The current housing bubble is so big, that the movie The Big Short (2015) is feeling dated

Oh sorry $350k -> $480k

That's supposed to be an extreme example from the last housing bubble?

The median house in the U.S. went $322k -> $428k the past 2 years.

The Big Short

i thought it was one of those adult movies you might watch on a lonely Saturday night.

So a bunch of people who locked in mortgages under 3% when those homes were going up to 480k. now new buyers have to pay 5% mortgage on either a 480k home or maybe (in some less desirable areas) a discounted 400k home all while appreciation is flat these next couple years during a (possible)recession. Is that really a big deal? Some kind of crash, huh? Ultimately housing ends up pretty stable relative to stocks and risky assets (crypto, etc)

And I love the Big Short movie, but I think in 2022 it applies much more to NFTs/cryptos/media influencing BS than it does to essential needs like housing (please see video below). The 2008 housing crash was caused by subprime. The subprime of our times (2022) is crypto/DeFi/influencers/stock day traders.

“Short everything that guy owns!” 😂

Great movie, if a bit sanitized👍

It is a great movie, but I agree it’s different this time. It was shady lending practices that crashed the market last time.

There will be a peak, likely already here, and a drop on the next 2 years, but I don’t think it will have the ripple effect that 2008 did. At least not on real estate specifically.

It will take some more job losses to crash the real estate market. Delinquencies are still low due to changes they made in lending practices after the last crash, so we shouldn't see the massive drop we experienced with the Big Short, but we will still see a decline in the near future. Inventory is starting to build (sales are down since a large percentage of the potential home buying population cannot qualify for homes at the current prices with interest rates where they are). New home sales fell off a cliff at a time when permits are fairly high (this is one part inflation driving up construction costs and one part supply chain issues increasing construction time). There is a correction coming. There was a big FOMO rush at the end of last year as people who pre-qualified at a lower rate rushed to buy houses, but since then, sales have dropped at a time of year when sales typically pick up.

Much different lending conditions in this current market. No bank is loaning a $30,000/year retail store assistant manager the funds to purchase a $500K house like they did in 2008.

I get that you like his movie Jamin and that you really, really want housing prices in Seattle to crash. Sadly, that just isn't going to happen unless the entire economy goes south and wipes out a bunch of jobs in the process. Chances are that your job would also be endangered under such circumstances and some guy in Bangalore will be buying a small house when he gets a raise and your responsibilities in an emergency layoff/corporate reorganization.

jamin hates America.

One of my kids' friends has a mom who is a realtor. Every time there is a big news cycle about interest rates going up, the economy going in the wrong direction or housing prices cooling, she gets a bunch of new clients who are coming off the benches after being priced out of the market. There is a very deep bench of people who want to buy a house are priced out of the market who are just sitting around, saving money and waiting for a chance to buy a house in a reasonable market.

Lumber prices have been crashing as interest rates are rising and supply chain disruptions are starting to finally get sorted out. That is a big help for home builders and will help control inflation. Another reason for a soft landing.

But the main reason this is not 2008 is that people have adapted to the housing market. In 2008, millions of people took a flying leap into a housing market based on financing schemes that were ticking time bombs. Now, people know what they are getting into and have adapted to being house poor.

Didn't you start a thread two or three weeks ago stating a large U.S. financial institution was about to fail? You talked to a guy in Maui. Follow up. What is your source in Maui telling you now?

The Big Short was not only about real estate appreciating quickly. Big Short was about the soundness of U.S. banks.

Glass-Steagall should not have been repealed in 1999. Since Glass-Steagall was repealed, banking regulations should have been more strictly enforced. After 2008 U.S. banking meltdown, Glass-Steagall should have been reinstated. Banking regulations should be stricter and enforced. That stated, banking regulations are more strictly enforced today than they were in the 00's.

What caused the crash in 2008 was:

1. Lending money to people who didn't have a high enough income to be able to make the payments long-term.

2. Lying on loan applications. That happened A LOT! In the industry they were jokingly called "liar loans" and lots of loan officers were OK with that. Fake 1099's, fake W-2's, bribing accountants and appraisers to provide false information for loans, etc. It was a REALLY crazy time.

3. No money down loans.

4. People buying rental properties and paying more in monthly mortgage payments than the rent they were getting, in the hopes that real estate prices would keep going up quickly and they could sell the rental property in a few years for a big profit.

5. Negative amortization loans. Meaning you were able to pay LESS per month than you were supposed to pay and then the amount you didn't pay got added to your mortgage total. So every month your mortgage got LARGER. That was never going to end well.

This recent run up in real estate prices is mainly caused by unusually low interest rates, but we no longer have the rediculous lending shenanigans that we had between 2003 - 2008. So the real estate market will cool off, but we won't have the nasty crash that we had in 2008.

Well, we know that you're not feeling dated!

Builders are gonna build as supply issues go away. But they are much more in tune with pricing and once it becomes unprofitable they won’t build as much.

Its gonna cool off and go down in a few areas but not more than 10% absolute max. Not even close to 2008.

Im still standing by my thesis that just buy a house when you need it. Buy an investment property when you want to diversify to RE exposure.

Are there as many interest only loans as the period leading up to 2008? I'm not sure there are as many terrible loans as back then. Yes, things are overheated and likely to calm down, but less sure it will be a universal housing market collapse.

Jamin

Also Jamin: “huge crash coming-40% declines everywhere in USA. Start a letsrun thread every week about it! I’m smarter than everyone else in any other career including finance/economics/business/etc. so maybe I should change careers and go to Wall Street? I can tell exactly when the prices are going to go down 40%, and, once they do, I will buy a mansion in Seattle. All of you who own homes are idiots because you’re going to be underwater shortly with foreclosures everywhere and you keep expecting 20%+ appreciation every year.”

They did because Obama FORCED them to under threat of steep financial penalties. This country has had some messed up leaders and he takes the cake.

What are you talking about? What exactly is it that you think Obama forced people to do?