Interest Rates on the Move! (Finally)

[TwoByFour]

BTW, what rough % of the new housing in your area is sided with sawn timber like lap siding or vertical tongue and groove or shingles? These are becoming flat out rare around here, even in $1+ million dollar homes. Fiber cement board everywhere. The big timber companies like Weyerhaeuser have traded down lately.

Our first house, in Seattle, was sided with clear fir. But it was 100 years old and old growth fir was pretty common back then. Cedar is almost non-existent in the Pacific Northwest at this point, it all pretty much comes from Canada, and it is becoming more scarce there also. So the days of wood sided houses are about done with which is probably a good thing since decimating forests for their old growth trees is not a good thing.

Where I live now (Hawaii), a lot of houses were built 50-100 years ago all of redwood - framing, siding and shingles. When one of those houses is demo'ed, people come from all around to buy up the old redwood. It is so resistant to bugs it is a good wood for the tropics.

 

[TwoByFour]

One thing to note about this rise in rates is that this is entirely due to market forces and has nothing to do with the Fed. Since the rise in rates is equivalent to a decrease in price of the bonds in question, the "rate hike" is another way of saying that demand for bonds has fallen off. That is the big question - why has demand fallen? There has been some discussion that traditional foreign buyers of US debt are getting nervous about the US and its stance on globalism. Or it could be an anticipation of rising inflation and nobody wants to be left holding the bag of low (real) interest rate bonds.

 

[Helena]

One issue that has become clear is that markets expect higher mortgage rates are coming, and that this will cut home building, hence demand for lumber and OSB, which should cut demand for timber. The formerly very hot local real estate and rental markets are cooling off too.

Ha

This will also lower real estate prices and rent.

.

 

[pj.mask]

Wouldn’t want wood or brick siding. Too much work. Brick might be ok if you live in an area with solid ground (no foundation issues). Hardi is quick to install and holds up without any trouble. Can replace if needed without worrying about finding right color or texture. Can cut holes if you want to add something in.

 

[audreyh1]

One thing to note about this rise in rates is that this is entirely due to market forces and has nothing to do with the Fed. Since the rise in rates is equivalent to a decrease in price of the bonds in question, the "rate hike" is another way of saying that demand for bonds has fallen off. That is the big question - why has demand fallen? There has been some discussion that traditional foreign buyers of US debt are getting nervous about the US and its stance on globalism. Or it could be an anticipation of rising inflation and nobody wants to be left holding the bag of low (real) interest rate bonds.

The Fed is unwinding their balance sheet meaning that supply is increasing by $50B a month. So that’s creating pressure on prices.

But the current reaction I believe is due to strong employment reports, increasing wages, and continued strong economic growth indicators, in spite of inflation remaining fairly steady.

Since the US dollar is strengthening and foreign bond rates remain far lower, I tend to doubt it’s due to foreign buyers.

 

[haha]

Thanks especially to those who commented on the changing mix of siding types. I remember about 30 years ago I sided a playhouse with cedar shakes I split myself. Took forever as I was inexperienced at splitting and siding, but we all liked it very much.

Early next year my current condo home will get resided with, you guessed it, Hardie-Panel.

Ha