19 minutes ago, VanHammersly said:

Weird. Everyone I know had the opposite happen. They were all killing it during the end of the Obama administration and then we’re all homeless and destitute during the Trump years and then they were all rehired at much higher salaries right around the time Biden took over. 

"Companies told me they were in a recession until Trump was elected" is even better than Mike's "my 401k was flat under Obama and then went through the roof under Trump." 

He's not wrong that the economy got overheated during Trump's years.

We were into a 6-7 year economic expansion and Trump decided to put the economy on a sugar rush at a time it didn't need it.

The Fed should have been hiking rates throughout but they either fell asleep at the wheel or succumb to political pressure. (It's not impossible that Trump extracted a promise from Powell that he wouldn't raise rates, but that's pure speculation.) 

It was all well and good until the only real crisis Trump faced his entire presidency happened, and then it fell like a house of cards.

Money isn't as cheap now (though even with these very aggressive rate hikes rates the prime rate is relatively low by historical standards) & the supply chain is still struggling. It's a testament to the strength of the American economy that it hasn't fallen off a cliff.

The Trump years are what happens when the Fed doesn't manage an overheating economy. It's not maintainable long term. It was a sugar high pure and simple. 

Viewing it as the result of sound policy by the orange menace is laughable.

I've been in Corporate Sales since 06.  Back in 07, my company started hiring a bunch of mortgage guys trying to switch careers because that market was drying up. Not even a year later, the economy exploded. 

Prior to my company going on a hiring freeze in late August, half of the resumes I was getting to review were mortgage people. 

Keep your head in the sand if you don't think things are about to implode..... 

The housing bubble and the tech bubble are both about to burst and it's going to be like 2001 and 2008 combined 

The housing market fell apart in 2008 because banks were giving people mortgages they couldn’t afford.  To my knowledge that isn’t happening right now.

5 minutes ago, Dave Moss said:

The housing market fell apart in 2008 because banks were giving people mortgages they couldn’t afford.  To my knowledge that isn’t happening right now.

https://www.reuters.com/markets/us/us-household-wealth-falls-again-second-quarter-fed-says-2022-09-09/

https://fortune.com/2022/08/09/housing-bubble-2022-call-robert-shiller-housing-market/

https://www.cbsnews.com/news/mortgage-rates-today-home-loan-highest-point-since-2008/

https://www.politico.com/news/2022/08/31/housing-recession-economy-00054276

 

After the dark days of the Trump administration, I think the best part about the Biden economic miracle is that, in order to incentivize workers, most companies have instituted Free-BJ-Wednesday.

4 hours ago, iladelphxx said:

I've been in Corporate Sales since 06.  Back in 07, my company started hiring a bunch of mortgage guys trying to switch careers because that market was drying up. Not even a year later, the economy exploded. 

Prior to my company going on a hiring freeze in late August, half of the resumes I was getting to review were mortgage people. 

Keep your head in the sand if you don't think things are about to implode..... 

The housing bubble and the tech bubble are both about to burst and it's going to be like 2001 and 2008 combined 

Better do an ipiggles and pull all your money out of the market now!

On 9/10/2022 at 1:44 PM, Dave Moss said:

The housing market fell apart in 2008 because banks were giving people mortgages they couldn’t afford.  To my knowledge that isn’t happening right now.

 

Now, lending standards are better today than they were in the mid 2000’s, but we’ve absolutely reached a point where the consumer is tapped out. Rising interest rates will help suppress home prices, but the monthly payments aren’t going down, it’s just going towards interest instead of equity. 

I’m expecting the housing market to suffer over the next year or two. It probably won’t be like the real estate crisis in 08, but you’re also probably going to see lower sale prices and higher inventory IMO.

On 7/28/2022 at 4:43 PM, TEW said:

We are officially in a recession, it’s just that it’s been 40 years since we had an inflation driven one. Two quarters of negative growth is what it is.

The fed will always signal strength and stability. I don’t mean that as a knock on them because you don’t want them spooking markets. It is what it is. Just take what they say with a giant grain of salt. It’s the same institution that had Bernanke saying the housing market is strong heading into the financial crisis.

As far as supply chain issues and inflation, something to keep in mind is that consumers got a huge jolt of spending power from the stimi checks, and basically all income levels have about 25% more cash on hand in their checking account than they did before COVID. So the consumer still has some dry powder left to cope with inflation, but I’m thinking once that cash is spent the economy could get thrown into a quick deflationary spiral as suddenly higher costs from inputs price people out of discretionary purchases. Or maybe the consumer is now going to keep higher savings? That would be interesting.

The reaction to that would determine a lot, but if the government goes for more stimulus, we could go from high inflation, to deflation, back into high inflation pretty quickly.

On China… they increasing have unemployment among their youth, which is really concerning from a structural view. You’re right about their demographics — China has been a huge buoy to the global economy and them flipping negative could be pretty catastrophic.

Interesting times…

 

8 hours ago, TEW said:

 

Now, lending standards are better today than they were in the mid 2000’s, but we’ve absolutely reached a point where the consumer is tapped out. Rising interest rates will help suppress home prices, but the monthly payments aren’t going down, it’s just going towards interest instead of equity. 

I’m expecting the housing market to suffer over the next year or two. It probably won’t be like the real estate crisis in 08, but you’re also probably going to see lower sale prices and higher inventory IMO.

We went from consumers having money in reserve to deal with inflation to being tapped out in just over a month. Fascinating!

 

 

 

10 hours ago, TEW said:

Now, lending standards are better today than they were in the mid 2000’s, but we’ve absolutely reached a point where the consumer is tapped out. Rising interest rates will help suppress home prices, but the monthly payments aren’t going down, it’s just going towards interest instead of equity. 

I’m expecting the housing market to suffer over the next year or two. It probably won’t be like the real estate crisis in 08, but you’re also probably going to see lower sale prices and higher inventory IMO.

This is going to manifest itself in the rent/buy pendulum swinging back a bit. And it will definitely have some effect on home prices; I expect them to contract a bit especially on marginal properties (lower-end single family homes, along with condos + cheaper townhomes)

But the crisis in '08 wasn't because of any squeeze on monthly budgets. It was because high risk mortgages were being bundled into MBS's and sold as low-risk investment options. When those high-risk mortgages started to go into foreclosure it caused a much broader effect.

In terms of being able to maintain mortgages, American owners of mortgage debt are in better shape to meet their obligations than they were in 2008. Things can of course change, but there does not seem to be the same risk of large numbers of defaults. 

10 hours ago, JohnSnowsHair said:

This is going to manifest itself in the rent/buy pendulum swinging back a bit. And it will definitely have some effect on home prices; I expect them to contract a bit especially on marginal properties (lower-end single family homes, along with condos + cheaper townhomes)

But the crisis in '08 wasn't because of any squeeze on monthly budgets. It was because high risk mortgages were being bundled into MBS's and sold as low-risk investment options. When those high-risk mortgages started to go into foreclosure it caused a much broader effect.

In terms of being able to maintain mortgages, American owners of mortgage debt are in better shape to meet their obligations than they were in 2008. Things can of course change, but there does not seem to be the same risk of large numbers of defaults. 

The real estate crash and the financial crisis are kind of two distinct (though obviously interconnected) issues. I don’t expect a financial crisis to that magnitude because banks are better capitalized and lending standards are more stringent. Plus far fewer homes were bought during this run up as a proportion of home owners.

I would disagree on starter homes being disproportionately impacted though — there is such a shortage, and there are so many people who want them, and they are relatively affordable, so I think they’ll keep their bid better than most types of property. The McMansions and luxury type homes are where I’d expect to see problems. Condos maybe too.  I think the problems we are going to see are more local/regional in nature though rather than property type.

We'll see. During economic downturns the spread between the marketables and not-so-much becomes more acute in the job markets, which I think will reduce pressure on low end inventory while your $250k+ family units will continue to be in the game.

1 hour ago, JohnSnowsHair said:

We'll see. During economic downturns the spread between the marketables and not-so-much becomes more acute in the job markets, which I think will reduce pressure on low end inventory while your $250k+ family units will continue to be in the game.

Well, I would argue that this time around the squeeze isn’t going to be on blue collar type jobs, nor will it be on the elites. The crunch is likely to be on the middle and upper middle class. Middle management and small businesses likely get hurt the most. Starter homes are where people downsize towards when things go wrong and where younger people are desperately trying to buy but currently priced out.

$250K units? The average home price today is ~$350K last I checked. So yeah, I whole heartedly agree with you that they’re going to get a bid. The bigger problem is in the higher priced stuff where people over extended themselves. Like I said, entry level housing should be pretty strong. They haven’t built any more of it and everyone wants it.