September 12, 20223 yr 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.
September 12, 20223 yr 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!
September 12, 20223 yr 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.
September 13, 20223 yr 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.
September 13, 20223 yr 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.
September 13, 20223 yr 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.
September 13, 20223 yr 3 minutes ago, Ipiggles said: 1) One of CVON's dumbest members duped by a fake quote yet again. 2) Even if the quote was real, the alternative is to vote Republican if you ever feel the need to subvert democracy and refuse to accept the outcome of elections. All in the name of a sore loser game show host turned criminal that doesn't understand the consequences of his crimes.
September 13, 20223 yr 10 minutes ago, Ipiggles said: There are ways to find out if you have been suckered. Are you aware of any?
September 13, 20223 yr 11 minutes ago, Ipiggles said: All that fake quote needs is a claim that it was said on Fox News in 1987
September 13, 20223 yr 59 minutes ago, Ipiggles said: You've posted similar graphs to this multiple times... why do you think the Strategic Petroleum Reserve exists?
September 13, 20223 yr 13 minutes ago, Imp81318 said: You've posted similar graphs to this multiple times... why do you think the Strategic Petroleum Reserve exists? For when the sheet hits the fan. I am calling it now, as soon as the elections are over in November, Joe will stop dumping the reserves. This is a politically driven stunt to get votes. Same as College Debt forgiveness.
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