Quote from @Alan F.:
Quote from @V.G Jason:
Not really a fair question.
The reason most people could invest in 2010-2020 was because of that (outlier) environment.
So the one's on the sidelines that did not get involved, and or are not coming from a position of strength--- now no longer can invest.
I think the view in 2022 was these high rates are the outlier environment. When in reality, what you see 2023-fwd is reversion to the mean, and folks thought 2010-2020 was the mean.
With such a high barrier of entry, the one's on the sidelines aren't really on the sidelines. They just aren't capable of investing. A minute population is capable of investing, in that outlier environment I'd say the top 40% could invest. Now maybe the top 3% can. As we push closer to the mean, and revert back with some dropback I'd say it's the top 8-10% towards the end of this decade that can invest.
No one is "timing" the market, they just are not qualified.
Nailed it, the great moderation was extremely poor Keynesian economic policy. Subsidizing "investors" has been 1 of many components that have to a stagflationary-esqe economic environment. These policies have been to the detriment of small businesses, the self employed and to large extent true GDP producers. Most investors on this forum are obtuse to the complicated nature of macroeconomics, cause and effect. Moving forward the REI investing world is once again normal. Its comical how few people understand how luck in a particular economic cycle plays into their successes.
Agreed. Anyone claiming people are going to feel the pain later by "sitting on the sidelines" is completely amiss of the real problem. And that's the fact that the main entry point from an intrinsic standpoint on RE was during the outlier period.
Real estate is not an intrinsic day 1 asset. It's a primarily a utility asset, and secondarily a store of value against currency.
Now, three things can happen.
That ship of low rates that sailed could come back? If it does sooner than later, or really at any point, it means destruction in the economy and if you were waiting you are probably impacted by this destruction.
Rates moderate and season here for some time with opex being a persistent headwind. If you enter at this point, be prepared to ride this wave. Most on this forum can't even come up with a downpayment, you can't expect them to ride HOI/tax increases, vacanices, etc., with lower leverage and less cash flow on a property. They'll tap out in 3 months, max.
Rates can increase. I think this will be the short term realization, and anyone that did not wait on the sidelines and jumped in with the intention of a short-term re-fi might have to tap out.
Housing supply is the other function, and my view as rates increase so does inventory in markets that are coming up to pre-pandemic levels and the inverse in the one's that are decreasing.
It's got nothing to do with people being speculative or "sitting on the sidelines". It's got everything to do with people just not be able to afford it, even if they wanted to. That's' the resistance point.
