"But real house prices can diverge from market fundamentals when there is widespread belief that today's robust price increases will continue," they noted. "If many buyers share this belief, purchases arising from a 'fear of missing out' can drive up prices and heighten expectations of strong house-price gains."
Of course you can expect some changes in market conditions when you go from 2.5% to almost 5% mortgage rates, But housing is still greatly needed so I wouldn’t expect a crash.
biggest bubbles are tech stocks, meme stocks & crypto, not housing
Jamin asks, "what have I been saying"... Somehow I don't think you really want an honest answer to that. Anybody with more than one brain cell knows the housing market had skyrocketed lately... Everybody give jamin a slow clap.
You missed the boat in Seattle, Jamin. That ship sailed five years ago. If you are hoping that prices are going to significantly come down, then you are going to be waiting a very long time. The upward rush will slow but desirable areas are going to hold their value. This bubble is not like the 2008/2009 bubble based on bad loans to unqualified buyers.
But housing is still greatly needed so I wouldn’t expect a crash.
biggest bubbles are tech stocks, meme stocks & crypto, not housing
Do you not understand that everything is connected? When people see their paper wealths in cryptos and stocks increase, they pay more for houses becase they're more confident that they can afford the monthly payments.
But housing is still greatly needed so I wouldn’t expect a crash.
biggest bubbles are tech stocks, meme stocks & crypto, not housing
Do you not understand that everything is connected? When people see their paper wealths in cryptos and stocks increase, they pay more for houses becase they're more confident that they can afford the monthly payments.
Yes I do. The housing market goes from White hot to red hot and maybe 15% -20% declines in some areas. Rents go up and there’s still a nationwide housing shortage that isn’t getting much better anytime soon.
Do you not understand that everything is connected? When people see their paper wealths in cryptos and stocks increase, they pay more for houses becase they're more confident that they can afford the monthly payments.
Yes I do. The housing market goes from White hot to red hot and maybe 15% -20% declines in some areas. Rents go up and there’s still a nationwide housing shortage that isn’t getting much better anytime soon.
You missed the boat in Seattle, Jamin. That ship sailed five years ago. If you are hoping that prices are going to significantly come down, then you are going to be waiting a very long time. The upward rush will slow but desirable areas are going to hold their value. This bubble is not like the 2008/2009 bubble based on bad loans to unqualified buyers.
Of course you can expect some changes in market conditions when you go from 2.5% to almost 5% mortgage rates, But housing is still greatly needed so I wouldn’t expect a crash.
biggest bubbles are tech stocks, meme stocks & crypto, not housing
Houses have never been more expensive when compared to income in US history. Plus we have all the FHA loans and "conventional loans with absurdly low down payments like 10%. So there is enough leverage in the market where you could see a big drop in prices, especially if the economy enters recession. A major drop in other assets which are also highly leveraged or a jump in unemployment could cascade over into the real estate market. Although I think the real estate market is better protected from a sudden drop than other assets with the everything bubble we've got going on right now its really hard to know how everything plays out.
Also the FED has been protecting all the asset values since 2009 with easy money. Now that inflation is a major problem if there is an asset value collapse do they stand by and try to reign in inflation or do they backstop the market knowing it will make the inflation problem worse. I am guessing the later since the inflation fighting tactics being employed are a joke. Plus with it being a midterm year the party in charge seems to already be in full let's blame Russia for all the inflation mode because we think you're stupid enough to buy the $hit we're selling. Biden will probably have Powell unleash another massive QE to prop up all markets if there is an asset value collapse blaming Russia for everything.
The fact Jamin is thinking about housing prices just demonstrates how much housing is needed and wanted by many sitting on the sidelines and renting. If housing were in great supply and cheap he would have already bought a mansion in Seattle. Instead he’s on letsrun with a thread each week trying to time the market and research various runner cities where housing is (slightly) more affordable. Anywhere that’s nice is expensive and may get slightly less expensive but good luck waiting for a crash. Yes they’ll be better buyer selection possibly a 20% drop in prices but no one thinks we’re in 2008 territory with housing
That's the same old tired argument. That housing would always be last on the list to crash because people will cut all other expenses (vacations, food, cars, etc.) before they finally decide to take a closer look at how much house they can afford. Among other reasons why it doesn't make sense, remember there's the domino effect such that, for example, people stop spending on vacations and then the airlines layoff employees and those employees represent a fraction of the buying power which was supporting fantasy house prices.
"But real house prices can diverge from market fundamentals when there is widespread belief that today's robust price increases will continue," they noted. "If many buyers share this belief, purchases arising from a 'fear of missing out' can drive up prices and heighten expectations of strong house-price gains."
Having some inflation while home prices flatten due to a bubble fear, combined with higher rates is a good thing.
Higher wages is an outcome of inflation. The ratio of income to home prices will improve. Houses become more affordable.
There are so many things wrong with this post, but I'll just focus on the most obvious, in that wages are increasing slower than inflation, which is what historically happens in eras of high inflation. Meaning your purchasing power is going down. The idea that idea that inflation is a good thing in a bubble because it will drive up wages flies is economic nonsense. Not to mention what do you say to people like the elderly who are past their working years and living off fixed incomes. It is very clear if you look at periods of high inflation like the 70s that the general public's purchasing power never keeps up with inflation.
We are all guessing at what is going to happen to the price of homes. What if they keep going up at 15-20% year over year like in 2021 and don't crash? The idea that prices will level out and wages will increase so there is a leveling out is purely a hypothesis that may or may not happen.
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