Housing crash deniers ???

[Greg R.]

Unfortunately I've been away for a few months while taking care of some personal matters, so I haven't been able to keep up on discussions. 

However, several months ago there were ample amount of folks here insisting that a market crash/ correction was impossible and that prices would only continue to increase.

Curious if there are still people out there who feel this way? If so, I'd love to see some data that supports your view that the market isn't going to crash/ correct. 

[Carlos Ptriawan]

Quote from @Joanne Tsai:

Quote from @Carlos Ptriawan:

Why rising unemployment is not scary ? Have you ever gotten laid off from your job because your company no longer exist ?

Well, they hate Musk to guts, and even he said to pump more oil domestically. 

I tend to work hard and not complain much, so no. And yes, when one is on W2, one expects to be taken care of (according to Rich Dad) and someone controls your destiny, I know I am dispensable. My husband has his own business, and we strive to be competitive so we don't go out of business.  
  

 Tell that to the realtor or any worker that lost a job in the last three months.

Of course if you only care for your own self you would not care for others.

[Carlos Ptriawan]

That 6 trillion US dollar that the Fed printed on April 2020 obviously is the ultimate root cause of the problem. Obviously if you add 40% more money into circulation it will trigger inflation. 

So in short. It's the Fed that's causing the inflation crisis. And then now they intentionally try to cause a recession crisis due to their previous action.

[James Hamling]

Quote from @Carlos Ptriawan:

That 6 trillion US dollar that the Fed printed on April 2020 obviously is the ultimate root cause of the problem. Obviously if you add 40% more money into circulation it will trigger inflation. 

So in short. It's the Fed that's causing the inflation crisis. And then now they intentionally try to cause a recession crisis due to their previous action.

 Yeah, 100%, if you take a pie and cut a few trillion additional pieces, absolutely it makes every piece smaller, hence worth less. 

My point is EVERYONE needs to open eyes and come aware of what's going on, and WHY. Not just "oh, Fed is f'ing us adding more $$$$ into the system", no, we need to ask WHY are they adding $$$$ into the system. 

It's a WAYYYYYyy bigger problem then just the few trillion added, it's a SYSTEMIC problem, they system itself is broken, big time. When we point to just the $$$$ printing, we get this sense of a 1 time event, which it's not. 

Think of all the entitlement programs by the federal Gov., and not just adding more, but expanding those existing ones, raising those budgets. That's all "shadow inflation", because where is the Gov getting the $$$$ for it? And no, not taxes, the F. Gov spends WAY more then it takes in. So that itself is also "Shezame'd" $$$$ into existence. 

And again, the bigger issue is WHY are they doing or needing to do such? Yeah, partially dead-beats, lol. But, in majority part, again, because the economy has a massive leak of $$$$ filtering out of the system. Some have computed it's as high as 20% of GDP annually hemorrhaging OUT of the economic cycle. Think on that for a moment, 20% of the entire U.S. economy of $$$$ going "poofff" into a black-hole out of the economy every year. 

And it's not QE, so nobody's purchasing power is growing by that 20% per year, because it still exists, it's just concentrating into places that don't circulate in the economy, is consolidating. 

The F.Gov. will NEVER get spending under control until they plug the hole in the economy. Then, a trade balance, at minimum MUST be achieved, or that's also $$$$ getting shipped out of the economy. 

Remember, every time you remove $$$$ from the U.S. economy "flow" that is a form of added inflation on the middle and working class, via a deflationary action, which presses incomes and pay down. Deflation does that, pushes pay DOWN. While at same time, $$$$ going out of system presses for $$$$ injection making value of money less. 

It's a 2 punch death that's going on. The $ earned is buying less, and there is less $ to be earned, capping income growth. 

It's all kinds of FUBAR!

[James Hamling]

Quote from @Bruce Woodruff:

Quote from @JD Martin:

The question was this: will exporting some of the US wealth to poor nations make the planet overall a better place? Hard to say. No serious wars for almost 80 years is pretty compelling. 

Well that's only one way of looking at it, isn't it? Exporting our earned wealth is corrupt and immoral in and of itself. And much of it never ends up where it was meant to go anyway.

No serious wars for 80 years is solely due to the US establishing such a dominant military that no one wants to F with us. Period.

 I'd have to argue on the no serious wars for 80 yrs thing.    Yeah, maybe in perspective of the average American but talk to most who were in Iraq I or II, it was pretty serious. Afghanistan. Heck, how about the life of an Afghan, in last 80 years they've known a handful without war. Bosnia was a horror show, and that's putting it nicely. West Africa has had a serries of wars. It's a long list, a very long list actually. 

U.S. has been a stabilizing force in many ways but unfortunately it's like there has been a height limit to who get's included under that umbrella of protection, nations who don't reach it, well, it's been business of blood as normal. 

I think this speaks to a great misconception by Americans that the natural human condition is peace, it's not, not at all. Humans are naturally horrific, savage, blood thirsty war-mongers, we are. Peace has only ever been held through POWER. That false narrative is what empowers the reduction in U.S. power, reduce it enough and the natural state WILL come to be, it is already isn't it. 

[Joanne Tsai]

Quote from @Carlos Ptriawan:

Quote from @Joanne Tsai:

Quote from @Carlos Ptriawan:

Why rising unemployment is not scary ? Have you ever gotten laid off from your job because your company no longer exist ?

Well, they hate Musk to guts, and even he said to pump more oil domestically. 

I tend to work hard and not complain much, so no. And yes, when one is on W2, one expects to be taken care of (according to Rich Dad) and someone controls your destiny, I know I am dispensable. My husband has his own business, and we strive to be competitive so we don't go out of business.  
  

 Tell that to the realtor or any worker that lost a job in the last three months.

Of course if you only care for your own self you would not care for others.

just saying, when you work for someone else, you run the risk of being cut, and when you run your own company, you run the risk of being taken out by your competitor. There is nothing about me caring for myself only. everyone shares the same risk more or less, that's why everyone is here trying to get to financial freedom, right?

[James Hamling]

Quote from @David Song:

@Greg R.

Housing prices will always go up. Buy anytime. - bigger pockets.com

Reality: numerous REI lost their life savings in 2009 and maybe 2022. Over leveraging, insufficient reserve, short term loan with balloon payment, etc.

Flippers bought in Q1 2022 will learn the lesson now. Many of them are losing their shirt. None will tell you publicly.

The price decline started in April 2022, and has been declining for the last 4 months. The bottom has not been reached yet. This is nationwide, from CA to Texas, everywhere. 

 Sorry David, but as you seem to believe prices have been declining in the entire nation, uhm, Minnesota IS in the U.S. and so far for 2022, we have had price INCREASES every month, this year. Not decline, not flat line, INCREASE. 

While it's not the bezonkers level it was last year, it's pacing around 10% YOY. 

Velocity has slowed, we almost have 1 full month inventory on existing homes now.... 0.9 to be exact. 

[Greg R.]

Quote from @Angelo Argentieri:

Ok, so I don't deny the amount of regs re: lending, but let's be honest. Good lenders are able to manipulate DTI and bend the numbers to get people into loans that they can barley afford. Let's not pretend that all the people who purchased in this over-inflated market are super stable and can't foreclose. I personally know people who are living check to check and who bit off more than they could chew thinking that they had to buy during the recent housing craze. 

So I respectfully disagree... there is a house of cards that will come tumbling down.

This is a great point as I know several folks who have recently purchase properties. I know their current pay, lifestyle, job stability, etc., and am nervous for them. The reason why is the job stability factor with the current and short-term economic instability. Will their interest rates spike due to an ARM, no. Will they lose employment and have what is left of savings eroded by inflation, yes. Will they not be able to afford their monthly debts, sadly most likely.

Will a few cards fall? They already have and will continue to. However, to call this a house of cards, is where I believe many will be too cautious during an opportunisitc time and they will regret it. 

Yup. All the "free" money that was circulating due to the relief bills is what caused the employee shortage. A lot of people stopped working, stopped paying rent and started taking a handout from big brother in the name of covid. As a result some unique opportunities presented themselves to those who stayed active in the workforce. A lot of people took advantage of the employee shortage and were able to leverage themselves into much better jobs with higher salaries - but not because they were qualified or deserving of the job, but because there was no one else. As a hiring manager I witnessed this first hand, time and time again.

I really hope that this won't happen but I have little doubt that we'll find ourselves in a full blown recession with high unemployment and even higher inflation before long. At that point it'll be abundantly clear how many households can't even go a single pay check without defaulting on their mortgage. Many of these houses will be the ones that were purchased for crazy amounts over asking price and over value at the peak of the bubble. 

When this happens values will have corrected and those who bought at top of the bubble will see their equity evaporated and no way out. 

I truly see no other way this plays out. We can't be so financially careless as a country with all the printing of money and economically devastating policies with no repercussions. 

[James Hamling]

I have a question.... and a confusion..... a question of confusion. 

So many here now talking with certainty of the inflation. I think we have well established existence of inflation now with all but unanimous consent. 

I am confused how there seems to be a prevailing thought that inflation will cause the market price of assets to decrease...... That is my question, how does this work that inflation will make the cost of all the "things" more, food costs more, cars cost more, fuel and energy is more, everything more EXCEPT real estate? Real Estate will be less...... 

How does that work? I am super confused on that argument. 

Inflation is the purchase power of a dollar becoming less. yes? So, what vortex in the universe make Real Estate not just immune but reverse power to this? 

Hasn't real estate been referred to as the #1 hedge against inflation for something like... oh.... 2 or 3 odd THOUSAND years or so?????? 

Because, we all agree inflation is real, it's here, it's making the cost of a plumber more right? The electrician costs more thanks to inflation. Furnace is more, concrete, nails, insulation, tappers, roofing, all the things more more more thanks to inflation.... BUT, lol, the finished product, a house, it's going to be, LESS?????? 

[David Song]

Quote from @James Hamling:

Quote from @David Song:

@Greg R.

Housing prices will always go up. Buy anytime. - bigger pockets.com

Reality: numerous REI lost their life savings in 2009 and maybe 2022. Over leveraging, insufficient reserve, short term loan with balloon payment, etc.

Flippers bought in Q1 2022 will learn the lesson now. Many of them are losing their shirt. None will tell you publicly.

The price decline started in April 2022, and has been declining for the last 4 months. The bottom has not been reached yet. This is nationwide, from CA to Texas, everywhere. 

 Sorry David, but as you seem to believe prices have been declining in the entire nation, uhm, Minnesota IS in the U.S. and so far for 2022, we have had price INCREASES every month, this year. Not decline, not flat line, INCREASE. 

While it's not the bezonkers level it was last year, it's pacing around 10% YOY. 

Velocity has slowed, we almost have 1 full month inventory on existing homes now.... 0.9 to be exact. 

Sorry, James. I do not follow MN, it’s too cold. I spent 5 years in Columbus, OH, and have already made my decision not to live there in my lifetime.
Also, I am not talking about YOY, but comparison to the peak achieved in Q1/2022. YOY even California is still positive. YOY data could be very misleading. Since the price peak was achieved in Q1 22, the YOY number may still be positive a few months after the dramatic decline started in April. Unless you are checking on listings frequently in person,  you will not be able to tell the market trend. 
if you really want to use YOY data, you have to wait until Q1 2023 to get a real feel about the market.

[John Myers]

@Greg H.

Congratulations on starting a very robust and interesting post!!

[Mary Jay]

Quote from @James Hamling:

I have a question.... and a confusion..... a question of confusion. 

So many here now talking with certainty of the inflation. I think we have well established existence of inflation now with all but unanimous consent. 

I am confused how there seems to be a prevailing thought that inflation will cause the market price of assets to decrease...... That is my question, how does this work that inflation will make the cost of all the "things" more, food costs more, cars cost more, fuel and energy is more, everything more EXCEPT real estate? Real Estate will be less...... 

How does that work? I am super confused on that argument. 

Inflation is the purchase power of a dollar becoming less. yes? So, what vortex in the universe make Real Estate not just immune but reverse power to this? 

Hasn't real estate been referred to as the #1 hedge against inflation for something like... oh.... 2 or 3 odd THOUSAND years or so?????? 

Because, we all agree inflation is real, it's here, it's making the cost of a plumber more right? The electrician costs more thanks to inflation. Furnace is more, concrete, nails, insulation, tappers, roofing, all the things more more more thanks to inflation.... BUT, lol, the finished product, a house, it's going to be, LESS?????? 

 I agree with you...I dont think we will see a huge decrease in prices...Max 30%... and depends on a location

[JD Martin]

Quote from @James Hamling:

Quote from @Bruce Woodruff:

Quote from @JD Martin:

The question was this: will exporting some of the US wealth to poor nations make the planet overall a better place? Hard to say. No serious wars for almost 80 years is pretty compelling. 

Well that's only one way of looking at it, isn't it? Exporting our earned wealth is corrupt and immoral in and of itself. And much of it never ends up where it was meant to go anyway.

No serious wars for 80 years is solely due to the US establishing such a dominant military that no one wants to F with us. Period.

 I'd have to argue on the no serious wars for 80 yrs thing.    Yeah, maybe in perspective of the average American but talk to most who were in Iraq I or II, it was pretty serious. Afghanistan. Heck, how about the life of an Afghan, in last 80 years they've known a handful without war. Bosnia was a horror show, and that's putting it nicely. West Africa has had a serries of wars. It's a long list, a very long list actually. 

U.S. has been a stabilizing force in many ways but unfortunately it's like there has been a height limit to who get's included under that umbrella of protection, nations who don't reach it, well, it's been business of blood as normal. 

I think this speaks to a great misconception by Americans that the natural human condition is peace, it's not, not at all. Humans are naturally horrific, savage, blood thirsty war-mongers, we are. Peace has only ever been held through POWER. That false narrative is what empowers the reduction in U.S. power, reduce it enough and the natural state WILL come to be, it is already isn't it. 

 Of course there have been wars, and there will always be wars, but after the horrors of WWI & II and the associated genocides that came with it, there's been nothing even remotely close worldwide. Maybe the Chinese "Cultural" Revolution or the Khmer Rouge would be notable in terms of putting people to death, but these were largely internal convulsions. I'd have to double check the numbers because I can't remember how recent it was, but more people were killed in WW2 than all wars worldwide since.

As for the natural state of things, war and conflict are certainly the "natural" state of humans, if you consider us as emotionally unevolved creatures. That makes the relative lack of war worldwide even more remarkable. As the leading world democracy, as well as one of the largest countries in the planet in terms of population, geography and resources, we are probably the best equipped and most suited for being the world's policeman because without question someone has to do it. 

[Eric Bilderback]

Quote from @James Hamling:

I have a question.... and a confusion..... a question of confusion. 

So many here now talking with certainty of the inflation. I think we have well established existence of inflation now with all but unanimous consent. 

I am confused how there seems to be a prevailing thought that inflation will cause the market price of assets to decrease...... That is my question, how does this work that inflation will make the cost of all the "things" more, food costs more, cars cost more, fuel and energy is more, everything more EXCEPT real estate? Real Estate will be less...... 

How does that work? I am super confused on that argument. 

Inflation is the purchase power of a dollar becoming less. yes? So, what vortex in the universe make Real Estate not just immune but reverse power to this? 

Hasn't real estate been referred to as the #1 hedge against inflation for something like... oh.... 2 or 3 odd THOUSAND years or so?????? 

Because, we all agree inflation is real, it's here, it's making the cost of a plumber more right? The electrician costs more thanks to inflation. Furnace is more, concrete, nails, insulation, tappers, roofing, all the things more more more thanks to inflation.... BUT, lol, the finished product, a house, it's going to be, LESS?????? 

It's nuanced but there is a difference in asset inflation which was created when the Fed took interest rates to zero, and consumer price inflation which happened with the COVID lockdowns and all the supply chain disruptions.  

The American economy is very dependent on assets prices so people can take home equity loans and buy more stuff, which heats up the economy.  The part I think many people are overlooking is that because the American economy is so dependent on asset prices and not actually producing products (like we should be) we are in real trouble if asset prices decline.  Demand destruction is a fancy way of saying decreased standard of living.  As much as I critique our monetary system and think it has created a total artificial economy I don't think it is wise to bet against the Fed aka, if the Fed wants prices to come down they are likely coming down.

@JD Martin

We are the worlds policeman when it suits us, as the say money talks and BS walks.  People have and are being slaughtered in parts of Asia, Africa and we don't do anything.  Hell the Chinese sterilize , and put the Uygers in forced camps and Nike uses them for slave labor to make the Kapernick's shoes.  Ukraine's boarder is more important to these policeman than our own boarder.  Wall Street are as corrupt and shameless as it gets they will even sell out their own country for their silver.  

[James Hamling]

Quote from @David Song:

Quote from @James Hamling:

Quote from @David Song:

@Greg R.

Housing prices will always go up. Buy anytime. - bigger pockets.com

Reality: numerous REI lost their life savings in 2009 and maybe 2022. Over leveraging, insufficient reserve, short term loan with balloon payment, etc.

Flippers bought in Q1 2022 will learn the lesson now. Many of them are losing their shirt. None will tell you publicly.

The price decline started in April 2022, and has been declining for the last 4 months. The bottom has not been reached yet. This is nationwide, from CA to Texas, everywhere. 

 Sorry David, but as you seem to believe prices have been declining in the entire nation, uhm, Minnesota IS in the U.S. and so far for 2022, we have had price INCREASES every month, this year. Not decline, not flat line, INCREASE. 

While it's not the bezonkers level it was last year, it's pacing around 10% YOY. 

Velocity has slowed, we almost have 1 full month inventory on existing homes now.... 0.9 to be exact. 

Sorry, James. I do not follow MN, it’s too cold. I spent 5 years in Columbus, OH, and have already made my decision not to live there in my lifetime.
Also, I am not talking about YOY, but comparison to the peak achieved in Q1/2022. YOY even California is still positive. YOY data could be very misleading. Since the price peak was achieved in Q1 22, the YOY number may still be positive a few months after the dramatic decline started in April. Unless you are checking on listings frequently in person,  you will not be able to tell the market trend. 
if you really want to use YOY data, you have to wait until Q1 2023 to get a real feel about the market.

 Wait.... your telling me your whole premise for some "crash" is a month over month number you found of a decline in some market...... that's ridiculous. 

Cold or not, Twin Cities is one of the major national markets, set to over-take Chicago in near term of years, so I'd say it matters, as you were saying "everywhere in the nation" is in decline since April. Andy yes, I do track the numbers, constantly, it happens to be my job. And our numbers YOY, which happens to be the widely established measurement of such movements, but also the month over month, increasing. 

To be honest, I am still amazed each data release at the constant incline, I am, I didn't expect it at this moment with loss of velocity but #'s don't lie. 

[Josue Vargas]

Quote from @Greg R.:

Unfortunately I've been away for a few months while taking care of some personal matters, so I haven't been able to keep up on discussions. 

However, several months ago there were ample amount of folks here insisting that a market crash/ correction was impossible and that prices would only continue to increase.

Curious if there are still people out there who feel this way? If so, I'd love to see some data that supports your view that the market isn't going to crash/ correct. 

Yeah, you are late, mortgages are rising by the hour, and property prices, well that depends on where you live and the market.  Keep up! and Good luck. 

[James Hamling]

Quote from @Eric Bilderback:

Quote from @James Hamling:

I have a question.... and a confusion..... a question of confusion. 

So many here now talking with certainty of the inflation. I think we have well established existence of inflation now with all but unanimous consent. 

I am confused how there seems to be a prevailing thought that inflation will cause the market price of assets to decrease...... That is my question, how does this work that inflation will make the cost of all the "things" more, food costs more, cars cost more, fuel and energy is more, everything more EXCEPT real estate? Real Estate will be less...... 

How does that work? I am super confused on that argument. 

Inflation is the purchase power of a dollar becoming less. yes? So, what vortex in the universe make Real Estate not just immune but reverse power to this? 

Hasn't real estate been referred to as the #1 hedge against inflation for something like... oh.... 2 or 3 odd THOUSAND years or so?????? 

Because, we all agree inflation is real, it's here, it's making the cost of a plumber more right? The electrician costs more thanks to inflation. Furnace is more, concrete, nails, insulation, tappers, roofing, all the things more more more thanks to inflation.... BUT, lol, the finished product, a house, it's going to be, LESS?????? 

It's nuanced but there is a difference in asset inflation which was created when the Fed took interest rates to zero, and consumer price inflation which happened with the COVID lockdowns and all the supply chain disruptions.  

The American economy is very dependent on assets prices so people can take home equity loans and buy more stuff, which heats up the economy.  The part I think many people are overlooking is that because the American economy is so dependent on asset prices and not actually producing products (like we should be) we are in real trouble if asset prices decline.  Demand destruction is a fancy way of saying decreased standard of living.  As much as I critique our monetary system and think it has created a total artificial economy I don't think it is wise to bet against the Fed aka, if the Fed wants prices to come down they are likely coming down.

@JD Martin

We are the worlds policeman when it suits us, as the say money talks and BS walks.  People have and are being slaughtered in parts of Asia, Africa and we don't do anything.  Hell the Chinese sterilize , and put the Uygers in forced camps and Nike uses them for slave labor to make the Kapernick's shoes.  Ukraine's boarder is more important to these policeman than our own boarder.  Wall Street are as corrupt and shameless as it gets they will even sell out their own country for their silver.  

 I kind of agree. Ok, my post was obviously rather snarky but you bring up some really good nuances and points. 

Yes, the Fed carries one hell of a "big stick", and really they do what ever the heck they want regardless of any political whim right. I agree in manner of believing there going to keep pursuing there desired result, where I disagree is in fact that I don't believe there going to be able to get it, as in there without a clue. 

the Fed is acting with tunnel vision. If things were just an inflation issue, in the classical sense, what there doing which is a text book action, well it would work. This situation is so far removed from anything ever. And it's honestly a bit bizarre because some of it is very obvious, for example much of the supply issues, rates could be at 85% and it would not do anything to relieve the issues because they have nothing to do with consumer demand, they have to do with the entire logistic having been stop dead in there tracks. Some, yes, consumer actions play a part but majority is the kill-switch that was covid lockdowns right. 

In one way a person could argue if one kills out the economy to as slow a crawl as possible, the logistics of everything can get caught back up. Ok, but what about the resulting retraction of the entire industry base from that recession action? Those actions to lower demand also lower supply, protracting the duration such would have to go on. But who knows, maybe they discussed that over cigars and brandy, had a chuckel and said "f-em". 

That still won't address the inflation "monster" from money supply. Nor housing crunch. Again, affordability will impact ability to fulfil housing demand but the inflationary impact hits input costs for housing and thus, limits the downward mobility of housing price. The only way to make housing significantly cheaper is through cost mitigations, or simply allowing millions of homeless. And millions of homeless, my bet is that would make hundreds of thousands of rioters. There is no buffer, housing shortage leaves no buffer. 

Is the answer "cheap imports" from a country were talking about the near certainty of war in the near future with..... 

It's like every turn there is a wall. Hence why I think the Fed is also saying "F-it" and just doing what the playbook says because sorting out real solutions makes there head hurt too much. 

[Matt Bishop]

@Greg R. I remain steadfastly confident in my real estate investments. Mortgages paid off and rents keep rise. No intention to sell anything for 10 years.

[JD Martin]

Quote from @Eric Bilderback:

We are the worlds policeman when it suits us, as the say money talks and BS walks.  People have and are being slaughtered in parts of Asia, Africa and we don't do anything.  Hell the Chinese sterilize , and put the Uygers in forced camps and Nike uses them for slave labor to make the Kapernick's shoes.  Ukraine's boarder is more important to these policeman than our own boarder.  Wall Street are as corrupt and shameless as it gets they will even sell out their own country for their silver.  

 You make good points here that are hard to argue against. Certainly a lot of the history of our "policeman" efforts just happened to line up with our economic interests, and some of our meddling is embarrassing if not shameful. And a lot of our policing efforts just happen to help people who look like us; we had no problem intervening in Serbia but let the Rwandans slaughter each other unabated. So yeah, your point is well taken.

That said, we are still the world's best hope for keeping the peace and encouraging freedom and democracy. No one else has the advantages we do: size, economic might, fighting power, and pluralism (i.e. our government better reflects a divergence of cultures and philosophies than most others). Even if we don't have a responsibility to look after other nations, to not do so will guarantee that eventually the wolf will be at the door. We're strong but not invincible. 

[Nicholas L.]

@JD Martin

this is a little bit of a tangent, but why not! (see - World War references in a market crash thread - awesome!)

a few years ago, China was 100% definitely, for sure, inevitably, going to become the world's largest economy.  

now... there are articles saying that may not be for decades, or may never happen - and, I think that China is on the verge of a demographic crisis with an aging population and too few people of working age.  India is going to overtake China as the world's most populous country (or already has.)

to bring this back to your point - I worry about the same thing happening to the US - while I believe we remain the powerhouse you described, our growth is slowing too.  it remains to be seen how much of that is due to covid and what will happen with immigration - but I believe manageable growth is good - good for RE and good for countries

[John Myers]

Very lively conversation and let's face it, nobody knows what is going to happen.  That includes me!

Several posts have stated the housing market now is different from 2008. That is true, however, I always worry when someone tells me "it is different this time.

Inflation is high and not going to end any time soon. This is typically good for hard assets like gold, silver, real estate, etc.........

Interest rates are increasing, this is bad for almost every person and every business.

There is definitely a scenario for a crash in the housing market. That scenario is a crash in the economy and high unemployment. The CEO of FedEx gave a dire outlook on their business. If their business is down, guess what, so are a lot of other businesses.

Many Americans live paycheck to paycheck. If they lose their jobs, they will lose their houses (unless the government steps in). They may have equity so they can sell their houses if there are willing buyers.

The good news is there are a ton of job openings at this time. People can find a job if they need one. How long will this last?

I am in the camp that believes we are in a recession, 2 consecutive quarters of negative GDP. Our government and many pundits say we are not in a recession because "this time it is different."

I also believe we are at the beginning of the recession cycle and the beginning of the interest rate increase cycle. The printing of money and out of control spending in DC is the cause of many of these problems. Nothing you or I can do about that.

This will not bode well for the stock market or the economy!

The worst is yet to come and we will see how bad things get. For the most part, the real estate market will follow the economy.

This thread may be going for a while and come back to life in a few months!

Good luck to all!!!

[David Song]

Quote from @James Hamling:

Quote from @David Song:

Quote from @James Hamling:

Quote from @David Song:

@Greg R.

Housing prices will always go up. Buy anytime. - bigger pockets.com

Reality: numerous REI lost their life savings in 2009 and maybe 2022. Over leveraging, insufficient reserve, short term loan with balloon payment, etc.

Flippers bought in Q1 2022 will learn the lesson now. Many of them are losing their shirt. None will tell you publicly.

The price decline started in April 2022, and has been declining for the last 4 months. The bottom has not been reached yet. This is nationwide, from CA to Texas, everywhere. 

 Sorry David, but as you seem to believe prices have been declining in the entire nation, uhm, Minnesota IS in the U.S. and so far for 2022, we have had price INCREASES every month, this year. Not decline, not flat line, INCREASE. 

While it's not the bezonkers level it was last year, it's pacing around 10% YOY. 

Velocity has slowed, we almost have 1 full month inventory on existing homes now.... 0.9 to be exact. 

Sorry, James. I do not follow MN, it’s too cold. I spent 5 years in Columbus, OH, and have already made my decision not to live there in my lifetime.
Also, I am not talking about YOY, but comparison to the peak achieved in Q1/2022. YOY even California is still positive. YOY data could be very misleading. Since the price peak was achieved in Q1 22, the YOY number may still be positive a few months after the dramatic decline started in April. Unless you are checking on listings frequently in person,  you will not be able to tell the market trend. 
if you really want to use YOY data, you have to wait until Q1 2023 to get a real feel about the market.

 Wait.... your telling me your whole premise for some "crash" is a month over month number you found of a decline in some market...... that's ridiculous. 

Cold or not, Twin Cities is one of the major national markets, set to over-take Chicago in near term of years, so I'd say it matters, as you were saying "everywhere in the nation" is in decline since April. Andy yes, I do track the numbers, constantly, it happens to be my job. And our numbers YOY, which happens to be the widely established measurement of such movements, but also the month over month, increasing. 

To be honest, I am still amazed each data release at the constant incline, I am, I didn't expect it at this moment with loss of velocity but #'s don't lie. 

If you use YOY data, feel free. I simply do not use that at all. By the time those data shows any trend, the market has already shifted for months. 

[Carlos Ptriawan]

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

That 6 trillion US dollar that the Fed printed on April 2020 obviously is the ultimate root cause of the problem. Obviously if you add 40% more money into circulation it will trigger inflation. 

So in short. It's the Fed that's causing the inflation crisis. And then now they intentionally try to cause a recession crisis due to their previous action.

 Yeah, 100%, if you take a pie and cut a few trillion additional pieces, absolutely it makes every piece smaller, hence worth less. 

My point is EVERYONE needs to open eyes and come aware of what's going on, and WHY. Not just "oh, Fed is f'ing us adding more $$$$ into the system", no, we need to ask WHY are they adding $$$$ into the system. 

It's a WAYYYYYyy bigger problem then just the few trillion added, it's a SYSTEMIC problem, they system itself is broken, big time. When we point to just the $$$$ printing, we get this sense of a 1 time event, which it's not. 

Think of all the entitlement programs by the federal Gov., and not just adding more, but expanding those existing ones, raising those budgets. That's all "shadow inflation", because where is the Gov getting the $$$$ for it? And no, not taxes, the F. Gov spends WAY more then it takes in. So that itself is also "Shezame'd" $$$$ into existence. 

those "entitlement programs" aka "subsidy" programs..... All these can happen because of several things that occur globally:
Since USD is no longer pegged to the gold in 1960/70-ish :

1. the USD is the major reserve currency, everyone in the world is using the dollar literally
2. All oil purchase in the world is bought using USD, as a replacement of gold
3. The oil and gas export from the exporter country is converted to US bonds and saved in US banks 

The entitlement program could happen because US has special entitlement in the international financial world.
As long as it happened that way, there seem  no changes in 'spending'

[Carlos Ptriawan]

Quote from @John Myers:

Very lively conversation and let's face it, nobody knows what is going to happen.  That includes me!

Several posts have stated the housing market now is different from 2008. That is true, however, I always worry when someone tells me "it is different this time.

Inflation is high and not going to end any time soon. This is typically good for hard assets like gold, silver, real estate, etc.........

Interest rates are increasing, this is bad for almost every person and every business.

There is definitely a scenario for a crash in the housing market. That scenario is a crash in the economy and high unemployment. The CEO of FedEx gave a dire outlook on their business. If their business is down, guess what, so are a lot of other businesses.

Many Americans live paycheck to paycheck. If they lose their jobs, they will lose their houses (unless the government steps in). They may have equity so they can sell their houses if there are willing buyers.

That is above what I've been keep saying.

Inflation is like "oooh my used car" is now more expensive than new-car. That's supply-chain issue context.
To fix it, you need the supply chain economy to be recovered completely after covid from US to China as semi supplier.

Now the Fed solution for your "car problem" is by forcing you "to lose your job" so you will lose your truck entirely. hahaha LOL 

It seems for whatever minor problem here and there, the solution is just either to print more money or to burn more money. 

I dont think 21st century economy works like that anymore. If you have supply chain issue fix the problem at the supply side and not cutting the entire financial structure.
 

[James Hamling]

Quote from @David Song:

Quote from @James Hamling:

Quote from @David Song:

Quote from @James Hamling:

Quote from @David Song:

@Greg R.

Housing prices will always go up. Buy anytime. - bigger pockets.com

Reality: numerous REI lost their life savings in 2009 and maybe 2022. Over leveraging, insufficient reserve, short term loan with balloon payment, etc.

Flippers bought in Q1 2022 will learn the lesson now. Many of them are losing their shirt. None will tell you publicly.

The price decline started in April 2022, and has been declining for the last 4 months. The bottom has not been reached yet. This is nationwide, from CA to Texas, everywhere. 

 Sorry David, but as you seem to believe prices have been declining in the entire nation, uhm, Minnesota IS in the U.S. and so far for 2022, we have had price INCREASES every month, this year. Not decline, not flat line, INCREASE. 

While it's not the bezonkers level it was last year, it's pacing around 10% YOY. 

Velocity has slowed, we almost have 1 full month inventory on existing homes now.... 0.9 to be exact. 

Sorry, James. I do not follow MN, it’s too cold. I spent 5 years in Columbus, OH, and have already made my decision not to live there in my lifetime.
Also, I am not talking about YOY, but comparison to the peak achieved in Q1/2022. YOY even California is still positive. YOY data could be very misleading. Since the price peak was achieved in Q1 22, the YOY number may still be positive a few months after the dramatic decline started in April. Unless you are checking on listings frequently in person,  you will not be able to tell the market trend. 
if you really want to use YOY data, you have to wait until Q1 2023 to get a real feel about the market.

 Wait.... your telling me your whole premise for some "crash" is a month over month number you found of a decline in some market...... that's ridiculous. 

Cold or not, Twin Cities is one of the major national markets, set to over-take Chicago in near term of years, so I'd say it matters, as you were saying "everywhere in the nation" is in decline since April. Andy yes, I do track the numbers, constantly, it happens to be my job. And our numbers YOY, which happens to be the widely established measurement of such movements, but also the month over month, increasing. 

To be honest, I am still amazed each data release at the constant incline, I am, I didn't expect it at this moment with loss of velocity but #'s don't lie. 

If you use YOY data, feel free. I simply do not use that at all. By the time those data shows any trend, the market has already shifted for months. 

 That makes no sense. 

NAR uses YOY, NAHB uses YOY. Are you saying NAR and NAHB is clueless?

Seasonal trends will give MOM fluctuations. MOM is such a narrow lens. 

And if you want to know what's really coming in Real Estate, it's talking to finance, looking at applications volume and velocity, talking to builders, looking at supply levels, not MOM readings. 

[James Hamling]

Quote from @Carlos Ptriawan:

Quote from @John Myers:

Very lively conversation and let's face it, nobody knows what is going to happen.  That includes me!

Several posts have stated the housing market now is different from 2008. That is true, however, I always worry when someone tells me "it is different this time.

Inflation is high and not going to end any time soon. This is typically good for hard assets like gold, silver, real estate, etc.........

Interest rates are increasing, this is bad for almost every person and every business.

There is definitely a scenario for a crash in the housing market. That scenario is a crash in the economy and high unemployment. The CEO of FedEx gave a dire outlook on their business. If their business is down, guess what, so are a lot of other businesses.

Many Americans live paycheck to paycheck. If they lose their jobs, they will lose their houses (unless the government steps in). They may have equity so they can sell their houses if there are willing buyers.

That is above what I've been keep saying.

Inflation is like "oooh my used car" is now more expensive than new-car. That's supply-chain issue context.
To fix it, you need the supply chain economy to be recovered completely after covid from US to China as semi supplier.

Now the Fed solution for your "car problem" is by forcing you "to lose your job" so you will lose your truck entirely. hahaha LOL 

It seems for whatever minor problem here and there, the solution is just either to print more money or to burn more money. 

I dont think 21st century economy works like that anymore. If you have supply chain issue fix the problem at the supply side and not cutting the entire financial structure.
 

 Think about this Carlos. 

They say raising rates, tanking the overall economy will "fix" supply issues. That makes 0 sense, because there saying they need to slow the economy, and supply issues. Doesn't supply issues slow the economy?????? You can't buy, what you can't buy, right. 

It's an oxymoron what Fed is saying on that line. If such a supply issue where people can't buy things, how is there over-heated action from too much commerce (ie buying). Lol, it makes 0 sense, it cancels itself. 

It simply highlights the fact they don't know what's going on or what to do and simply following the playbook vs creating a play. 

Free market solves supply chain issues, it does, if left alone. When an item is in demand and supply is constrained, others emerge to fulfill that gap, yes? They know this, they did it with fuel! When prices went nuts, they released from strategic reserve, so why are they not doing similar on all else? Get the SBA the ability to empower more startups in that sector, and like magic, more supply comes into existence. 

And the Fed did say this week a problem is people have too much liquidity, THAT I believe is the real focus. 

This is just the next chapter in the war on the middle class. The surf class/ poverty class is in large part unaffected, there existence is subsidized right, none of the 87k auditors is looking at them, no. 

You can't issue trillions into existence without inflation, it's so basic, but they said no it won't do any, then oh it's "transient" lol, apparently just passing through, now a crisis. Once enough people are smashed down, watch, they will offer the cure, and it will be via loans of some kind, i guarantee it. 40/50yr mortgage is coming, no doubt.