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. 

[J. Mitchell Bernier]

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Joe Bertolino:

Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such.     Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today? 

Ok, now let's dissect the claims made in this statement. 

1) Certain individuals will have their loan reduced or eliminated all together. However, this greatly varies depending on the type of loans they had and also their current income. 

2) You didn't mention the estimated cost to repay this debt, which effects 100% of tax payers. The estimated cost per tax payer is $2,000. So while a small segment of people are getting a break, the rest aren't. As you would phrase it "What will be the effect of all these people having that ADDED $$$". I can similarly ask, what will be the effect be on the entire tax paying population of the United States having to endure further tax burdens and having LESS $$$?

3) You state that "many accounts will now be at $0", which is also misleading and missing context. CNBS projects that roughly 8 million people can have their loans "cleared". However, per the DOE there are over 45 million Americans that hold federal student loans. 

This means that only 17% of people with student loans would have their loans "forgiven", leaving well over 80% still having to manage their student loans. 

In short, is an incredibly weak argument that the Biden "loan forgiveness" is going to create an overall positive impact on the economy as a whole. The data supports the opposite. A very few people are going to benefit and many are going to suffer in terms of higher taxes. Further, an overwhelming majority of student loan holders will NOT have their loans erased and will have to resume making payments in a few months. And now since inflation is raging, wages are lower now than what they were when loans were paused. 

 This is a great example here of a pre-determined conclusion and just, sticking to it, no matter the data, just keep sticking to it over n over...... 

Look, I did say "and the resulting inflation from such...." because reality is it's not gonna be tax payers paying for Student Loan forgiveness, it's not, because that would require a balanced fed. budget which we are just a few trillion away from. So it's going to be added inflation, more $$$$ "shazamed" into existence. Again. 

Your argument, Lol, you point out I said " many accounts will now be at $0" and go on to say 8 million accounts will be brought to $0. As to argue it's "only" 8 million? Last i checked, 8 million firmly qualifies as "a lot".  Or 17% of all Student Loans, which again, I'd call that a lot, wouldn't you?

I am not arguing pro-S.L. forgiveness, not arguing pro or con really. Your argument was Student Loan forgiveness was some data-point proof of trouble in housing price, I simply point out that one item, it actually does the opposite. 

In the grand scheme of things, Student Loan forgiveness seems to me as the best, smartest entitlement program in contrast with all the others. It's at least rewarding those who have at some level at least attempted to do something, right? I mean, vs another handout for, IDK, free cell phones, or how about free internet for all, it's the smartest dumb thing done. 

If this whole thing get's you all ruffled you should go on and actually read through the annual budget at things like how much $ is being spent to study the migration patterns of Canadian Geese, lol. And yeah, wish that was a joke, it's not. And there is a mountain of similar moronic spending. 

As for wages, what the heck are you talking about? Where do you invent this nonsense that wages have been DROPPING since covid?! That's just patently NOT TRUE. Most the nation, MOST industries, MOST employers have been struggling to hire people including pressing $/bribes up and up and up.    maybe in whatever Inuit village of the arctic where your at, but for majority of populated North America it's a totally different story. 

Your wage statement is an oxymoron, feel free to make that the word of the day, OXYMORON. A good example: "....since inflation is raging, wages are lower......", Oxymoron. 

Hey James, I think what he means is "real wages". So you get a pay raise of 5% but inflation is being reported at 8% means your real wages are -3%. So yes wages are up, but not up enough to combat inflation. See article below from July of this year stating that. 


Inflation erasing wage gains, forcing pay cuts for American workers (nypost.com)

[James Hamling]

Quote from @John Carbone:

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Joe Bertolino:

Quote from @John Carbone:

However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.

Tech co. can't sell products if the dollar is too high.

This is what I've been saying. The housing market is not in it's own disaggregated economy. It's a part of the larger macro economy. There are obviously nuances and specific variables that apply to different sectors, states, cities, and localities. However, we need to look at housing through the macro lens and evaluate all of the economical variables that impact housing.  
 
There are a few things that I'm keeping a close eye on.

1) Foreclosures. I was reading that 16% of home owners used mortgage forbearance due to covid. A lot of people just came off, and others are still just coming off covid forbearance. For these folks there are generally three main options. The first is a repayment plan... so if someone missed 18 payments, they would divide those into 12 portions. The individual would need to pay not only their regular mortgage, but also the repayment. The second is lump sum, which really makes no sense. If someone was unable to make their normal payment for "x" months, how would they be able to repay it all in one shot? The third I believe is loan modification. According to Freddie the loan modification interest rate is 5.5%. Assuming someone went on forbearance with a 3.5 or 4% rate, their loan mod is going to add on all of the missed payments in terms of principal balance, and also shoot their rate up quite a bit. 
- In short, I think there are going to be a lot of foreclosures in the coming months, years. 

Student loans. Studnet loans have been "paused" due to covid, and are set to restart Jan 1, 2023. This is significant and can't be ignored. 

Rents. This one is obviously local, but despite high rents pretty much across the board, there are a lot of areas where it's still cheaper to rent than buy. The top 10 on that list are San Francisco, Oakland, LA, San Jose, NYC, Long Beach, Seattle, DC, San Diego, and Boston. 

Inflation. This one is major, as costs for basic necessities continue to shoot through the roof. There is ample info out there about the impact of inflation, how it's draining savings accounts, running up credit card debt, etc. 

Stock Market. As the stock market continues to crash (Dow currently down to $29.417), this signals bad news since the stock market is generally see as a vote of confidence for the economy. This also means less $$ for businesses, cutting expenses, hiring freezes, layoffs, impacts on pension funds, reduced funding for expansion and R&D, etc. 

Unemployment. For those still in denial about this one, Powell cautioned that a sharp rise in unemployment may be coming as the fed hikes interest rates at the fastest pace in a quarter-century. We're already seeing a significant slowing in private sector new jobs created. Tech sector is going to be hit hard as well as many publicly traded fortune 500 companies. There's a lot here and this can certainly be argued, but I believe that the signs/ indicators point to unemployment rising at a pretty significant pace over the upcoming months/ years. 

Foreclosures - I am so exhausted of hearing about this twisting of the narrative. We have had post after post for nearly 2 years on B.P. how there is this giant foreclosure "mass" that's "just about to it". No, no there is not, just as nothing has come of it for the last 2 years. It's grabbing a few data points and building a pre-determined narrative with selective data. The lion's share of these deferments where at request and direction of banks and media to take them "just in case". Millions, and I do mean MILLIONS had no need, but took them "just in case" because there was unknowns and that was the directives given of no negative potential if taken. Also, the prevailing construct is missed payments are just added onto the end of the mortgage. Banks are not setting up REO system like 20-teens era, that is the first and biggest signal to watch for, it's very telling. It will matter when actual foreclosure fillings move forward, until then forbearance is a pointless metric unless it's to pump views on your YT channel.

Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such.     Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today? 

Inflation - Inflation does not only increase consumer costs, it hit's everything. We are now seeing the start of wage increase "wave" of inflationary cycle. 

Stock Market - Yes, this does matter much as regularly just after inspection is completed, pre-closing we do have that Stock Market check to complete closing.......... Ok, there is some relation but reality is housing costs and activity does not follow the fluctuations and movement of the Stock Market. And actually, a bad stock market is good for housing, it helps promote the sale of various bonds. Covid start the stocks went into free-fall, did housing? 

Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset.     I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol.        All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people.     On that end I say don't tease me with a good time!     When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW".    Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing.     A shift would be amazing, and speed the economic recovery into a bull-run.     

The BEST thing that could come out of all this is smashing this mirage of global dependance, which the U.S. got wayyyy out of wack on, and a balanced move of production WHICH MEANS a renaissance in U.S. domestic production, and innovations that come with such.

Do you realize when this happens that there will be more workers to build houses? Oil and lumber prices have already deflated which will make home building cheaper. Add in more skilled workers and we will get housing more affordable and in line with what it should be based on inflation since 1980 and wage growth, easily 20 percent less than now. 

 We are at such a massive net shortage of skilled workers that we need to intake in the millions of skilled workers just to get to stability of current pricing. Are you aware that more then 30% of the skilled work-force is now working BEYOND standard retirement age for such work? This is why the impact is being felt in the historical norm industries post-trades or things such as trade instructors, or compliance positions. 

Also, it is called SKILLED trades for a reason, it takes a number of YEARS for a person to come up to proficiency. This gap can not be infilled in 1yr, even if sheer volume of bodies is thrown at it there is then the years of training to bring them up to full utilization. It is coined "the lost decade" in reference to this, as in 10 years of lost recruitment and training. We are talking millions of persons short. It can get infilled, but not quickly. 

As for adjusted price inflation vs wage incline, are you kidding me?! So you expect that in housing prices and completely ignore it's not present ANYWHERE, in any industry?! Let me make this simple; NOT-GONNA-HAPPEN. It's called the disparity gap. 

Yes, oil and lumber prices have come down.... from their highs. Guess what it is today, MORE then pre-covid. 

Look, your whole premise is to argue prices are somehow going to magically come back to what they were a few years ago. Please, tell me when that ever happened. EVER. HVAC supply prices are still continuing up, concrete is now in shortage and guess what those prices are doing. Gypsum is still well higher then 3 yrs ago and guess what, it's NOT ever going to be that price again EVER!

Look, everyone, please just spend 30 seconds and look up inflation. Everything WILL-COST-MORE, that's inflation, that's what it does. So arguing there is inflation, and that prices will come down, is nutz, it's just disconnected lunacy. 

The only way your getting prices back down to yester-year is called deflation. Guess what the Fed says on deflation; that it's the only thing worse then inflation. Notice the Fed say "correction" and not deflation, not crash, not collapse, "correction" and getting inflation reigned in. Notice they say ACCEPTABLE level of inflation. ACCEPTABLE, as-in there happy with inflation, it's great, just at lower levels then this. 

Maybe the Fed needs to come out with statements in Crayola or a sing-along version to help make things understood to all, IDK, but they are NOT gunning for deflation, just stabilized inflation. Lower levels of inflation. Not 20% fall back in anything. 

AND on oil, let's see how oil price works out when were not pumping from strategic reserves, the prices reflect the artificial lowering, FYI. 

You go tell me how many electricians, carpenters, masons etc. are happy to sign on to "easily" take 20% less, let me know how well that works out for ya. 

[John Carbone]

Quote from @James Hamling:

Quote from @John Carbone:

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Joe Bertolino:

Quote from @John Carbone:

However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.

Tech co. can't sell products if the dollar is too high.

This is what I've been saying. The housing market is not in it's own disaggregated economy. It's a part of the larger macro economy. There are obviously nuances and specific variables that apply to different sectors, states, cities, and localities. However, we need to look at housing through the macro lens and evaluate all of the economical variables that impact housing.  
 
There are a few things that I'm keeping a close eye on.

1) Foreclosures. I was reading that 16% of home owners used mortgage forbearance due to covid. A lot of people just came off, and others are still just coming off covid forbearance. For these folks there are generally three main options. The first is a repayment plan... so if someone missed 18 payments, they would divide those into 12 portions. The individual would need to pay not only their regular mortgage, but also the repayment. The second is lump sum, which really makes no sense. If someone was unable to make their normal payment for "x" months, how would they be able to repay it all in one shot? The third I believe is loan modification. According to Freddie the loan modification interest rate is 5.5%. Assuming someone went on forbearance with a 3.5 or 4% rate, their loan mod is going to add on all of the missed payments in terms of principal balance, and also shoot their rate up quite a bit. 
- In short, I think there are going to be a lot of foreclosures in the coming months, years. 

Student loans. Studnet loans have been "paused" due to covid, and are set to restart Jan 1, 2023. This is significant and can't be ignored. 

Rents. This one is obviously local, but despite high rents pretty much across the board, there are a lot of areas where it's still cheaper to rent than buy. The top 10 on that list are San Francisco, Oakland, LA, San Jose, NYC, Long Beach, Seattle, DC, San Diego, and Boston. 

Inflation. This one is major, as costs for basic necessities continue to shoot through the roof. There is ample info out there about the impact of inflation, how it's draining savings accounts, running up credit card debt, etc. 

Stock Market. As the stock market continues to crash (Dow currently down to $29.417), this signals bad news since the stock market is generally see as a vote of confidence for the economy. This also means less $$ for businesses, cutting expenses, hiring freezes, layoffs, impacts on pension funds, reduced funding for expansion and R&D, etc. 

Unemployment. For those still in denial about this one, Powell cautioned that a sharp rise in unemployment may be coming as the fed hikes interest rates at the fastest pace in a quarter-century. We're already seeing a significant slowing in private sector new jobs created. Tech sector is going to be hit hard as well as many publicly traded fortune 500 companies. There's a lot here and this can certainly be argued, but I believe that the signs/ indicators point to unemployment rising at a pretty significant pace over the upcoming months/ years. 

Foreclosures - I am so exhausted of hearing about this twisting of the narrative. We have had post after post for nearly 2 years on B.P. how there is this giant foreclosure "mass" that's "just about to it". No, no there is not, just as nothing has come of it for the last 2 years. It's grabbing a few data points and building a pre-determined narrative with selective data. The lion's share of these deferments where at request and direction of banks and media to take them "just in case". Millions, and I do mean MILLIONS had no need, but took them "just in case" because there was unknowns and that was the directives given of no negative potential if taken. Also, the prevailing construct is missed payments are just added onto the end of the mortgage. Banks are not setting up REO system like 20-teens era, that is the first and biggest signal to watch for, it's very telling. It will matter when actual foreclosure fillings move forward, until then forbearance is a pointless metric unless it's to pump views on your YT channel.

Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such.     Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today? 

Inflation - Inflation does not only increase consumer costs, it hit's everything. We are now seeing the start of wage increase "wave" of inflationary cycle. 

Stock Market - Yes, this does matter much as regularly just after inspection is completed, pre-closing we do have that Stock Market check to complete closing.......... Ok, there is some relation but reality is housing costs and activity does not follow the fluctuations and movement of the Stock Market. And actually, a bad stock market is good for housing, it helps promote the sale of various bonds. Covid start the stocks went into free-fall, did housing? 

Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset.     I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol.        All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people.     On that end I say don't tease me with a good time!     When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW".    Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing.     A shift would be amazing, and speed the economic recovery into a bull-run.     

The BEST thing that could come out of all this is smashing this mirage of global dependance, which the U.S. got wayyyy out of wack on, and a balanced move of production WHICH MEANS a renaissance in U.S. domestic production, and innovations that come with such.

Do you realize when this happens that there will be more workers to build houses? Oil and lumber prices have already deflated which will make home building cheaper. Add in more skilled workers and we will get housing more affordable and in line with what it should be based on inflation since 1980 and wage growth, easily 20 percent less than now. 

 We are at such a massive net shortage of skilled workers that we need to intake in the millions of skilled workers just to get to stability of current pricing. Are you aware that more then 30% of the skilled work-force is now working BEYOND standard retirement age for such work? This is why the impact is being felt in the historical norm industries post-trades or things such as trade instructors, or compliance positions. 

Also, it is called SKILLED trades for a reason, it takes a number of YEARS for a person to come up to proficiency. This gap can not be infilled in 1yr, even if sheer volume of bodies is thrown at it there is then the years of training to bring them up to full utilization. It is coined "the lost decade" in reference to this, as in 10 years of lost recruitment and training. We are talking millions of persons short. It can get infilled, but not quickly. 

As for adjusted price inflation vs wage incline, are you kidding me?! So you expect that in housing prices and completely ignore it's not present ANYWHERE, in any industry?! Let me make this simple; NOT-GONNA-HAPPEN. It's called the disparity gap. 

Yes, oil and lumber prices have come down.... from their highs. Guess what it is today, MORE then pre-covid. 

Look, your whole premise is to argue prices are somehow going to magically come back to what they were a few years ago. Please, tell me when that ever happened. EVER. HVAC supply prices are still continuing up, concrete is now in shortage and guess what those prices are doing. Gypsum is still well higher then 3 yrs ago and guess what, it's NOT ever going to be that price again EVER!

Look, everyone, please just spend 30 seconds and look up inflation. Everything WILL-COST-MORE, that's inflation, that's what it does. So arguing there is inflation, and that prices will come down, is nutz, it's just disconnected lunacy. 

The only way your getting prices back down to yester-year is called deflation. Guess what the Fed says on deflation; that it's the only thing worse then inflation. Notice the Fed say "correction" and not deflation, not crash, not collapse, "correction" and getting inflation reigned in. Notice they say ACCEPTABLE level of inflation. ACCEPTABLE, as-in there happy with inflation, it's great, just at lower levels then this. 

Maybe the Fed needs to come out with statements in Crayola or a sing-along version to help make things understood to all, IDK, but they are NOT gunning for deflation, just stabilized inflation. Lower levels of inflation. Not 20% fall back in anything. 

AND on oil, let's see how oil price works out when were not pumping from strategic reserves, the prices reflect the artificial lowering, FYI. 

You go tell me how many electricians, carpenters, masons etc. are happy to sign on to "easily" take 20% less, let me know how well that works out for ya. 

Just today, the 10 year treasury is up another 20 basis points nearing 4 percent…will be curious to see the new mortgage rates over the next few days. But according to you we can have double digit interest rates and prices won’t drop 20 percent. Let’s revisit this thread in 6 months.

 
”The median home sales price is $428,700 as of the first quarter of 2022.” let’s see how low that goes when 2023 data is released. 

[J. Mitchell Bernier]

Quote from @James Hamling:

Quote from @John Carbone:

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Joe Bertolino:

Quote from @John Carbone:

However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.

Tech co. can't sell products if the dollar is too high.

This is what I've been saying. The housing market is not in it's own disaggregated economy. It's a part of the larger macro economy. There are obviously nuances and specific variables that apply to different sectors, states, cities, and localities. However, we need to look at housing through the macro lens and evaluate all of the economical variables that impact housing.  
 
There are a few things that I'm keeping a close eye on.

1) Foreclosures. I was reading that 16% of home owners used mortgage forbearance due to covid. A lot of people just came off, and others are still just coming off covid forbearance. For these folks there are generally three main options. The first is a repayment plan... so if someone missed 18 payments, they would divide those into 12 portions. The individual would need to pay not only their regular mortgage, but also the repayment. The second is lump sum, which really makes no sense. If someone was unable to make their normal payment for "x" months, how would they be able to repay it all in one shot? The third I believe is loan modification. According to Freddie the loan modification interest rate is 5.5%. Assuming someone went on forbearance with a 3.5 or 4% rate, their loan mod is going to add on all of the missed payments in terms of principal balance, and also shoot their rate up quite a bit. 
- In short, I think there are going to be a lot of foreclosures in the coming months, years. 

Student loans. Studnet loans have been "paused" due to covid, and are set to restart Jan 1, 2023. This is significant and can't be ignored. 

Rents. This one is obviously local, but despite high rents pretty much across the board, there are a lot of areas where it's still cheaper to rent than buy. The top 10 on that list are San Francisco, Oakland, LA, San Jose, NYC, Long Beach, Seattle, DC, San Diego, and Boston. 

Inflation. This one is major, as costs for basic necessities continue to shoot through the roof. There is ample info out there about the impact of inflation, how it's draining savings accounts, running up credit card debt, etc. 

Stock Market. As the stock market continues to crash (Dow currently down to $29.417), this signals bad news since the stock market is generally see as a vote of confidence for the economy. This also means less $$ for businesses, cutting expenses, hiring freezes, layoffs, impacts on pension funds, reduced funding for expansion and R&D, etc. 

Unemployment. For those still in denial about this one, Powell cautioned that a sharp rise in unemployment may be coming as the fed hikes interest rates at the fastest pace in a quarter-century. We're already seeing a significant slowing in private sector new jobs created. Tech sector is going to be hit hard as well as many publicly traded fortune 500 companies. There's a lot here and this can certainly be argued, but I believe that the signs/ indicators point to unemployment rising at a pretty significant pace over the upcoming months/ years. 

Foreclosures - I am so exhausted of hearing about this twisting of the narrative. We have had post after post for nearly 2 years on B.P. how there is this giant foreclosure "mass" that's "just about to it". No, no there is not, just as nothing has come of it for the last 2 years. It's grabbing a few data points and building a pre-determined narrative with selective data. The lion's share of these deferments where at request and direction of banks and media to take them "just in case". Millions, and I do mean MILLIONS had no need, but took them "just in case" because there was unknowns and that was the directives given of no negative potential if taken. Also, the prevailing construct is missed payments are just added onto the end of the mortgage. Banks are not setting up REO system like 20-teens era, that is the first and biggest signal to watch for, it's very telling. It will matter when actual foreclosure fillings move forward, until then forbearance is a pointless metric unless it's to pump views on your YT channel.

Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such.     Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today? 

Inflation - Inflation does not only increase consumer costs, it hit's everything. We are now seeing the start of wage increase "wave" of inflationary cycle. 

Stock Market - Yes, this does matter much as regularly just after inspection is completed, pre-closing we do have that Stock Market check to complete closing.......... Ok, there is some relation but reality is housing costs and activity does not follow the fluctuations and movement of the Stock Market. And actually, a bad stock market is good for housing, it helps promote the sale of various bonds. Covid start the stocks went into free-fall, did housing? 

Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset.     I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol.        All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people.     On that end I say don't tease me with a good time!     When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW".    Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing.     A shift would be amazing, and speed the economic recovery into a bull-run.     

The BEST thing that could come out of all this is smashing this mirage of global dependance, which the U.S. got wayyyy out of wack on, and a balanced move of production WHICH MEANS a renaissance in U.S. domestic production, and innovations that come with such.

Do you realize when this happens that there will be more workers to build houses? Oil and lumber prices have already deflated which will make home building cheaper. Add in more skilled workers and we will get housing more affordable and in line with what it should be based on inflation since 1980 and wage growth, easily 20 percent less than now. 

 We are at such a massive net shortage of skilled workers that we need to intake in the millions of skilled workers just to get to stability of current pricing. Are you aware that more then 30% of the skilled work-force is now working BEYOND standard retirement age for such work? This is why the impact is being felt in the historical norm industries post-trades or things such as trade instructors, or compliance positions. 

Also, it is called SKILLED trades for a reason, it takes a number of YEARS for a person to come up to proficiency. This gap can not be infilled in 1yr, even if sheer volume of bodies is thrown at it there is then the years of training to bring them up to full utilization. It is coined "the lost decade" in reference to this, as in 10 years of lost recruitment and training. We are talking millions of persons short. It can get infilled, but not quickly. 

As for adjusted price inflation vs wage incline, are you kidding me?! So you expect that in housing prices and completely ignore it's not present ANYWHERE, in any industry?! Let me make this simple; NOT-GONNA-HAPPEN. It's called the disparity gap. 

Yes, oil and lumber prices have come down.... from their highs. Guess what it is today, MORE then pre-covid. 

Look, your whole premise is to argue prices are somehow going to magically come back to what they were a few years ago. Please, tell me when that ever happened. EVER. HVAC supply prices are still continuing up, concrete is now in shortage and guess what those prices are doing. Gypsum is still well higher then 3 yrs ago and guess what, it's NOT ever going to be that price again EVER!

Look, everyone, please just spend 30 seconds and look up inflation. Everything WILL-COST-MORE, that's inflation, that's what it does. So arguing there is inflation, and that prices will come down, is nutz, it's just disconnected lunacy. 

The only way your getting prices back down to yester-year is called deflation. Guess what the Fed says on deflation; that it's the only thing worse then inflation. Notice the Fed say "correction" and not deflation, not crash, not collapse, "correction" and getting inflation reigned in. Notice they say ACCEPTABLE level of inflation. ACCEPTABLE, as-in there happy with inflation, it's great, just at lower levels then this. 

Maybe the Fed needs to come out with statements in Crayola or a sing-along version to help make things understood to all, IDK, but they are NOT gunning for deflation, just stabilized inflation. Lower levels of inflation. Not 20% fall back in anything. 

AND on oil, let's see how oil price works out when were not pumping from strategic reserves, the prices reflect the artificial lowering, FYI. 

You go tell me how many electricians, carpenters, masons etc. are happy to sign on to "easily" take 20% less, let me know how well that works out for ya. 

 Let me preface this by saying, I don't see a "crash" but certainly a pull back. However your last point is interesting, about skilled labor taking less. Because that is exactly what happened after the bubble burst the last time. Demand dried up and many of the contractors, plumbers, electricians, and others were begging for work so they were doing it for just barely over cost, compared to recently pricing up a 30% margin. I can line people up around the street that either did that in last recession that survived or didn't financially survive it. So yes it certainly can happen that these skilled workers take less. 

Also keep watching lumber, the futures contracts for November are down and are at the highs before the pandemic. So as rates continue to rise and construction demand wanes it will continue to fall. 

Only time will tell, but as for me I am preparing for the worst and hoping for the best. 

[James Hamling]

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Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such.     Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today? 

Ok, now let's dissect the claims made in this statement. 

1) Certain individuals will have their loan reduced or eliminated all together. However, this greatly varies depending on the type of loans they had and also their current income. 

2) You didn't mention the estimated cost to repay this debt, which effects 100% of tax payers. The estimated cost per tax payer is $2,000. So while a small segment of people are getting a break, the rest aren't. As you would phrase it "What will be the effect of all these people having that ADDED $$$". I can similarly ask, what will be the effect be on the entire tax paying population of the United States having to endure further tax burdens and having LESS $$$?

3) You state that "many accounts will now be at $0", which is also misleading and missing context. CNBS projects that roughly 8 million people can have their loans "cleared". However, per the DOE there are over 45 million Americans that hold federal student loans. 

This means that only 17% of people with student loans would have their loans "forgiven", leaving well over 80% still having to manage their student loans. 

In short, is an incredibly weak argument that the Biden "loan forgiveness" is going to create an overall positive impact on the economy as a whole. The data supports the opposite. A very few people are going to benefit and many are going to suffer in terms of higher taxes. Further, an overwhelming majority of student loan holders will NOT have their loans erased and will have to resume making payments in a few months. And now since inflation is raging, wages are lower now than what they were when loans were paused. 

 This is a great example here of a pre-determined conclusion and just, sticking to it, no matter the data, just keep sticking to it over n over...... 

Look, I did say "and the resulting inflation from such...." because reality is it's not gonna be tax payers paying for Student Loan forgiveness, it's not, because that would require a balanced fed. budget which we are just a few trillion away from. So it's going to be added inflation, more $$$$ "shazamed" into existence. Again. 

Your argument, Lol, you point out I said " many accounts will now be at $0" and go on to say 8 million accounts will be brought to $0. As to argue it's "only" 8 million? Last i checked, 8 million firmly qualifies as "a lot".  Or 17% of all Student Loans, which again, I'd call that a lot, wouldn't you?

I am not arguing pro-S.L. forgiveness, not arguing pro or con really. Your argument was Student Loan forgiveness was some data-point proof of trouble in housing price, I simply point out that one item, it actually does the opposite. 

In the grand scheme of things, Student Loan forgiveness seems to me as the best, smartest entitlement program in contrast with all the others. It's at least rewarding those who have at some level at least attempted to do something, right? I mean, vs another handout for, IDK, free cell phones, or how about free internet for all, it's the smartest dumb thing done. 

If this whole thing get's you all ruffled you should go on and actually read through the annual budget at things like how much $ is being spent to study the migration patterns of Canadian Geese, lol. And yeah, wish that was a joke, it's not. And there is a mountain of similar moronic spending. 

As for wages, what the heck are you talking about? Where do you invent this nonsense that wages have been DROPPING since covid?! That's just patently NOT TRUE. Most the nation, MOST industries, MOST employers have been struggling to hire people including pressing $/bribes up and up and up.    maybe in whatever Inuit village of the arctic where your at, but for majority of populated North America it's a totally different story. 

Your wage statement is an oxymoron, feel free to make that the word of the day, OXYMORON. A good example: "....since inflation is raging, wages are lower......", Oxymoron. 

Hey James, I think what he means is "real wages". So you get a pay raise of 5% but inflation is being reported at 8% means your real wages are -3%. So yes wages are up, but not up enough to combat inflation. See article below from July of this year stating that. 


Inflation erasing wage gains, forcing pay cuts for American workers (nypost.com)

 Now were getting into a whole other economic discussion and a thread in and of itself which let's be honest, 98% would struggle at best to keep up with and comprehend. 

This is an argument I have made before in presenting to get people more in disposable income, the #1 best way is to LOWER minimum wage, and wages as a whole. For most, they just stop and get stuck right there, it makes there head hurt too much to think it through to comprehend all the details and "hows" of it all. 

Yes, wage increase would have to be disproportionate to the inflation to have any net 0 off-set. But, this get's us into a upward tailspin as wages increase so does cost of goods, which then negates a portion of that increase, needing more increase, which makes higher cost of goods, and so on and so fourth, it's a runaway cycle. 

It's a basic 101 principle of economics that for ever $1.00 of increased cost of goods (ie wages) the cost of product must increase $1.07. Thanks to various factors like taxation etc., but this is and has been an established fact for pretty much forever. So, trying to "level" things with increases is, very literally, a never ending increase, and unattainable. In crease begets increase.

And as taxes are done on a % basis, it means tax's are also taking a bigger chunk disproportionate to the increase. 

This all brings us back to "well, what can/should be done then". That $1.00 - $1.07 relationship, also stands true in reverse order, this is key. So, if you LOWER wages, you can lower tax impact and lower cost of goods in such a way that the net result is yes, less $ but # standard BUT MORE disposable income because of the relational lowering of the cost of goods, tax impacts on income, etc.. THIS is why the Fed fears deflation more then inflation, it cut's a whole lot deeper into the 2%. 

Deflation is a huge win for the working middle glass, and that's why we won't see it in our lifetimes I don't think. haven't yet.

Pre-08 collapse there was the same issue of affordability of housing. You may not be old enough to remember but, there was. Look up interest rates as well, may surprise you there. Guess what they did then, they simply made FINANCING available to infill.     Yes, I am 1,000% certain that's exactly what will happen here, 0 doubt. Back then, they offered it via bonkers terms, interest only mortgages, deferred payment structures etc, all to inflate affordability vs actually addressing affordability and the disparity gap. That breed a high leverage environment built upon nothing, a bubble, or more correctly said it was a ticking time bomb. ALL knew, it was simple math, it was a ticking time bomb. 

Now, I am certain it will be a similar but different tune. Adjustment of term, but this time a 40/50yr mortgage vs 30. Ushers in a new invigoration of "affordability". In 2000's they also called NINJa loans "affordability" when it was nothing of affordability, it was total BS, this too will be total BS. 

It will again setup for a high leverage scenario, big bull run, prepping things for a real collapse. Today, just too much liquidity. 

And in future collapse, also no doubt we will again bail-out whomever, just like before and always. Banks never loose, just adjust the ways in which they win. 

Watch for it, 40/50yr mortgage. I am calling it, we will hear/see of this in the coming months, we will have something to this effect in play by end of year '23'. It may be in process of happening or just an election campaign promise of making such happen, but it's coming, watch. 

If I could predict the lotto as well as i have been predicting the R.E. market the last 36 months, I'd been hanging talking about this with Musk and Gates somewhere. You can't predict the future like a fortune telling, but you sure as heck can recognize the signs and actions, determine intent and direction, and wake up to the market makers in power position. It's NOT a "free" market system, it's not. That's our matrix slogan, kind of like work will set you free. Those in control are not dumb, they just have different concerns and focus then the average citizen. The #1 mistake is looking at all of it with the wrong lens of them working for us, no, Queens and Kings do not work for the surfs, they allow us to work for them. And they allow us our fantasy that it's something else while we do it. That's the reality check. 

In a free market system, the dollar is dead. It's been dead. The Fed raises the corpse of the dollar and dances it around every now and then to keep the party going. Yeah, this is economic Weekend at Bernie's.  

[John Carbone]

Quote from @James Hamling:

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Quote from @James Hamling:

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Quote from @James Hamling:

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Joe Bertolino:

Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such.     Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today? 

Ok, now let's dissect the claims made in this statement. 

1) Certain individuals will have their loan reduced or eliminated all together. However, this greatly varies depending on the type of loans they had and also their current income. 

2) You didn't mention the estimated cost to repay this debt, which effects 100% of tax payers. The estimated cost per tax payer is $2,000. So while a small segment of people are getting a break, the rest aren't. As you would phrase it "What will be the effect of all these people having that ADDED $$$". I can similarly ask, what will be the effect be on the entire tax paying population of the United States having to endure further tax burdens and having LESS $$$?

3) You state that "many accounts will now be at $0", which is also misleading and missing context. CNBS projects that roughly 8 million people can have their loans "cleared". However, per the DOE there are over 45 million Americans that hold federal student loans. 

This means that only 17% of people with student loans would have their loans "forgiven", leaving well over 80% still having to manage their student loans. 

In short, is an incredibly weak argument that the Biden "loan forgiveness" is going to create an overall positive impact on the economy as a whole. The data supports the opposite. A very few people are going to benefit and many are going to suffer in terms of higher taxes. Further, an overwhelming majority of student loan holders will NOT have their loans erased and will have to resume making payments in a few months. And now since inflation is raging, wages are lower now than what they were when loans were paused. 

 This is a great example here of a pre-determined conclusion and just, sticking to it, no matter the data, just keep sticking to it over n over...... 

Look, I did say "and the resulting inflation from such...." because reality is it's not gonna be tax payers paying for Student Loan forgiveness, it's not, because that would require a balanced fed. budget which we are just a few trillion away from. So it's going to be added inflation, more $$$$ "shazamed" into existence. Again. 

Your argument, Lol, you point out I said " many accounts will now be at $0" and go on to say 8 million accounts will be brought to $0. As to argue it's "only" 8 million? Last i checked, 8 million firmly qualifies as "a lot".  Or 17% of all Student Loans, which again, I'd call that a lot, wouldn't you?

I am not arguing pro-S.L. forgiveness, not arguing pro or con really. Your argument was Student Loan forgiveness was some data-point proof of trouble in housing price, I simply point out that one item, it actually does the opposite. 

In the grand scheme of things, Student Loan forgiveness seems to me as the best, smartest entitlement program in contrast with all the others. It's at least rewarding those who have at some level at least attempted to do something, right? I mean, vs another handout for, IDK, free cell phones, or how about free internet for all, it's the smartest dumb thing done. 

If this whole thing get's you all ruffled you should go on and actually read through the annual budget at things like how much $ is being spent to study the migration patterns of Canadian Geese, lol. And yeah, wish that was a joke, it's not. And there is a mountain of similar moronic spending. 

As for wages, what the heck are you talking about? Where do you invent this nonsense that wages have been DROPPING since covid?! That's just patently NOT TRUE. Most the nation, MOST industries, MOST employers have been struggling to hire people including pressing $/bribes up and up and up.    maybe in whatever Inuit village of the arctic where your at, but for majority of populated North America it's a totally different story. 

Your wage statement is an oxymoron, feel free to make that the word of the day, OXYMORON. A good example: "....since inflation is raging, wages are lower......", Oxymoron. 

Hey James, I think what he means is "real wages". So you get a pay raise of 5% but inflation is being reported at 8% means your real wages are -3%. So yes wages are up, but not up enough to combat inflation. See article below from July of this year stating that. 


Inflation erasing wage gains, forcing pay cuts for American workers (nypost.com)

 Now were getting into a whole other economic discussion and a thread in and of itself which let's be honest, 98% would struggle at best to keep up with and comprehend. 

This is an argument I have made before in presenting to get people more in disposable income, the #1 best way is to LOWER minimum wage, and wages as a whole. For most, they just stop and get stuck right there, it makes there head hurt too much to think it through to comprehend all the details and "hows" of it all. 

Yes, wage increase would have to be disproportionate to the inflation to have any net 0 off-set. But, this get's us into a upward tailspin as wages increase so does cost of goods, which then negates a portion of that increase, needing more increase, which makes higher cost of goods, and so on and so fourth, it's a runaway cycle. 

It's a basic 101 principle of economics that for ever $1.00 of increased cost of goods (ie wages) the cost of product must increase $1.07. Thanks to various factors like taxation etc., but this is and has been an established fact for pretty much forever. So, trying to "level" things with increases is, very literally, a never ending increase, and unattainable. In crease begets increase.

And as taxes are done on a % basis, it means tax's are also taking a bigger chunk disproportionate to the increase. 

This all brings us back to "well, what can/should be done then". That $1.00 - $1.07 relationship, also stands true in reverse order, this is key. So, if you LOWER wages, you can lower tax impact and lower cost of goods in such a way that the net result is yes, less $ but # standard BUT MORE disposable income because of the relational lowering of the cost of goods, tax impacts on income, etc.. THIS is why the Fed fears deflation more then inflation, it cut's a whole lot deeper into the 2%. 

Deflation is a huge win for the working middle glass, and that's why we won't see it in our lifetimes I don't think. haven't yet.

Pre-08 collapse there was the same issue of affordability of housing. You may not be old enough to remember but, there was. Look up interest rates as well, may surprise you there. Guess what they did then, they simply made FINANCING available to infill.     Yes, I am 1,000% certain that's exactly what will happen here, 0 doubt. Back then, they offered it via bonkers terms, interest only mortgages, deferred payment structures etc, all to inflate affordability vs actually addressing affordability and the disparity gap. That breed a high leverage environment built upon nothing, a bubble, or more correctly said it was a ticking time bomb. ALL knew, it was simple math, it was a ticking time bomb. 

Now, I am certain it will be a similar but different tune. Adjustment of term, but this time a 40/50yr mortgage vs 30. Ushers in a new invigoration of "affordability". In 2000's they also called NINJa loans "affordability" when it was nothing of affordability, it was total BS, this too will be total BS. 

It will again setup for a high leverage scenario, big bull run, prepping things for a real collapse. Today, just too much liquidity. 

And in future collapse, also no doubt we will again bail-out whomever, just like before and always. Banks never loose, just adjust the ways in which they win. 

Watch for it, 40/50yr mortgage. I am calling it, we will hear/see of this in the coming months, we will have something to this effect in play by end of year '23'. It may be in process of happening or just an election campaign promise of making such happen, but it's coming, watch. 

If I could predict the lotto as well as i have been predicting the R.E. market the last 36 months, I'd been hanging talking about this with Musk and Gates somewhere. You can't predict the future like a fortune telling, but you sure as heck can recognize the signs and actions, determine intent and direction, and wake up to the market makers in power position. It's NOT a "free" market system, it's not. That's our matrix slogan, kind of like work will set you free. Those in control are not dumb, they just have different concerns and focus then the average citizen. The #1 mistake is looking at all of it with the wrong lens of them working for us, no, Queens and Kings do not work for the surfs, they allow us to work for them. And they allow us our fantasy that it's something else while we do it. That's the reality check. 

In a free market system, the dollar is dead. It's been dead. The Fed raises the corpse of the dollar and dances it around every now and then to keep the party going. Yeah, this is economic Weekend at Bernie's.  

I agree with everything you say, except I think prices drop 20-30 percent first before it happens. Government is too reactionary, they only look for after the fact solutions. We will see within a year how it plays out. 

 50 year mortgage won’t do anything to payment. The only thing that matters is the INTEREST RATES

https://www.thetruthaboutmortg...

[James Hamling]

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Quote from @Joe Bertolino:

Quote from @John Carbone:

However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.

Tech co. can't sell products if the dollar is too high.

This is what I've been saying. The housing market is not in it's own disaggregated economy. It's a part of the larger macro economy. There are obviously nuances and specific variables that apply to different sectors, states, cities, and localities. However, we need to look at housing through the macro lens and evaluate all of the economical variables that impact housing.  
 
There are a few things that I'm keeping a close eye on.

1) Foreclosures. I was reading that 16% of home owners used mortgage forbearance due to covid. A lot of people just came off, and others are still just coming off covid forbearance. For these folks there are generally three main options. The first is a repayment plan... so if someone missed 18 payments, they would divide those into 12 portions. The individual would need to pay not only their regular mortgage, but also the repayment. The second is lump sum, which really makes no sense. If someone was unable to make their normal payment for "x" months, how would they be able to repay it all in one shot? The third I believe is loan modification. According to Freddie the loan modification interest rate is 5.5%. Assuming someone went on forbearance with a 3.5 or 4% rate, their loan mod is going to add on all of the missed payments in terms of principal balance, and also shoot their rate up quite a bit. 
- In short, I think there are going to be a lot of foreclosures in the coming months, years. 

Student loans. Studnet loans have been "paused" due to covid, and are set to restart Jan 1, 2023. This is significant and can't be ignored. 

Rents. This one is obviously local, but despite high rents pretty much across the board, there are a lot of areas where it's still cheaper to rent than buy. The top 10 on that list are San Francisco, Oakland, LA, San Jose, NYC, Long Beach, Seattle, DC, San Diego, and Boston. 

Inflation. This one is major, as costs for basic necessities continue to shoot through the roof. There is ample info out there about the impact of inflation, how it's draining savings accounts, running up credit card debt, etc. 

Stock Market. As the stock market continues to crash (Dow currently down to $29.417), this signals bad news since the stock market is generally see as a vote of confidence for the economy. This also means less $$ for businesses, cutting expenses, hiring freezes, layoffs, impacts on pension funds, reduced funding for expansion and R&D, etc. 

Unemployment. For those still in denial about this one, Powell cautioned that a sharp rise in unemployment may be coming as the fed hikes interest rates at the fastest pace in a quarter-century. We're already seeing a significant slowing in private sector new jobs created. Tech sector is going to be hit hard as well as many publicly traded fortune 500 companies. There's a lot here and this can certainly be argued, but I believe that the signs/ indicators point to unemployment rising at a pretty significant pace over the upcoming months/ years. 

Foreclosures - I am so exhausted of hearing about this twisting of the narrative. We have had post after post for nearly 2 years on B.P. how there is this giant foreclosure "mass" that's "just about to it". No, no there is not, just as nothing has come of it for the last 2 years. It's grabbing a few data points and building a pre-determined narrative with selective data. The lion's share of these deferments where at request and direction of banks and media to take them "just in case". Millions, and I do mean MILLIONS had no need, but took them "just in case" because there was unknowns and that was the directives given of no negative potential if taken. Also, the prevailing construct is missed payments are just added onto the end of the mortgage. Banks are not setting up REO system like 20-teens era, that is the first and biggest signal to watch for, it's very telling. It will matter when actual foreclosure fillings move forward, until then forbearance is a pointless metric unless it's to pump views on your YT channel.

Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such.     Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today? 

Inflation - Inflation does not only increase consumer costs, it hit's everything. We are now seeing the start of wage increase "wave" of inflationary cycle. 

Stock Market - Yes, this does matter much as regularly just after inspection is completed, pre-closing we do have that Stock Market check to complete closing.......... Ok, there is some relation but reality is housing costs and activity does not follow the fluctuations and movement of the Stock Market. And actually, a bad stock market is good for housing, it helps promote the sale of various bonds. Covid start the stocks went into free-fall, did housing? 

Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset.     I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol.        All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people.     On that end I say don't tease me with a good time!     When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW".    Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing.     A shift would be amazing, and speed the economic recovery into a bull-run.     

The BEST thing that could come out of all this is smashing this mirage of global dependance, which the U.S. got wayyyy out of wack on, and a balanced move of production WHICH MEANS a renaissance in U.S. domestic production, and innovations that come with such.

Do you realize when this happens that there will be more workers to build houses? Oil and lumber prices have already deflated which will make home building cheaper. Add in more skilled workers and we will get housing more affordable and in line with what it should be based on inflation since 1980 and wage growth, easily 20 percent less than now. 

 We are at such a massive net shortage of skilled workers that we need to intake in the millions of skilled workers just to get to stability of current pricing. Are you aware that more then 30% of the skilled work-force is now working BEYOND standard retirement age for such work? This is why the impact is being felt in the historical norm industries post-trades or things such as trade instructors, or compliance positions. 

Also, it is called SKILLED trades for a reason, it takes a number of YEARS for a person to come up to proficiency. This gap can not be infilled in 1yr, even if sheer volume of bodies is thrown at it there is then the years of training to bring them up to full utilization. It is coined "the lost decade" in reference to this, as in 10 years of lost recruitment and training. We are talking millions of persons short. It can get infilled, but not quickly. 

As for adjusted price inflation vs wage incline, are you kidding me?! So you expect that in housing prices and completely ignore it's not present ANYWHERE, in any industry?! Let me make this simple; NOT-GONNA-HAPPEN. It's called the disparity gap. 

Yes, oil and lumber prices have come down.... from their highs. Guess what it is today, MORE then pre-covid. 

Look, your whole premise is to argue prices are somehow going to magically come back to what they were a few years ago. Please, tell me when that ever happened. EVER. HVAC supply prices are still continuing up, concrete is now in shortage and guess what those prices are doing. Gypsum is still well higher then 3 yrs ago and guess what, it's NOT ever going to be that price again EVER!

Look, everyone, please just spend 30 seconds and look up inflation. Everything WILL-COST-MORE, that's inflation, that's what it does. So arguing there is inflation, and that prices will come down, is nutz, it's just disconnected lunacy. 

The only way your getting prices back down to yester-year is called deflation. Guess what the Fed says on deflation; that it's the only thing worse then inflation. Notice the Fed say "correction" and not deflation, not crash, not collapse, "correction" and getting inflation reigned in. Notice they say ACCEPTABLE level of inflation. ACCEPTABLE, as-in there happy with inflation, it's great, just at lower levels then this. 

Maybe the Fed needs to come out with statements in Crayola or a sing-along version to help make things understood to all, IDK, but they are NOT gunning for deflation, just stabilized inflation. Lower levels of inflation. Not 20% fall back in anything. 

AND on oil, let's see how oil price works out when were not pumping from strategic reserves, the prices reflect the artificial lowering, FYI. 

You go tell me how many electricians, carpenters, masons etc. are happy to sign on to "easily" take 20% less, let me know how well that works out for ya. 

Just today, the 10 year treasury is up another 20 basis points nearing 4 percent…will be curious to see the new mortgage rates over the next few days. But according to you we can have double digit interest rates and prices won’t drop 20 percent. Let’s revisit this thread in 6 months.

 
”The median home sales price is $428,700 as of the first quarter of 2022.” let’s see how low that goes when 2023 data is released. 

 I advise that the most accurate way to view/consider home pricing in this phase of things is COMPRESSION. We are seeing pricing compression happening in real-time in various ways at this moment, although being a bit messed with given the large liquidity int he system at same time, that's really fluffing up the higher tier of things.    December is going to be the "canary in the cole-mine" in more ways then 1. Were going to get a good read as to how this weird witches brew of high inflation, turmoil and liquidity all translate in consumer activity. Also, we will see the greatest evidence of seasonal adjustments in housing, not to mention the forward build projections by that time.    

I have said for months now about my warning on STAGFLATION cycle, I feel like a whistle blower by this point. Unfortunately as things progress it keeps coming more and more true. As i said in those, collapse would be better, a lot better. I hope I am wrong, I hope stagflation does not come into full birth but it's halfway there, this is the labor pains of Stagflation. 

At this point I suggest all start reading up on such, start thinking about what actions to take in the environment. Stagflation is a black-hole that devours capital. If not inflation burning cash, high prices and low affordability compressing returns to sub-inflation rates. It's a very negative place to be. 

On home pricing you have to take into account that people don't need to sell like they did in 09. 

[J. Mitchell Bernier]

@James Hamling

I agree that there will be a push for "affordability measures" by our govt. Whether it be in longer term mortgages or more voucher programs. 

However; you said that "It's a basic 101 principle of economics that for ever $1.00 of increased cost of goods (ie wages) the cost of product must increase $1.07. Thanks to various factors like taxation etc., but this is and has been an established fact for pretty much forever. So, trying to "level" things with increases is, very literally, a never ending increase, and unattainable. In crease begets increase." and that doesn't show in the data.

Below is a chart from the Atlanta Fed showing wage increases and the CPI for each year from 1998 till now. Sometimes that happens but sometimes it doesn't, look at 2012-2020 and 1998-2007. So raising wages faster than the inflation rate will not cause a tailspin. 

Whether we like it or not, we need a "culling of the herd" a "scheduled burn"  of the economy including housing, that can was kicked down the road for far too long and now we have to pay the piper. 

[Greg R.]

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Joe Bertolino:

Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset.     I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol.        All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people.     On that end I say don't tease me with a good time!     When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW".    Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing.     A shift would be amazing, and speed the economic recovery into a bull-run.     

You clearly don't understand how the world works. Have you ever heard of a ERP (Enterprise Resource Planning system), how about SCM (Supply Chain Management system), a CRM (Customer Relationship Management system)? How about the backbone that powers supply chains, truckers, factories, utilities, hospitals, financial systems, etc. Without tech everything stops. You are living in a fantasy land if you think tech could go away or be reduced/ diminished and everything is just hunky-dory. 

Also, you wishing that a million tech workers lose their jobs is just pathetic. This goes to show that your take on serious matters is immature and can't be taken seriously. 

I can't remember the ignorant politician or bureaucrat who made the comment that coal miners and people who work in industries such as fracking would simply shift over to making solar panels hahahaha. Seems that you have that same mindset. I'm sure coders would be chomping at the bit to give up their desk job in AC making $150k a year to go do some manual labor out in the elements. Perhaps they can go do some roofing work in Nevada in the summer or some framing in Buffalo NY in the winter, I'm sure they'd be overjoyed lmao. 

And according to you, people with tech jobs are "meh" and nurses and other trades are "REAL and secured incomes, big time"

Such an unintelligent/ uninformed comment. You clearly have a vendetta against those in the tech industry. Perhaps out of jealousy? Folks who work in tech generally have an incredibly stable and strong income. Further, most are able to provide a great life for their family and have awesome growth trajectories. 

You can rightfully bash a lot of other professions, but tech isn't one of them. A vast majority of people who work in tech at a bare minimum don't rely on government handouts and pay their taxes. I'd venture to say at a higher clip than many other professions. 

If it weren't for all the tech folks (who you clearly don't value), BP as we know it wouldn't exist. 

[James Hamling]

Quote from @Greg R.:

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Joe Bertolino:

Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset.     I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol.        All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people.     On that end I say don't tease me with a good time!     When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW".    Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing.     A shift would be amazing, and speed the economic recovery into a bull-run.     

You clearly don't understand how the world works. Have you ever heard of a ERP (Enterprise Resource Planning system), how about SCM (Supply Chain Management system), a CRM (Customer Relationship Management system)? How about the backbone that powers supply chains, truckers, factories, utilities, hospitals, financial systems, etc. Without tech everything stops. You are living in a fantasy land if you think tech could go away or be reduced/ diminished and everything is just hunky-dory. 

Also, you wishing that a million tech workers lose their jobs is just pathetic. This goes to show that your take on serious matters is immature and can't be taken seriously. 

I can't remember the ignorant politician or bureaucrat who made the comment that coal miners and people who work in industries such as fracking would simply shift over to making solar panels hahahaha. Seems that you have that same mindset. I'm sure coders would be chomping at the bit to give up their desk job in AC making $150k a year to go do some manual labor out in the elements. Perhaps they can go do some roofing work in Nevada in the summer or some framing in Buffalo NY in the winter, I'm sure they'd be overjoyed lmao. 

And according to you, people with tech jobs are "meh" and nurses and other trades are "REAL and secured incomes, big time"

Such an unintelligent/ uninformed comment. You clearly have a vendetta against those in the tech industry. Perhaps out of jealousy? Folks who work in tech generally have an incredibly stable and strong income. Further, most are able to provide a great life for their family and have awesome growth trajectories. 

You can rightfully bash a lot of other professions, but tech isn't one of them. A vast majority of people who work in tech at a bare minimum don't rely on government handouts and pay their taxes. I'd venture to say at a higher clip than many other professions. 

If it weren't for all the tech folks (who you clearly don't value), BP as we know it wouldn't exist. 

 My issue with Tech., is the American Tech persons, and there delusion of entitlement. 

Ever heard of a little place I like to call INDIA? Hands down the most brilliant people in the computer sciences I have ever known, repetitively. And my disinterest in the American Tech workers sense of entitlement, is widely shared with my numerous Indian Tech Professional clients, many of which are in various positions of management and oversight of such. So yeah, poo-on-you, lol. 

How about this fun fact, which the American tech persons seems to forget consistently; the most amazing part of much tech work is, you don't have to be physiclly anywhere to do it! Israel is rapidly becoming a major incubator for huge tech innovations, and they can be found online. South Africa not only has a rapidly growing capacity but also with English as primary language persons AND first rate education in such. India, Phillipines, Brazil, the list goes on and on of countries who are coming on par with the U.S. in tech, or beating the U.S.. 

So yes, guess what, all those systems, ever heard of OUTSOURCING? yeah, sorry bud, I know your emotionally invested but yes, you are 100% replaceable. And easily so, I am sorry to inform. 

A nurse, how do you outsource a nurse? Can someone do nursing care from Bangladesh? Can the electrician role be readily filled on Fiver? Nope. Hence yes, I LOVE those tenant occupations, they ARE real, and very secured positions, because they are not easily replaceable, require considerable skill, education and training. 

I have nothing against persons in Tech. I actually own a tech startup, FYI, so yeah, am I supposed to be jealous of myself then? Lol.    Point is, I know the reality, and the reality is many companies are heavy in staffed tech personnel where it IS an option to outsource, readily. Many tech positions can be outsourced with no impact on function of company, hence addressing your doomsday scenario of OMG what if a bunch of tech people are laid off. Oh well, I guess they need to reconsider the choices they made in life, right. 

If 1 million tech workers left various companies tomorrow, it would be a news story, that's it. It would mean those companies would retain a whole bunch of outsourced firms for such. BUT if a whole slew of nurses left yesterday, if a slew of Train Workers were gone...... yeah, things come to a screeching halt! That's a MAJOR difference.     Yes, I value a Nurse much more then 10 tech workers. I value a truck driver way more then tech, I value all the hard to replace skilled professionals who can NOT be outsourced, a lot more then the #1 most readily, easily replaceable sector on earth. 

And yeah, I agree, the average American tech worker probably couldn't hack it as an electrician, plumber or nurse. Yet more reasons I place my value's where I do. With the ones who matter most. 

[John Carbone]

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Joe Bertolino:

Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset.     I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol.        All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people.     On that end I say don't tease me with a good time!     When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW".    Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing.     A shift would be amazing, and speed the economic recovery into a bull-run.     

You clearly don't understand how the world works. Have you ever heard of a ERP (Enterprise Resource Planning system), how about SCM (Supply Chain Management system), a CRM (Customer Relationship Management system)? How about the backbone that powers supply chains, truckers, factories, utilities, hospitals, financial systems, etc. Without tech everything stops. You are living in a fantasy land if you think tech could go away or be reduced/ diminished and everything is just hunky-dory. 

Also, you wishing that a million tech workers lose their jobs is just pathetic. This goes to show that your take on serious matters is immature and can't be taken seriously. 

I can't remember the ignorant politician or bureaucrat who made the comment that coal miners and people who work in industries such as fracking would simply shift over to making solar panels hahahaha. Seems that you have that same mindset. I'm sure coders would be chomping at the bit to give up their desk job in AC making $150k a year to go do some manual labor out in the elements. Perhaps they can go do some roofing work in Nevada in the summer or some framing in Buffalo NY in the winter, I'm sure they'd be overjoyed lmao. 

And according to you, people with tech jobs are "meh" and nurses and other trades are "REAL and secured incomes, big time"

Such an unintelligent/ uninformed comment. You clearly have a vendetta against those in the tech industry. Perhaps out of jealousy? Folks who work in tech generally have an incredibly stable and strong income. Further, most are able to provide a great life for their family and have awesome growth trajectories. 

You can rightfully bash a lot of other professions, but tech isn't one of them. A vast majority of people who work in tech at a bare minimum don't rely on government handouts and pay their taxes. I'd venture to say at a higher clip than many other professions. 

If it weren't for all the tech folks (who you clearly don't value), BP as we know it wouldn't exist. 

 My issue with Tech., is the American Tech persons, and there delusion of entitlement. 

Ever heard of a little place I like to call INDIA? Hands down the most brilliant people in the computer sciences I have ever known, repetitively. And my disinterest in the American Tech workers sense of entitlement, is widely shared with my numerous Indian Tech Professional clients, many of which are in various positions of management and oversight of such. So yeah, poo-on-you, lol. 

How about this fun fact, which the American tech persons seems to forget consistently; the most amazing part of much tech work is, you don't have to be physiclly anywhere to do it! Israel is rapidly becoming a major incubator for huge tech innovations, and they can be found online. South Africa not only has a rapidly growing capacity but also with English as primary language persons AND first rate education in such. India, Phillipines, Brazil, the list goes on and on of countries who are coming on par with the U.S. in tech, or beating the U.S.. 

So yes, guess what, all those systems, ever heard of OUTSOURCING? yeah, sorry bud, I know your emotionally invested but yes, you are 100% replaceable. And easily so, I am sorry to inform. 

A nurse, how do you outsource a nurse? Can someone do nursing care from Bangladesh? Can the electrician role be readily filled on Fiver? Nope. Hence yes, I LOVE those tenant occupations, they ARE real, and very secured positions, because they are not easily replaceable, require considerable skill, education and training. 

I have nothing against persons in Tech. I actually own a tech startup, FYI, so yeah, am I supposed to be jealous of myself then? Lol.    Point is, I know the reality, and the reality is many companies are heavy in staffed tech personnel where it IS an option to outsource, readily. Many tech positions can be outsourced with no impact on function of company, hence addressing your doomsday scenario of OMG what if a bunch of tech people are laid off. Oh well, I guess they need to reconsider the choices they made in life, right. 

If 1 million tech workers left various companies tomorrow, it would be a news story, that's it. It would mean those companies would retain a whole bunch of outsourced firms for such. BUT if a whole slew of nurses left yesterday, if a slew of Train Workers were gone...... yeah, things come to a screeching halt! That's a MAJOR difference.     Yes, I value a Nurse much more then 10 tech workers. I value a truck driver way more then tech, I value all the hard to replace skilled professionals who can NOT be outsourced, a lot more then the #1 most readily, easily replaceable sector on earth. 

And yeah, I agree, the average American tech worker probably couldn't hack it as an electrician, plumber or nurse. Yet more reasons I place my value's where I do. With the ones who matter most. 

You are missing a huge piece to all of this. The best tech workers come to the USA. We are the largest economy, and it’s where all innovation happens. Sure there are a lot of tech companies that shouldn’t exist, and they will be purged with the high rate environment, but to think high value tech jobs that corporations rely on to keep functioning in a multi trillion dollar Industry is going to be shipped over to Bangladesh is laughable. Every hear of copyright protection? Major corporations do not even allow workers to access their companies networks when overseas precisely for this reason. 

on the other hand, will there be a day where someone selling real estate, which is done 90 percent online, may be done by someone in India for 1 percent commission……probably 

[Joanne Tsai]

Quote from @James Hamling:

Quote from @John Carbone:

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Joe Bertolino:

Quote from @John Carbone:

However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.

Tech co. can't sell products if the dollar is too high.

This is what I've been saying. The housing market is not in it's own disaggregated economy. It's a part of the larger macro economy. There are obviously nuances and specific variables that apply to different sectors, states, cities, and localities. However, we need to look at housing through the macro lens and evaluate all of the economical variables that impact housing.  
 
There are a few things that I'm keeping a close eye on.

1) Foreclosures. I was reading that 16% of home owners used mortgage forbearance due to covid. A lot of people just came off, and others are still just coming off covid forbearance. For these folks there are generally three main options. The first is a repayment plan... so if someone missed 18 payments, they would divide those into 12 portions. The individual would need to pay not only their regular mortgage, but also the repayment. The second is lump sum, which really makes no sense. If someone was unable to make their normal payment for "x" months, how would they be able to repay it all in one shot? The third I believe is loan modification. According to Freddie the loan modification interest rate is 5.5%. Assuming someone went on forbearance with a 3.5 or 4% rate, their loan mod is going to add on all of the missed payments in terms of principal balance, and also shoot their rate up quite a bit. 
- In short, I think there are going to be a lot of foreclosures in the coming months, years. 

Student loans. Studnet loans have been "paused" due to covid, and are set to restart Jan 1, 2023. This is significant and can't be ignored. 

Rents. This one is obviously local, but despite high rents pretty much across the board, there are a lot of areas where it's still cheaper to rent than buy. The top 10 on that list are San Francisco, Oakland, LA, San Jose, NYC, Long Beach, Seattle, DC, San Diego, and Boston. 

Inflation. This one is major, as costs for basic necessities continue to shoot through the roof. There is ample info out there about the impact of inflation, how it's draining savings accounts, running up credit card debt, etc. 

Stock Market. As the stock market continues to crash (Dow currently down to $29.417), this signals bad news since the stock market is generally see as a vote of confidence for the economy. This also means less $$ for businesses, cutting expenses, hiring freezes, layoffs, impacts on pension funds, reduced funding for expansion and R&D, etc. 

Unemployment. For those still in denial about this one, Powell cautioned that a sharp rise in unemployment may be coming as the fed hikes interest rates at the fastest pace in a quarter-century. We're already seeing a significant slowing in private sector new jobs created. Tech sector is going to be hit hard as well as many publicly traded fortune 500 companies. There's a lot here and this can certainly be argued, but I believe that the signs/ indicators point to unemployment rising at a pretty significant pace over the upcoming months/ years. 

Foreclosures - I am so exhausted of hearing about this twisting of the narrative. We have had post after post for nearly 2 years on B.P. how there is this giant foreclosure "mass" that's "just about to it". No, no there is not, just as nothing has come of it for the last 2 years. It's grabbing a few data points and building a pre-determined narrative with selective data. The lion's share of these deferments where at request and direction of banks and media to take them "just in case". Millions, and I do mean MILLIONS had no need, but took them "just in case" because there was unknowns and that was the directives given of no negative potential if taken. Also, the prevailing construct is missed payments are just added onto the end of the mortgage. Banks are not setting up REO system like 20-teens era, that is the first and biggest signal to watch for, it's very telling. It will matter when actual foreclosure fillings move forward, until then forbearance is a pointless metric unless it's to pump views on your YT channel.

Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such.     Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today? 

Inflation - Inflation does not only increase consumer costs, it hit's everything. We are now seeing the start of wage increase "wave" of inflationary cycle. 

Stock Market - Yes, this does matter much as regularly just after inspection is completed, pre-closing we do have that Stock Market check to complete closing.......... Ok, there is some relation but reality is housing costs and activity does not follow the fluctuations and movement of the Stock Market. And actually, a bad stock market is good for housing, it helps promote the sale of various bonds. Covid start the stocks went into free-fall, did housing? 

Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset.     I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol.        All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people.     On that end I say don't tease me with a good time!     When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW".    Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing.     A shift would be amazing, and speed the economic recovery into a bull-run.     

The BEST thing that could come out of all this is smashing this mirage of global dependance, which the U.S. got wayyyy out of wack on, and a balanced move of production WHICH MEANS a renaissance in U.S. domestic production, and innovations that come with such.

Do you realize when this happens that there will be more workers to build houses? Oil and lumber prices have already deflated which will make home building cheaper. Add in more skilled workers and we will get housing more affordable and in line with what it should be based on inflation since 1980 and wage growth, easily 20 percent less than now. 

 We are at such a massive net shortage of skilled workers that we need to intake in the millions of skilled workers just to get to stability of current pricing. Are you aware that more then 30% of the skilled work-force is now working BEYOND standard retirement age for such work? This is why the impact is being felt in the historical norm industries post-trades or things such as trade instructors, or compliance positions. 

Also, it is called SKILLED trades for a reason, it takes a number of YEARS for a person to come up to proficiency. This gap can not be infilled in 1yr, even if sheer volume of bodies is thrown at it there is then the years of training to bring them up to full utilization. It is coined "the lost decade" in reference to this, as in 10 years of lost recruitment and training. We are talking millions of persons short. It can get infilled, but not quickly. 

As for adjusted price inflation vs wage incline, are you kidding me?! So you expect that in housing prices and completely ignore it's not present ANYWHERE, in any industry?! Let me make this simple; NOT-GONNA-HAPPEN. It's called the disparity gap. 

Yes, oil and lumber prices have come down.... from their highs. Guess what it is today, MORE then pre-covid. 

Look, your whole premise is to argue prices are somehow going to magically come back to what they were a few years ago. Please, tell me when that ever happened. EVER. HVAC supply prices are still continuing up, concrete is now in shortage and guess what those prices are doing. Gypsum is still well higher then 3 yrs ago and guess what, it's NOT ever going to be that price again EVER!

Look, everyone, please just spend 30 seconds and look up inflation. Everything WILL-COST-MORE, that's inflation, that's what it does. So arguing there is inflation, and that prices will come down, is nutz, it's just disconnected lunacy. 

The only way your getting prices back down to yester-year is called deflation. Guess what the Fed says on deflation; that it's the only thing worse then inflation. Notice the Fed say "correction" and not deflation, not crash, not collapse, "correction" and getting inflation reigned in. Notice they say ACCEPTABLE level of inflation. ACCEPTABLE, as-in there happy with inflation, it's great, just at lower levels then this. 

Maybe the Fed needs to come out with statements in Crayola or a sing-along version to help make things understood to all, IDK, but they are NOT gunning for deflation, just stabilized inflation. Lower levels of inflation. Not 20% fall back in anything. 

AND on oil, let's see how oil price works out when were not pumping from strategic reserves, the prices reflect the artificial lowering, FYI. 

You go tell me how many electricians, carpenters, masons etc. are happy to sign on to "easily" take 20% less, let me know how well that works out for ya. 

they probably won't sign on to it "easily", but hey, I bought my first house in 2010, and there were plenty of contractors who would work for anything. we bought and renovated a house in Feb this year, our contractor were triple booked for every single day, and recently he texted me about a potential house for purchase, and he said he can help me renovate it if needed. the wind is turning, slowly but surely it is.

[Greg R.]

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @James Hamling:

Quote from @Greg R.:

Quote from @Carlos Ptriawan:

Quote from @Joe Bertolino:

Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset.     I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol.        All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people.     On that end I say don't tease me with a good time!     When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW".    Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing.     A shift would be amazing, and speed the economic recovery into a bull-run.     

You clearly don't understand how the world works. Have you ever heard of a ERP (Enterprise Resource Planning system), how about SCM (Supply Chain Management system), a CRM (Customer Relationship Management system)? How about the backbone that powers supply chains, truckers, factories, utilities, hospitals, financial systems, etc. Without tech everything stops. You are living in a fantasy land if you think tech could go away or be reduced/ diminished and everything is just hunky-dory. 

Also, you wishing that a million tech workers lose their jobs is just pathetic. This goes to show that your take on serious matters is immature and can't be taken seriously. 

I can't remember the ignorant politician or bureaucrat who made the comment that coal miners and people who work in industries such as fracking would simply shift over to making solar panels hahahaha. Seems that you have that same mindset. I'm sure coders would be chomping at the bit to give up their desk job in AC making $150k a year to go do some manual labor out in the elements. Perhaps they can go do some roofing work in Nevada in the summer or some framing in Buffalo NY in the winter, I'm sure they'd be overjoyed lmao. 

And according to you, people with tech jobs are "meh" and nurses and other trades are "REAL and secured incomes, big time"

Such an unintelligent/ uninformed comment. You clearly have a vendetta against those in the tech industry. Perhaps out of jealousy? Folks who work in tech generally have an incredibly stable and strong income. Further, most are able to provide a great life for their family and have awesome growth trajectories. 

You can rightfully bash a lot of other professions, but tech isn't one of them. A vast majority of people who work in tech at a bare minimum don't rely on government handouts and pay their taxes. I'd venture to say at a higher clip than many other professions. 

If it weren't for all the tech folks (who you clearly don't value), BP as we know it wouldn't exist. 

 My issue with Tech., is the American Tech persons, and there delusion of entitlement. 

Ever heard of a little place I like to call INDIA? Hands down the most brilliant people in the computer sciences I have ever known, repetitively. And my disinterest in the American Tech workers sense of entitlement, is widely shared with my numerous Indian Tech Professional clients, many of which are in various positions of management and oversight of such. So yeah, poo-on-you, lol. 

How about this fun fact, which the American tech persons seems to forget consistently; the most amazing part of much tech work is, you don't have to be physiclly anywhere to do it! Israel is rapidly becoming a major incubator for huge tech innovations, and they can be found online. South Africa not only has a rapidly growing capacity but also with English as primary language persons AND first rate education in such. India, Phillipines, Brazil, the list goes on and on of countries who are coming on par with the U.S. in tech, or beating the U.S.. 

So yes, guess what, all those systems, ever heard of OUTSOURCING? yeah, sorry bud, I know your emotionally invested but yes, you are 100% replaceable. And easily so, I am sorry to inform. 

A nurse, how do you outsource a nurse? Can someone do nursing care from Bangladesh? Can the electrician role be readily filled on Fiver? Nope. Hence yes, I LOVE those tenant occupations, they ARE real, and very secured positions, because they are not easily replaceable, require considerable skill, education and training. 

I have nothing against persons in Tech. I actually own a tech startup, FYI, so yeah, am I supposed to be jealous of myself then? Lol.    Point is, I know the reality, and the reality is many companies are heavy in staffed tech personnel where it IS an option to outsource, readily. Many tech positions can be outsourced with no impact on function of company, hence addressing your doomsday scenario of OMG what if a bunch of tech people are laid off. Oh well, I guess they need to reconsider the choices they made in life, right. 

If 1 million tech workers left various companies tomorrow, it would be a news story, that's it. It would mean those companies would retain a whole bunch of outsourced firms for such. BUT if a whole slew of nurses left yesterday, if a slew of Train Workers were gone...... yeah, things come to a screeching halt! That's a MAJOR difference.     Yes, I value a Nurse much more then 10 tech workers. I value a truck driver way more then tech, I value all the hard to replace skilled professionals who can NOT be outsourced, a lot more then the #1 most readily, easily replaceable sector on earth. 

And yeah, I agree, the average American tech worker probably couldn't hack it as an electrician, plumber or nurse. Yet more reasons I place my value's where I do. With the ones who matter most. 

@James Hamling you are a realtor (I'm assuming), and very clearly not a tech professional. Your lack of understanding about tech topics is astounding. Hopefully for your sake you have some smart technical people to help with your startup. It's quite amusing to see how much you think you know about the industry. I suppose you've never heard the saying "knows just enough to think he knows what he's talking about, but not enough to know how little he actually knows." I can't think of a more accurate way to describe your understanding (or lack thereof) on tech. 

Good luck to you pal, not going to waste my time arguing with someone who knows very little about the subject. 

[James Hamling]

Quote from @J. Mitchell Bernier:

@James Hamling

I agree that there will be a push for "affordability measures" by our govt. Whether it be in longer term mortgages or more voucher programs. 

However; you said that "It's a basic 101 principle of economics that for ever $1.00 of increased cost of goods (ie wages) the cost of product must increase $1.07. Thanks to various factors like taxation etc., but this is and has been an established fact for pretty much forever. So, trying to "level" things with increases is, very literally, a never ending increase, and unattainable. In crease begets increase." and that doesn't show in the data.

Below is a chart from the Atlanta Fed showing wage increases and the CPI for each year from 1998 till now. Sometimes that happens but sometimes it doesn't, look at 2012-2020 and 1998-2007. So raising wages faster than the inflation rate will not cause a tailspin. 

Whether we like it or not, we need a "culling of the herd" a "scheduled burn"  of the economy including housing, that can was kicked down the road for far too long and now we have to pay the piper. 

 That data source is not going to work. 

In the Obama era, they changed the the formula for how things get calculated. Not the only administration where such changes were implemented, this was just the most controversial changes to it and where it really went off the rails and became junk data. 

It's a simple fact the disparity gap is at epic levels, and it has grown at such for some time. Go look up un-cooked numbers from independent data sources. Especially those who take into account "shadow inflation". Which is a factor where, let's say a bag of chips cost $1.00 for 10oz of chips. And then that bag is changed to be 7.5oz, at $1.00 per bag. The price per bag has remained the same but it's not the same, it has incurred a 25% inflation via the reduction in packaging. 

Your saying a "burn" of the economy and housing pricing that was "kicked down the road for far too long", what are you referencing, the last 10 years, 50 years, or 125 years? Because fact is housing has a rather steady appreciation over decades of your choice. Are you saying housing should be at 1974 levels? What decade was there supposed to be a deflation? What makes you an authority on what housing "should" be priced at? 

A house costs 1 of 2 things. Either what the inputs to create that housing are, or what a person is willing to sell it for. That's it. There is no other dictate of what a home should cost, unless we are going full communist. 

On raising wages, your completely missing what I was putting down. If you pay a worker $1.oo more to make a burger, that burger will NOT sell for $1.00 more. It will sell for $1.07 more. Now translate that across all the everything's in life. So as wages go up, cost of items disproportionately go up in relation, thus making a person poorer, just at biggers numbers. 

Your chart, conveniently left out other pertinent years I see. How about pulling up not wage growth, but actual wages vs cost of living, let's look at those 2 simple ones in relationship. And not to mention, your data is flawed, it's got about half of living expenses removed, so if a person doesn't eat, yeah there a-ok. 

[J. Mitchell Bernier]

Quote from @James Hamling:

Quote from @J. Mitchell Bernier:

@James Hamling

I agree that there will be a push for "affordability measures" by our govt. Whether it be in longer term mortgages or more voucher programs. 

However; you said that "It's a basic 101 principle of economics that for ever $1.00 of increased cost of goods (ie wages) the cost of product must increase $1.07. Thanks to various factors like taxation etc., but this is and has been an established fact for pretty much forever. So, trying to "level" things with increases is, very literally, a never ending increase, and unattainable. In crease begets increase." and that doesn't show in the data.

Below is a chart from the Atlanta Fed showing wage increases and the CPI for each year from 1998 till now. Sometimes that happens but sometimes it doesn't, look at 2012-2020 and 1998-2007. So raising wages faster than the inflation rate will not cause a tailspin. 

Whether we like it or not, we need a "culling of the herd" a "scheduled burn"  of the economy including housing, that can was kicked down the road for far too long and now we have to pay the piper. 

 That data source is not going to work. 

In the Obama era, they changed the the formula for how things get calculated. Not the only administration where such changes were implemented, this was just the most controversial changes to it and where it really went off the rails and became junk data. 

It's a simple fact the disparity gap is at epic levels, and it has grown at such for some time. Go look up un-cooked numbers from independent data sources. Especially those who take into account "shadow inflation". Which is a factor where, let's say a bag of chips cost $1.00 for 10oz of chips. And then that bag is changed to be 7.5oz, at $1.00 per bag. The price per bag has remained the same but it's not the same, it has incurred a 25% inflation via the reduction in packaging. 

Your saying a "burn" of the economy and housing pricing that was "kicked down the road for far too long", what are you referencing, the last 10 years, 50 years, or 125 years? Because fact is housing has a rather steady appreciation over decades of your choice. Are you saying housing should be at 1974 levels? What decade was there supposed to be a deflation? What makes you an authority on what housing "should" be priced at? 

A house costs 1 of 2 things. Either what the inputs to create that housing are, or what a person is willing to sell it for. That's it. There is no other dictate of what a home should cost, unless we are going full communist. 

On raising wages, your completely missing what I was putting down. If you pay a worker $1.oo more to make a burger, that burger will NOT sell for $1.00 more. It will sell for $1.07 more. Now translate that across all the everything's in life. So as wages go up, cost of items disproportionately go up in relation, thus making a person poorer, just at biggers numbers. 

Your chart, conveniently left out other pertinent years I see. How about pulling up not wage growth, but actual wages vs cost of living, let's look at those 2 simple ones in relationship. And not to mention, your data is flawed, it's got about half of living expenses removed, so if a person doesn't eat, yeah there a-ok. 

Wow, Lots to unpack here so let go through each one. 
1) "The changing of the formula during the Obama Years": Look at years 1998 through 2007. 
2) What sources are you looking at? I will be happy to go look for them, but who are you referring too? CNN? Fox News? The Onion? I would think the FED is as close to independent as we can get since they are not driven by clicks, ADs, or Subscriptions. 
3) "Burn of the economy", we should of been in QT for a long time now and raising rates back in 2018. But they got to scared and backed off when the "Taper Tantrum" happened. Because of that every asset, stocks, real estate, cyrpto, etc all became too inflated. So yeah we should of had an economic reset in 2018 and since we "kicked the can" then we are not paying for it more dearly.
4) Never said anything about what housing should be at, but housing should not be increasing at 20% or more in a year on average. That is unsustainable just as any asset increasing that fast is unsustainable. 
5) "Dictating the price of housing" You are correct, but when we helicopter cash and give everyone money that they don't need this provides the spark to increase all asset prices. So then demand is artificially inflated. 
6) "Missing half of living expenses"? That is the CPI not the core CPI, the CPI includes food, energy, housing and a host of other things. The core CPI, which i think is what you are referring too, excludes food and energy. So that is why I chose the CPI over the Core CPI 

I hope you are right and I am flat wrong, but if its the other way around at least I know I was prepared. 

[Carlos Ptriawan]

And yeah, I agree, the average American tech worker probably couldn't hack it as an electrician, plumber or nurse. Yet more reasons I place my value's where I do. With the ones who matter most. 

Everything about tech is actually not just about tech people losing money or losing their job but it's more than that
. The USA export nowadays only consists primarily of Tech/Medical product, outside mineral sectors. You could google OECD website for that.

American competitiveness today relies heavily on tech/patents. 

I would not argue the other thing, but outside the housing focus, if the Dollar remains strong like this and Fed rate is about 5 percent, this is what will happen:

1. De-Dollarization will continue. BRICS country is buying Russian oil today with Rubble. Even the Italian started buying Russian oil.

2. shifting from unipolar world to multipolar world, country buy other country product with local currency using bilateral agreement to avoid using US Dollar.

3. For tech, more R&D and tech/biology/health center will be created more outside US, be it in India and China, as large talent pool is there and much more affordable, the process will be much more accelerated than today. There will be huge reduction in hiring in US.

What's funny about this is there's a recent "Semiconductor Act" from today's admins. to raise the competitiveness of American products, so for making chips, it will be created in USA rather than in China. This is a huge deal if it happens since it will employ a lot of people and shifting the knowledge back to America. But we can't do this if the cost of production in the US is not competitive. 

 So there's this 'mis-synchronization of policy in US today, one side wants everything to be produced here (which is good) but the financial side says otherwise. The Same like in oil & gas industry. You want no inflation but you don't allow for more drilling.

 
It's utterly confusing.

[Eric Fernwood]

Hello Greg,

I do not see a 2008-type housing crash occurring for multiple reasons:

• Few properties are underwater. For example, in Nevada, only about 0.7% are underwater. If people can't handle their mortgage, most will sell the property, bank the profit, and rent.
• Sub-prime loans partially caused the 2008 crash. Since 2010, loan requirements have become much stricter.
• The number of jobs continues to increase - people will be able to make mortgage payments.

While I do not see a major crash, I believe higher interest rates, inflation, and the waning effects of COVID will result in locations reverting to their pre-COVID appreciation and rent growth rates. That is already happening in many cities. A Realtor.com article listed cities where property prices have fallen the most. Below are the top (bottom?) ten and the actual drop once you include inflation:

What Now?

We are where we are. The real question is, “How do we hedge against inflation and position ourselves for the future?”

Select single-family rental homes are the premier choice for hedging against inflation and a volatile stock market. Don’t take my word for it.

• Why Wall Street May Be in the Single-family Rental Market for Keeps
• Investors buying large numbers of homes in Las Vegas

But not just any single-family property will do. You must get three things right to have a dependable passive income and capital appreciation.

• Location
• Tenant pool
• Property

So we are on the same page, I believe a dependable passive income must meet three requirements.

• Reliable - You continuously receive income with minimal interruptions in good and bad economic times.
• Inflation Adapting - Your rental income increases faster than inflation, so you have the additional dollars you need to maintain the same lifestyle.
• Persistent – The income continues for a long time; you and your spouse will not outlive the income.

Below is the order to follow for dependable income properties.

Below is a brief description of the location and tenant pool essentials. If you would like information on the entire process, let me know.

Location

Location requirements:

• Inflation adapting - Pre-Covid rents (and prices) must rise faster than the inflation rate. If rents are not rising faster than inflation, your inflation-adjusted rental income (buying power) will continuously decline.
• Population growth - Both the state and local populations must be increasing. Many things must be right for both state and local populations to increase. If you buy in a location where both state and local populations are not increasing, conditions must be pretty bad to drive people to move to another state. With a declining population, rents and prices will fail to keep pace with inflation.
• Population Size - Metro population greater than 1 million. Small towns rely too much on a single business or market segment.

Once you select the right location, you can start looking for properties now, right? Wrong. You don’t know what to buy. Every property is only attractive to a narrow segment of potential renters. It is critical to only buy properties that attract the tenant pool you need for a dependable income.

Tenant Pool

A dependable passive income depends on your property being continuously occupied by a tenant who:

• Pays all the rent on schedule
• Stays employed in good times or bad
• Takes care of the property, and
• stays for many years.

Only a narrow segment of the entire tenant pool spectrum will have a high concentration of tenants with the above characteristics. Once you select that segment, you can determine what properties to buy by learning the following about the selected tenant pool segment:

Knowing the above, you can create a physical property description any realtor can use to find candidate properties.

People debate whether single-family, condos, or multi-family properties are better. The property type is not your decision. Your tenant pool segment defined all the property characteristics. They even define the renovation elements.

Take a Long-Term View of Each Location

People put too much weight on ROI when selecting an investment location. Return calculations only predict how a property will perform under ideal conditions on day one. Return calculations tell you nothing about the future. Take a look at the two properties below.

Property A is in a location where rent growth and appreciation rise faster than inflation. Property B is in a location where rents and prices are increasing below the inflation rate. Over time, Property B’s rent growth does not keep pace with inflation, so your buying power continuously declines over time. Property A’s rent increases faster than inflation, so your buying power increases over time, despite inflation.

If you selected a location solely by initial return, you would likely end up selecting the location with the higher initial return but a declining rental income. However, if you selected Property A in a high appreciation market, your initial return will be lower, but Property A’s rent growth and appreciation will provide a dependable passive income.

Use It or Lose It

What will you do if you do not invest your cash? The stock market is down 16.8% since the first of the year, and is not expected to improve in the foreseeable future. Many analysts expect high inflation to continue. If you take your money out of the market and put it in a more secure instrument, like a CD or US Treasury bond, you will lose 4% to 6% per year. However, if you invest in the right real estate, even if your initial return might be low, you will have inflation protection, appreciation, rent growth, and tax advantages.

[Carlos Ptriawan]

Quote from @Eric Fernwood:

Hello Greg,

I do not see a 2008-type housing crash occurring for multiple reasons:

• Few properties are underwater. For example, in Nevada, only about 0.7% are underwater. If people can't handle their mortgage, most will sell the property, bank the profit, and rent.
• Sub-prime loans partially caused the 2008 crash. Since 2010, loan requirements have become much stricter.
• The number of jobs continues to increase - people will be able to make mortgage payments.

While I do not see a major crash, I believe higher interest rates, inflation, and the waning effects of COVID will result in locations reverting to their pre-COVID appreciation and rent growth rates. That is already happening in many cities. A Realtor.com article listed cities where property prices have fallen the most. Below are the top (bottom?) ten and the actual drop once you include inflation:

What Now?

We are where we are. The real question is, “How do we hedge against inflation and position ourselves for the future?”

Select single-family rental homes are the premier choice for hedging against inflation and a volatile stock market. Don’t take my word for it.

• Why Wall Street May Be in the Single-family Rental Market for Keeps
• Investors buying large numbers of homes in Las Vegas

But not just any single-family property will do. You must get three things right to have a dependable passive income and capital appreciation.

• Location
• Tenant pool
• Property

So we are on the same page, I believe a dependable passive income must meet three requirements.

• Reliable - You continuously receive income with minimal interruptions in good and bad economic times.
• Inflation Adapting - Your rental income increases faster than inflation, so you have the additional dollars you need to maintain the same lifestyle.
• Persistent – The income continues for a long time; you and your spouse will not outlive the income.

Below is the order to follow for dependable income properties.

Below is a brief description of the location and tenant pool essentials. If you would like information on the entire process, let me know.

Location

Location requirements:

• Inflation adapting - Pre-Covid rents (and prices) must rise faster than the inflation rate. If rents are not rising faster than inflation, your inflation-adjusted rental income (buying power) will continuously decline.
• Population growth - Both the state and local populations must be increasing. Many things must be right for both state and local populations to increase. If you buy in a location where both state and local populations are not increasing, conditions must be pretty bad to drive people to move to another state. With a declining population, rents and prices will fail to keep pace with inflation.
• Population Size - Metro population greater than 1 million. Small towns rely too much on a single business or market segment.

Once you select the right location, you can start looking for properties now, right? Wrong. You don’t know what to buy. Every property is only attractive to a narrow segment of potential renters. It is critical to only buy properties that attract the tenant pool you need for a dependable income.

Tenant Pool

A dependable passive income depends on your property being continuously occupied by a tenant who:

• Pays all the rent on schedule
• Stays employed in good times or bad
• Takes care of the property, and
• stays for many years.

Only a narrow segment of the entire tenant pool spectrum will have a high concentration of tenants with the above characteristics. Once you select that segment, you can determine what properties to buy by learning the following about the selected tenant pool segment:

Knowing the above, you can create a physical property description any realtor can use to find candidate properties.

People debate whether single-family, condos, or multi-family properties are better. The property type is not your decision. Your tenant pool segment defined all the property characteristics. They even define the renovation elements.

Take a Long-Term View of Each Location

People put too much weight on ROI when selecting an investment location. Return calculations only predict how a property will perform under ideal conditions on day one. Return calculations tell you nothing about the future. Take a look at the two properties below.

Property A is in a location where rent growth and appreciation rise faster than inflation. Property B is in a location where rents and prices are increasing below the inflation rate. Over time, Property B’s rent growth does not keep pace with inflation, so your buying power continuously declines over time. Property A’s rent increases faster than inflation, so your buying power increases over time, despite inflation.

If you selected a location solely by initial return, you would likely end up selecting the location with the higher initial return but a declining rental income. However, if you selected Property A in a high appreciation market, your initial return will be lower, but Property A’s rent growth and appreciation will provide a dependable passive income.

Use It or Lose It

What will you do if you do not invest your cash? The stock market is down 16.8% since the first of the year, and is not expected to improve in the foreseeable future. Many analysts expect high inflation to continue. If you take your money out of the market and put it in a more secure instrument, like a CD or US Treasury bond, you will lose 4% to 6% per year. However, if you invest in the right real estate, even if your initial return might be low, you will have inflation protection, appreciation, rent growth, and tax advantages.

 This is very good reply. But I confuse when you say there's no crash but the house price in Toledo already dropped 25% from peak. Isn't that a crash definition already at least from Toledo perspective ?

But the rest of article is really good, well researched. Thanks! 

[Bruce Woodruff]

Good post, @Eric Fernwood! I would agree with @Carlos Ptriawan though, that 25% is nothing to ignore. And we are just getting started IMO.

[James Hamling]

Quote from @Carlos Ptriawan:

And yeah, I agree, the average American tech worker probably couldn't hack it as an electrician, plumber or nurse. Yet more reasons I place my value's where I do. With the ones who matter most. 

Everything about tech is actually not just about tech people losing money or losing their job but it's more than that
. The USA export nowadays only consists primarily of Tech/Medical product, outside mineral sectors. You could google OECD website for that.

American competitiveness today relies heavily on tech/patents. 

I would not argue the other thing, but outside the housing focus, if the Dollar remains strong like this and Fed rate is about 5 percent, this is what will happen:

1. De-Dollarization will continue. BRICS country is buying Russian oil today with Rubble. Even the Italian started buying Russian oil.

2. shifting from unipolar world to multipolar world, country buy other country product with local currency using bilateral agreement to avoid using US Dollar.

3. For tech, more R&D and tech/biology/health center will be created more outside US, be it in India and China, as large talent pool is there and much more affordable, the process will be much more accelerated than today. There will be huge reduction in hiring in US.

What's funny about this is there's a recent "Semiconductor Act" from today's admins. to raise the competitiveness of American products, so for making chips, it will be created in USA rather than in China. This is a huge deal if it happens since it will employ a lot of people and shifting the knowledge back to America. But we can't do this if the cost of production in the US is not competitive. 

 So there's this 'mis-synchronization of policy in US today, one side wants everything to be produced here (which is good) but the financial side says otherwise. The Same like in oil & gas industry. You want no inflation but you don't allow for more drilling.

 
It's utterly confusing.

 Sad part, I don't think the average American has a clue. And I believe the average politician is too damn scared to tell the truth, instead, kick the can best possible, lie lie and lie some more, and be ready with that "other home" when the manure hits the fan. That's the thing, the wealthy will just relocate for a time. 

BRICS are on a campaign to knock the U.S. off that pedestal, and we are doing nothing of substance to stop it. 

Dollar is back by BS and use, really that's it. BRICS, they have gold, oil and gas to back there's. Resource rich as all heck. If BRICS launched there own, let's call it EURO 2.0, I think that's it, that would be the breaking point where everything changes. They get OPEC on-board, oh, done, D-O-N-E, dollar will be the prettiest toilet paper you ever used. 

Reminds me of when the wall came down in '80's, it all happened so fast. But later we find, it really didn't, it was years in the making, it all was just experienced by general public in an instance, after the power brokers had set everything for themselves. I am certain that's how USD will go, will seem like any ordinary Thursday and all of a sudden, it just all comes unwound. 

[Bruce Woodruff]

Quote from @James Hamling:

Sad part, I don't think the average American has a clue. And I believe the average politician is too damn scared to tell the truth

I usually agree, but I don't think the average politician has a clue either. You're giving them way too much credit for intelligence, or more importantly common sense. Sure they have their Ivy League and Law school degrees, but that has become nothing more than a warning sign nowadays.

[James Hamling]

Quote from @J. Mitchell Bernier:

Quote from @James Hamling:

Quote from @J. Mitchell Bernier:

@James Hamling

I agree that there will be a push for "affordability measures" by our govt. Whether it be in longer term mortgages or more voucher programs. 

However; you said that "It's a basic 101 principle of economics that for ever $1.00 of increased cost of goods (ie wages) the cost of product must increase $1.07. Thanks to various factors like taxation etc., but this is and has been an established fact for pretty much forever. So, trying to "level" things with increases is, very literally, a never ending increase, and unattainable. In crease begets increase." and that doesn't show in the data.

Below is a chart from the Atlanta Fed showing wage increases and the CPI for each year from 1998 till now. Sometimes that happens but sometimes it doesn't, look at 2012-2020 and 1998-2007. So raising wages faster than the inflation rate will not cause a tailspin. 

Whether we like it or not, we need a "culling of the herd" a "scheduled burn"  of the economy including housing, that can was kicked down the road for far too long and now we have to pay the piper. 

 That data source is not going to work. 

In the Obama era, they changed the the formula for how things get calculated. Not the only administration where such changes were implemented, this was just the most controversial changes to it and where it really went off the rails and became junk data. 

It's a simple fact the disparity gap is at epic levels, and it has grown at such for some time. Go look up un-cooked numbers from independent data sources. Especially those who take into account "shadow inflation". Which is a factor where, let's say a bag of chips cost $1.00 for 10oz of chips. And then that bag is changed to be 7.5oz, at $1.00 per bag. The price per bag has remained the same but it's not the same, it has incurred a 25% inflation via the reduction in packaging. 

Your saying a "burn" of the economy and housing pricing that was "kicked down the road for far too long", what are you referencing, the last 10 years, 50 years, or 125 years? Because fact is housing has a rather steady appreciation over decades of your choice. Are you saying housing should be at 1974 levels? What decade was there supposed to be a deflation? What makes you an authority on what housing "should" be priced at? 

A house costs 1 of 2 things. Either what the inputs to create that housing are, or what a person is willing to sell it for. That's it. There is no other dictate of what a home should cost, unless we are going full communist. 

On raising wages, your completely missing what I was putting down. If you pay a worker $1.oo more to make a burger, that burger will NOT sell for $1.00 more. It will sell for $1.07 more. Now translate that across all the everything's in life. So as wages go up, cost of items disproportionately go up in relation, thus making a person poorer, just at biggers numbers. 

Your chart, conveniently left out other pertinent years I see. How about pulling up not wage growth, but actual wages vs cost of living, let's look at those 2 simple ones in relationship. And not to mention, your data is flawed, it's got about half of living expenses removed, so if a person doesn't eat, yeah there a-ok. 

Wow, Lots to unpack here so let go through each one. 
1) "The changing of the formula during the Obama Years": Look at years 1998 through 2007. 
2) What sources are you looking at? I will be happy to go look for them, but who are you referring too? CNN? Fox News? The Onion? I would think the FED is as close to independent as we can get since they are not driven by clicks, ADs, or Subscriptions. 
3) "Burn of the economy", we should of been in QT for a long time now and raising rates back in 2018. But they got to scared and backed off when the "Taper Tantrum" happened. Because of that every asset, stocks, real estate, cyrpto, etc all became too inflated. So yeah we should of had an economic reset in 2018 and since we "kicked the can" then we are not paying for it more dearly.
4) Never said anything about what housing should be at, but housing should not be increasing at 20% or more in a year on average. That is unsustainable just as any asset increasing that fast is unsustainable. 
5) "Dictating the price of housing" You are correct, but when we helicopter cash and give everyone money that they don't need this provides the spark to increase all asset prices. So then demand is artificially inflated. 
6) "Missing half of living expenses"? That is the CPI not the core CPI, the CPI includes food, energy, housing and a host of other things. The core CPI, which i think is what you are referring too, excludes food and energy. So that is why I chose the CPI over the Core CPI 

I hope you are right and I am flat wrong, but if its the other way around at least I know I was prepared. 

Ok, too much to go over line by line so let's simplify. 

The Fed is not your friend. They are neither Federal nor a Reserve. The Fed is a for profit bank, full stop. We-the-people, throughout generations of idiocy, have given full control of our financial lives to this monster. Including, as pointed out here, directing the data on such. They are the definition of biased. 

We are living in an age of mass inflation in the U.S., because simply put we place morons and idiots to run this thing, and we are bankrupt, to a bonkers degree. We live from credit to credit. We have to keep raising a new credit line not just to cover our spending, but to raise the INCREASE in spending we keep doing AND pay the ever bigger debt on all the credits we keep taking. 

That credit is done via drunk Uncle Sammy slinking out to the garage to crank up that "IOU" printing press, called the US Dollar. (yeah, bonds, Fed, I know, I am super simplifying here, work with me). 

So we are borrowing ourselves into oblivion, at same time we are printing into oblivion. 

It's not a hard calculous to put all this together and realize, THINGS, actual real world THINGS, the stuff we use, touch, especially the things we need, are going to take more and more of this pretty-paper to trade for, because that pretty-paper is really meaning less and less, daily. 

Food, water, shelter. Nothing is more important then these 3, NOTHING. A person will sacrifice health for these, sacrifice everything. On the importance scale, they are king. Because they are the necessities for life, nothing else comes without these meet. 

Money, the dollar, is just green printed paper. You can wipe your butt with it, and burn it. That's the only use other then what someone THINKS it represents, as in they value it because they can get ____ for it.    That social contract is eroding! That erosion we call inflation but that's what it is, that paper is worth LESS, we trust it less, there is more of them around, it's less special and one get's less with it. 

The house, has the exact same use value it always had. Arguably MORE, because that paper getting less, makes it harder to get a house with it. 

In no scenario does inflation mean housing will drop in it's value. 

Things harder to attain get what? MORE! Scarcity raises value. Always has. 

More then 2,000 years of history on this relationship, I don't see how it reversed in the last 3. 

Real Estate IS the #1 hedge against inflation, full stop. It has held this position longer then the U.S.A. has existed as a nation, a colony, or even on maps! 

[Tony Kim]

Quote from @Bruce Woodruff:

Quote from @James Hamling:

Sad part, I don't think the average American has a clue. And I believe the average politician is too damn scared to tell the truth

I usually agree, but I don't think the average politician has a clue either. You're giving them way too much credit for intelligence, or more importantly common sense. Sure they have their Ivy League and Law school degrees, but that has become nothing more than a warning sign nowadays.

And the ones that happen to have half a clue know that it costs too much political capital to make a change that would actually benefit us in the long term. They can move to stop borrowing and stop printing money, but that would also end their political career.

[Tony Kim]

Quote from @James Hamling:

I agree with you, but is it enough of a hedge to provide protection against interest rates entering double-figures? Sorry if you already addressed this in an earlier post. Supposed to be WFH right now and don't have time to read everything.

[Bruce Woodruff]

Quote from @Tony Kim:

Quote from @Bruce Woodruff:

Quote from @James Hamling:

Sad part, I don't think the average American has a clue. And I believe the average politician is too damn scared to tell the truth

I usually agree, but I don't think the average politician has a clue either. You're giving them way too much credit for intelligence, or more importantly common sense. Sure they have their Ivy League and Law school degrees, but that has become nothing more than a warning sign nowadays.

And the ones that happen to have half a clue know that it costs too much political capital to make a change that would actually benefit us in the long term. They can move to stop borrowing and stop printing money, but that would also end their political career.

Question for you Tony....in your opinion, if the majority of politicians in DC really wanted to correct the problems, could they any more?