidate AAPL? :smiling_imp:

I want to have some cash for real estate.

TSLA and AAPL hold long, no liquidation.

Except TSLA and AAPL, I consider half the current holding, esp STNE kind of high stake.

If TSLA & AAPL comes down, I will also have some money to buy.

Posted this article already in another thread. The slump in housing and stocks already happened. It’s going up from here.

Just for fun I was kidding “what the forum members saying…”

As Apple price is going down and down, it is becoming attractive.

Like hanera gave idea, every 5% down, I buy $10k worth, for DCA, of any stock I own.

No idea to sell anything. After all, STNE is Warren Buffet stock and right from IPO they are posting profits.

I understand Market pricing is different from actual value ! Any price drop is an opportunity to buy at low price

No, Slump in housing will continue until FED increases rate as Lenders need to increase the rate. Otherwise, inversion will happen.

If FED is not increasing the rate, then slump is stopped or stabilized.