As projected, the Federal Reserve has just raised its benchmark Federal Funds rate, upping its target range by another 25 basis points to between 2.25 and 2.5 percent, while signaling expectations for two more quarter-point increases in 2019, down from a previously expected three.

The Fed dropped the benchmark rate a total of five percentage points between August of 2007 and the end of 2008, a move which helped drive the 30-year mortgage rate down to an all-time low of 3.31 percent in 2012.  The Fed has since raised its target by a total of 2.25 percent and the benchmark mortgage rate is back up to 4.63 percent, which remains two full percentage points below average as measured over the past 30 years.

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Comments from “Plugged-In” Readers

  1. Posted by john downey

    And stocks are sinking! 2019 will be interesting with the Uber/ Lyft IPO. I sense stocks will go 10-15% lower from here.

    • Posted by Tipster

      What exactly do you get from Uber or Lyft, other than money losing companies with a soon to be obsolete business model who are one employment law decision away from bankruptcy.

      • Posted by Outoftown

        I’m not so sure that their business model is obsolete, more ahead of their time – the goal is to get cars without drivers. I find it amazing that they have been able to get this far in the face of labor laws, taxi companies and labor unions – question is if they can hold on long enough for driving technology to catch up. As far as money loosing, Twitter is still around.

      • Posted by Jeffrey W. Baker

        Their business model is clearly junk, but they are doing a find job of funneling cold hard cash out of clueless Japanese mega-funds and into landlords’ pockets.

        • Posted by Brahma (incensed renter)

          I don’t think you understand Uber’s business model. What they are doing is exploiting working class people who are in some way marginally employable, recent immigrants or those needed flexible work hours, etc. while persuading them that they are “independent contractors” and thus not eligible for employer-sponsored benefits.

          It’s worth repeating that 74% of Uber and Lyft drivers earn less than the minimum wage in their state. While uber and it’s ilk, yes, disrupt labor regulations and social norms about taxicab services, increase traffic congestion and undermine the social support needed to improve public transit.

  2. Posted by Brahma (incensed renter)

    Well, around here about 2 months ago a commenter wrote

    “People on sidelines often hope for a “correction”, but I doubt there is going to be one. Tech stocks are having a rough patch, but will end the year higher.

    Emphasis mine. Taking the kindest two readings and running with them, perhaps he was saying that the stock market in general will end the year between ten and fifteen percentage points lower from today’s Standard & Poor’s 500 closing price of 2,506.96, but that “tech stocks” will end the year higher than they were during the last week of October, when the Technology Select Sector SPDR ETF closed at $66.94 (today, the same fund closed at $63.70) and The Nasdaq Composite Index closed at 7,167.21 (today, the NASDAQ Composite index closed at 6,636.83.

    Wonder who that stock pundit was?

    • Posted by Oakland lover

      It looks like the long awaited correction / stock recession is finally here.

      It’s been pretty apparent in the housing data for months now as SS points out. But it’s clear from many angles.

      Now with the broader economic structure showing stress it will indeed be very interesting to watch how this plays out locally.

      I’ve been waiting forever for this. Cash stockpile is ready to go. All stocks and REITs this time around. RE was my play in 2009 and 2015. Now it’s time for all liquid assett purchases.

      For those prepared this will be a great next couple years to buy things.

      For those who made a ton in easy money on the last funding /ipo boom, but wasted it all away or overleveraged it and don’t have a healthy cushion, well best of luck!

      The 250k earning but month to month paycheck type has always been a novelty to me.

      • Posted by RobBob

        Clearly the fed doesn’t believe in a widespread recession given that they are expecting more rate increases totaling 50 basis points.

        No helicopters in charge this time around.

      • Posted by SFRealist

        Since Trump is responsible for starting this recession, I don’t trust him to get us out. It’s going to be a long two years…. or a long six years.

        • Posted by Sabbie

          First of all, there has been a recession every ten years in America for roughly 150 years. Second, the seeds of this recession were sown in 2011 when the Fed caved to the market and refused to take off the training wheels.

          • Posted by SFRealist

            This is 100% Trump. He jacked up deficit spending and tariffs. He owns this.

          • Posted by Notcom

            “This is 100% Trump. He jacked up deficit spending…”

            Uhm…were you out that day in grammar school where they showed that film that explains where little laws come from ?? The laws that actually set the budget.

          • Posted by SFRealist

            My mistake. The GOP Congess passed the bill that he wanted and that he signed into law.

            Better?

          • Posted by SFRealist

            Would you also argue that the tariffs were not his doing?

          • Posted by Notcom

            No, he owns that…I’ll even given you 100+%.

        • Posted by Rillion

          Well the recession hasn’t started yet. Economic growth will be positive this quarter. It will also likely be positive in Q1 2019. So we are still likely at least 4+ months away from a recession starting. Trump is certainly responsible for screwing up the stock market with how badly he is running his administration and bungling up trade negotiations and budget negotiations. Also some of the housing weakness, particularly in high tax states like California, is related to the tax law changes (but most is interest rate related).

    • Posted by Brahma (incensed renter)

      You’ll recall that at the end of October commenter “john downey” wrote:

      “People on sidelines often hope for a “correction”, but I doubt there is going to be one. Tech stocks are having a rough patch, but will end the year higher.“

      And now we are in a position to know what happened, since today was the last trading day of the year.

      Today the S&P 500 ticked up 21 points, or 0.8%, to 2,506.85. The gains were led by healthcare and technology stocks. That represents a decrease of 0.004% over the level at the end of October, when the prediction was posted. On Jan 1 of this year, the S&P 500 was at 2,789.80, so today’s close represents a decline of approximately 10% on the year; we can conclude that the stock market in general did not end the year higher.

      But what about “tech stocks”? The last week of October, the Technology Select Sector SPDR ETF closed at $66.94. Today it closed at $61.98, about 7% lower since the prediction was posted or about -3% for the year.

      It would have been a good two month period (or a good year, for that matter) to be on the sidelines. Happy New Years, everybody!

  3. Posted by JolllRogers

    Just think of all of that lost RSU income no longer trickling into the local housing market.

  4. Posted by Ohlone Californio

    How many posters in this thread bought SF real estate, I wonder.

    • Posted by Jolly Rodger

      And I wonder which posters on this thread make a living by selling SF real estate??

      • Posted by Outoftown

        Oh, you just want to know everything! I don’t own or sell real estate in SF – I read this site to stay tuned to trends as they usually spread out from primary markets such as SF to secondary markets such as the San Joaquin Valley

        • Posted by Notcom

          But is that really true? (not the part about your (non)holdings but the part about “spread(ing to) the San Joaquin Valley). I’ve heard the Central Valley never really recovered from 2008…or maybe it’s 1982 (things have been depressed there for a looooooong time). Or maybe “San Joaquin Valley” = “Tracy” in Outoftownspeak?

      • Posted by Ohlone Californio

        Why? Do real estate professionals not make money in a falling market? Perhaps put that card back in your pocket and employ it in more credible context. Just a thought.

        • Posted by Jolly Rodger

          Ohh sure “professionals” make money in a falling market. But what about their clients??

          • Posted by Ohlone Californio

            Scare quotes are rude, you know. Well often it is easier for clients to make money in a falling market actually. What is your understanding? Is it merely someone who has had a piece of property for a year or two but needs to sell? Is that it? OK, then yes the clients may lose money. But it will be with eyes wide open probably if the real estate professional is a good one. And of course, they should try their best to prevent that outcome.

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