Rentcels...are you devastated? SRS..home prices.

[VegasLifter26]

not at all, i love renting. Home prices will come back down in the next few years once interest rates go up

[GeezersPalace]

People here are f**king clueless....I've seen this before and like before prices will crash, they always do.

First signs today of a major recession coming, one tax increase from biden and markets plummit. Imagine what will happen when rates go up.

[lockdev]

The buyers are not actually highly qualified when you look at their employers' balance sheets

BuT THiS TimE Is DIffeREnT.

Not srs.

We're in an asset bubble boyos, plain and simple.

in b4:
muh supply
muh demand
muh qualified buyers
muh all-cash buyers.

You're forgetting the most important one:
muh Fed market manipulation

Remember one of the biggest warning signs of a bubble: People saying "this time is different".

It's not different. The Fed is fueling a debt-filled super party but everyone, even them, knows we're just circling the toilet.

[VegasLifter26]

what asset class will protect against the next crash? im buying commdoities. Oil companies, mining, gold, ect

[katya422]

what asset class will protect against the next crash? im buying commdoities. Oil companies, mining, gold, ect

Would prioritize needs first (food, medicine, energy). And research deets of course.

International equities

Asia (minus China & NK) is supposedly the up and coming region. Not my opinion; couple of people who should know and that I've seen interviews of.

[BigDeeps01]

The buyers are not actually highly qualified when you look at their employers' balance sheets and realize that their unproductive jobs would evaporate in an environment where interest rates were allowed to naturally rise. Over 20% of US businesses are perpetually unprofitable and would almost immediately go bankrupt if rates were to rise to any meaningful level. In fact, 2.5% was enough to send the economy into a near tailspin in late 2018. That threshold is probably much less now considering how much additional debt has been added to corporate balance sheets since 2020.

And the interesting thing is when these companies finally do go bankrupt, there's going to be nothing left to pick over from creditors because the bulk of their value is based on intangibles. So when rates finally rise, you're going to have at least 20% of businesses implode almost overnight. That is obviously going to have ramifications on the rest of the economy as other businesses that are currently profitable start losing money as a result of this massive hole that was blown in the economy. Then on top of that, you have an over-indebted federal government with the bulk of its debt in short term bonds that will be forced into austerity an literally unable to stimulate and blow more money on stupid chit like PPP grants as they have during Corona because they have to start rolling over new debt into higher interest bonds and any further spending forces yields up even higher compounding the problems.

And that is all while home prices are simultaneously becoming more unaffordable because the average down payment is a paltry 6% and higher rates cause payments to balloon forcing sellers to have to adjust their prices down.

If we ever get natural interest rates, asset values are going to chit the bed so very hard.

I've heard this story before

We'll see

Keep renting though - Less competition for me

[swoleyo]

Most miscers shouldn't even be commenting on this. There's such a lack of housing supply at the moment that nothing short of a total economic collapse is going to seriously hurt the market.

Everyone's screaming bubble but refuse to take market inventory into account. This has zero resemblance to 2008. Banks are also not giving out sub prime mortgages to people that can't afford the property.

[r32gojirra]

you know rentcels aren't paying their rent right now right?


joke's on you incel.

None of mine have missed a payment...

[ByAssociation]

The only advantage I can see of renting is that I like to move around every 3-4 years even if it’s within a town. It’s nice to live in a new place for the first year and have lots of projects making it new and it just feels different. It also helps create memories etc. I was always happy for years and remember things better for the first few years after moving. Once you’ve been landed for a while, while it is nice things start to blend together. While it isn’t impossible it’s way more foolish to move a lot if you’re buying because you are wasting tens of thousands on closing costs and fees. When I move when renting I just get a 20’ truck another guy or two for big pieces and do everything myself. I’m about to buy but the main thing holding me back now is quite unexpected because I’m wondering if keeping renting so I can move around more freely is actually better

[lockdev]

Most miscers shouldn't even be commenting on this. There's such a lack of housing supply at the moment that nothing short of a total economic collapse is going to seriously hurt the market.

Everyone's screaming bubble but refuse to take market inventory into account. This has zero resemblance to 2008. Banks are also not giving out sub prime mortgages to people that can't afford the property.

Please don't fall into the "this time is different" trap.

The 2008 bubble is not like the 2021 bubble. That doesn't mean the bottom will not fall out.

Inventory is one of the causes of this price hike, but there are bigger factors in play here, the main ones being: Long-term low/zero interest rates, a money printer with a broken handle, and a pandemic that has seriously fooked with the markets.

The main issue here is not the housing market, but the market as a whole. We are in an everything bubble and we have been for years. Inflation will eventually force the Fed's hand and they'll have to increase rates. When they do, goodnight sweet prince.

Combine an economy that is surviving on debt and the generosity of the Fed with rising interest rates and you have a powder keg waiting to go off.

You're going to see a lot of businesses go under. If 20% of the population loses their job, we're going to see a massive flood of homes hit the market.

The alternative is that the Fed continues to print money. This will ultimately lead to stagflation, as we're already starting to see.

You have to remember brah, we never really got out of the 2008 recession. The Fed has tried to print their way out, but they have just been kicking the can. Just because the markets are up, does not mean the economy is healthy. Just because inventory is down, does not mean we're not in a bubble.

[rootcon]

The fact that the Fed is still buying $40 billion in mortgage backed securities... Every Single Month is straight up criminal.

If mortgage rates were allowed to rise naturally, and they rose to historic norms of 7%, the median housing payment based on the avg 6% down payment on a median $350k home would rise over $1,000 a month for mortgage payment alone. And if rates were to rise to historic norms, you're going to also have a ****load of freshly unemployed people whose perpetually unprofitable employers just went bankrupt because they can no longer service their debt and kick the can.

The average American only look at payments because they're fukking stoopid, so the avg moron who is already living hand to mouth with minimal savings is not going to be able to afford a home at their current prices if rates rose to 7% unless home prices fall by 40%.
For each percentage increase in mortgage rates, home prices would have to fall about 5% from current levels.

Can you give your thoughts on what you think will happen?

The buyers are not actually highly qualified when you look at their employers' balance sheets and realize that their unproductive jobs would evaporate in an environment where interest rates were allowed to naturally rise. Over 20% of US businesses are perpetually unprofitable and would almost immediately go bankrupt if rates were to rise to any meaningful level. In fact, 2.5% was enough to send the economy into a near tailspin in late 2018. That threshold is probably much less now considering how much additional debt has been added to corporate balance sheets since 2020.

And the interesting thing is when these companies finally do go bankrupt, there's going to be nothing left to pick over from creditors because the bulk of their value is based on intangibles. So when rates finally rise, you're going to have at least 20% of businesses implode almost overnight. That is obviously going to have ramifications on the rest of the economy as other businesses that are currently profitable start losing money as a result of this massive hole that was blown in the economy. Then on top of that, you have an over-indebted federal government with the bulk of its debt in short term bonds that will be forced into austerity an literally unable to stimulate and blow more money on stupid chit like PPP grants as they have during Corona because they have to start rolling over new debt into higher interest bonds and any further spending forces yields up even higher compounding the problems.

And that is all while home prices are simultaneously becoming more unaffordable because the average down payment is a paltry 6% and higher rates cause payments to balloon forcing sellers to have to adjust their prices down.

If we ever get natural interest rates, asset values are going to chit the bed so very hard.

That all makes sense if rates rise, but with the govt in control of rates, won't they just stay near zero in order to fund this out of control spending? What will happen if things stay more or less the same rates wise?

[Xyus_Quebec]

The market in Canada has just gone crazy in the last 18 months, my house that I bought less than a year ago has gone up 100k$, if I were to sell it today.

[lockdev]

That all makes sense if rates rise, but with the govt in control of rates, won't they just stay near zero in order to fund this out of control spending? What will happen if things stay more or less the same rates wise?

Either stagflation or continued inflation, depending on productivity.

I'm leaning towards stagflation. Look around. When you combine low supply and slow economic growth with high inflation, you have stagflation. With the exception of food, clothing, and cheap products, most things are either out of stock or have had a significant price increase. Hell, even kids playgrounds have increased 40-50% in the past 2 years.

The Fed's job is to slow the curve either way, but they've basically used all of their tricks, and for far too long. Even they are starting to realize they can't keep this up forever, and are kind of subtly warning us that the party will end soon.

[GordonXXX]

NAME CAGR
CASH 1.00%
BONDS 5.90%
STOCKS 10.40%
REAL ESTATE 3.50%
INFLATION -3.00%

[FrankGrimesJr]

I bought my house last year little after the COVID started. People told me I should have waited after the Covid was over because prices will drop for sure. Now I’m laughing at them.

[katya422]

Please don't fall into the "this time is different" trap.

The 2008 bubble is not like the 2021 bubble. That doesn't mean the bottom will not fall out.

Inventory is one of the causes of this price hike, but there are bigger factors in play here, the main ones being: Long-term low/zero interest rates, a money printer with a broken handle, and a pandemic that has seriously fooked with the markets.

The main issue here is not the housing market, but the market as a whole. We are in an everything bubble and we have been for years. Inflation will eventually force the Fed's hand and they'll have to increase rates. When they do, goodnight sweet prince.

Combine an economy that is surviving on debt and the generosity of the Fed with rising interest rates and you have a powder keg waiting to go off.

You're going to see a lot of businesses go under. If 20% of the population loses their job, we're going to see a massive flood of homes hit the market.

The alternative is that the Fed continues to print money. This will ultimately lead to stagflation, as we're already starting to see.

You have to remember brah, we never really got out of the 2008 recession. The Fed has tried to print their way out, but they have just been kicking the can. Just because the markets are up, does not mean the economy is healthy. Just because inventory is down, does not mean we're not in a bubble.

Yep.

[katya422]

Just effing LOL at linking a Kiyosaki video as if it would be relevant to anything.

His video was from 12/20. This is from 03/21. Same general theme.

In the wake of the September 2008 Lehman bankruptcy, it was clear that troubles in the U.S. economy had serious ramifications for the rest of the global economy. Indeed, the bursting of a U.S. housing and credit bubble had ripple effects throughout world financial markets, which precipitated what economists now call the Great Economic Recession.

Fast forward to 2021. Now, America’s massive monetary and fiscal policy experiment is being conducted against the backdrop of a so-called everything asset and credit price bubble, which is very much larger and more pervasive than the earlier U.S. housing and credit market bubble.

It is not simply that U.S. equity valuations are at the lofty levels last experienced on the eve of the 1929 stock market crash. Nor is it that the dubious Bitcoin market now has a valuation in excess of $1 trillion. Rather it is also that very risky borrowers, especially in the highly leveraged loan market and in the emerging-market economies, can raise money at interest rates not much higher than those at which the U.S. government can borrow.

Today’s everything bubble has been inflated by the extraordinarily low interest rates produced by the massive amount of central bank money printing in response to the coronavirus pandemic. This raises the question as to what happens when the pleasant easy money music stops and interest rates start to rise. Past experience would suggest that when that happens, bubbles will start bursting and the emerging market economies will run into serious trouble as money is repatriated to the United States.

https://nationalinterest.org/feature...isaster-180266

Or this from Seeking Alpha:

Recently, I discussed the “Two Pins That Pop The Bubble,” specifically noting the risk of rising interest rates and inflation. However, the real threat is not just the stock market bubble’s deflation but rather blowing up the “everything bubble.”

During previous periods in financial history, the focus was primarily on the deflation of a singular market bubble.

The flood of liquidity and ultra-accommodative monetary policies has simultaneously inflated multiple bubbles. Stocks, bonds, real estate, and speculative investments have all experienced historic inflations.



There is little argument that financial markets are currently in a “bubble.” The monthly chart of the S&P 500 shows the deviation from long-term monthly means at levels not seen since 1990.





During a “market mania,” investors must continue to rationalize overpaying for assets to keep prices moving higher. Over the last decade, the most common justification remains that low discount rates justify high valuations.

The problem comes when interest rates rise. Throughout history, an unexpected surge in interest rates has repeatedly led to poor investor outcomes.



Despite media rhetoric that “rising rates” aren’t a problem for the stock market, history suggests they are. Given the massive surge in corporate leverage promulgated by weak economic growth, higher rates will quickly impact corporate profitability and financing activities.

Currently, there is also a “bubble” once again in housing as a continual suppression of borrowing costs, loose lending policies, and a flood of stimulus has led to a historical surge in home prices. As we noted previously in “There Is No Supply Shortage,” home price appreciation has once again eclipsed long-term price trends.

The current overvaluation in homes, of course, is driven by record-low mortgage rates.



However, as noted above, that economic support will quickly reverse as interest rates rise. Given there is a surging demand for homes, just as with the stock market, when rates rise, there will be a rush to sell to a diminishing pool of buyers.

Also, as with the stock market, owned by the top 20% of income earners, most houses bought were by that same fraction of the population. [Higher incomes and nearly perfect credit].

Of course, there is nowhere more at risk from higher rates than the bond market itself. Given that “yield” is a function of price, there is a perfectly negative correlation between prices and interest rates.

The Federal Reserve problem is they have now pushed “yield spreads” across the entirety of the credit spectrum to record lows. The Fed’s suppression of rates to “bail-out” the bond market in the short-term has created a long-term problem of “mispricing risk.”

That mispricing of risk, or rather the creation of “moral hazard,” in the credit markets created a record number of “zombie” companies in the process.



Eventually, when rates rise enough, these “zombie” companies will be unable to refinance debt for their continued survival. Once bankruptcies begin to spike uncontrollably, investors will demand to get paid for their investment risk. As shown, such has occurred in the past with relatively dismal outcomes.

What should be clear is that if the rise in interest rates approaches 2% or higher, there are many problems embedded in an economy laden with nearly $85 trillion in debt.

The US economy is literally on perpetual life support. Recent events show too clearly that unless fiscal and monetary stimulus continues, the economy will fail and, by extension, the stock market.

However, the Fed currently has no choice.

Such is the consequence, and problem, of getting caught in a “liquidity trap.”

What the average person fails to understand is that the next “financial crisis” will not just be a stock market crash, a housing bust, or a collapse in bond prices.

It could be the simultaneous implosion of all three.

https://seekingalpha.com/article/440...rything-bubble

[Exiled93]

Yep. Have been looking around on zillow for like 2 years now while saving up. Slowly saw the inventory diminish and now it's 200k for a townhome in the ghetto lol.

So I'll be renting for a few more years. Oh well. I do like the freedom of being able to move.

[katya422]

There are a couple of people I've seen interviewed that claim economic growth died around 1970. From this chart it looks like it was flat from about 1950 to 2000 and then went cliff diving.

[Antonio519]

I kinda see it stabilizing, starting to see some prices coming back to reality

[CYBORG1]

So what are we supposed to do? If we sell bubbled assets and hold cash inflation continues to devalue cash. If we buy or continue to hold assets the bubble pops eventually and the value of the assets plummets potentially. Seems like a lose-lose situation.

[lockdev]

So what are we supposed to do? If we sell bubbled assets and hold cash inflation continues to devalue cash. If we buy or continue to hold assets the bubble pops eventually and the value of the assets plummets potentially. Seems like a lose-lose situation.

Bingo.

Enter the Socialism. Srs.

We're being primed right now brah. No conspiracy.

[BigDeeps01]

Loling so hard at the conspiracy cels in this thread

Just hold onto your cash guys, don't trust any of the markets, it's all coming down!

[Beast92]

this chit is happening in Mexico as well, its cringe worthy, houses in my area are atleast 600k+ USD and thats Mexico,

on the brightside one of our family houses just broke the 1 million USD worth after this climb

[Ratfish]

imagine renting

just

fkn

LOL

[Jms89]

Rentcels are peak retard. Imagine thinking that paying a landlord is cheaper than paying a fixed mortgage on an appreciating asset.

[FrankGrimesJr]

Whatever economists predict, you should always do the opposite because they tend to be wrong.

[_zman]

So what are we supposed to do? If we sell bubbled assets and hold cash inflation continues to devalue cash. If we buy or continue to hold assets the bubble pops eventually and the value of the assets plummets potentially. Seems like a lose-lose situation.

I personally stay invested in a variety of assets with cash on hand. Invest in Real-Estate (if the bubble pops, rentcel demand goes up), Stocks (typically beat inflation), Commodities (to spread your assets and have physical currency on hand), take on long term fixed rate loans if you can afford it.

If you lose your a$$ in all of the above, well everyone is just as broke as you.

[Vhagar]

For the average real first-time home buyer it just means delaying another year or so at most. If you figure in 2019 Timothy wanted to buy a $300k house, needing a $60k down payment for bypassing PMI, in today's world that house is probably now $400k, so Timothy would need another $20k to add to their down payment, which they can hopefully accumulate within a year tops. Might need more down though if they want to keep their payment lower.

The average first time home buyer doesn’t have 60k saved and probably isn’t saving 20k per year if they can only afford a 300k house

[samsbolton]

The buyers are not actually highly qualified when you look at their employers' balance sheets and realize that their unproductive jobs would evaporate in an environment where interest rates were allowed to naturally rise. Over 20% of US businesses are perpetually unprofitable and would almost immediately go bankrupt if rates were to rise to any meaningful level. In fact, 2.5% was enough to send the economy into a near tailspin in late 2018. That threshold is probably much less now considering how much additional debt has been added to corporate balance sheets since 2020.

And the interesting thing is when these companies finally do go bankrupt, there's going to be nothing left to pick over from creditors because the bulk of their value is based on intangibles. So when rates finally rise, you're going to have at least 20% of businesses implode almost overnight. That is obviously going to have ramifications on the rest of the economy as other businesses that are currently profitable start losing money as a result of this massive hole that was blown in the economy. Then on top of that, you have an over-indebted federal government with the bulk of its debt in short term bonds that will be forced into austerity an literally unable to stimulate and blow more money on stupid chit like PPP grants as they have during Corona because they have to start rolling over new debt into higher interest bonds and any further spending forces yields up even higher compounding the problems.

And that is all while home prices are simultaneously becoming more unaffordable because the average down payment is a paltry 6% and higher rates cause payments to balloon forcing sellers to have to adjust their prices down.

If we ever get natural interest rates, asset values are going to chit the bed so very hard.

I know 3 bankers/hedge fund/PE guys, two are very high net worth, and Ive asked them all many times what is the end game for endlessly growing sovereign debt.

They have ABSOLUTELY NO CLUE.

If they dont know, no one does.