Let’s start with something we can all agree on: housing is in the midst of a major slowdown. Existing home sales are falling faster than they did during the great financial crisis of the mid to late aughts, and mortgage interest rates have just about doubled since the start of the year and are now flirting with 7%. As a result, housing affordability is deteriorating at full tilt. The market is hemorrhaging buyers, and sellers are holding tight to the record low rates they locked these past couple of years and are hunkering down for the ensuing… for the ensuing what? Correction? Crash? Meltdown? It depends on who you ask.
The RE problems of today, 2022, trace back directly to the 2008 financial crisis and subprime mortgage collapse. Now, if the real estate market had been allowed to fully collapse, instead of receiving massive bailouts (AIG et.al.) we would not be where we are today. Instead, we would have something the market has avoided since the 1940s and 1950s - true price discovery. Now, prices are inflated beyond affordability so many are priced right out from a purchase. Couple this with wages not maintaining pace with inflation, SINCE 2008 has uncoupled RE prices from reality, once again, just as happened prior to the 2008 financial crisis. The only real solution is prices correcting back to 1913 price levels and a new form of currency to take over. The whole FIAT based debt currency is long in the tooth and ripe for replacement. Repricing RE assets in the new currency will be one of the first doings of the post-fiat economy.
Re proportionality, I suspect you’re correct: a few areas will lose more than 2 years’ gains, others less, while most will see their home’s value at pre-pandemic levels. Perhaps 15/70/15%, but I’m flying on instinct here. Love Bill as well. ☺️
The RE problems of today, 2022, trace back directly to the 2008 financial crisis and subprime mortgage collapse. Now, if the real estate market had been allowed to fully collapse, instead of receiving massive bailouts (AIG et.al.) we would not be where we are today. Instead, we would have something the market has avoided since the 1940s and 1950s - true price discovery. Now, prices are inflated beyond affordability so many are priced right out from a purchase. Couple this with wages not maintaining pace with inflation, SINCE 2008 has uncoupled RE prices from reality, once again, just as happened prior to the 2008 financial crisis. The only real solution is prices correcting back to 1913 price levels and a new form of currency to take over. The whole FIAT based debt currency is long in the tooth and ripe for replacement. Repricing RE assets in the new currency will be one of the first doings of the post-fiat economy.
It will be recession and unemployment that take down the housing market this time.
Re proportionality, I suspect you’re correct: a few areas will lose more than 2 years’ gains, others less, while most will see their home’s value at pre-pandemic levels. Perhaps 15/70/15%, but I’m flying on instinct here. Love Bill as well. ☺️