Key Indicator Hints America Is Headed
For Its Worst Real Estate Crash In History
The Federalist,
by
Justin Haskins
Original Article
Posted By: PeterWolosin,
2/17/2022 8:16:51 AM
Although it’s impossible to predict economic crashes with certainty, a key economic indicator suggests the U.S. housing market is on the verge of an unprecedented crash, one that could end up being the biggest in America’s history.
Following the 2008 stock and real estate market crashes, the Federal Reserve, Democratic-led Congress, and the presidential administrations of George W. Bush and Barack Obama began an unprecedented effort to pump new dollars into the financial system — and, to a lesser extent, the economy at large.
The strategy behind the flood of quantitative easing, government takeovers, stimulus checks, and government welfare programs that followed
Reply 1 - Posted by:
Submariner 2/17/2022 8:45:26 AM (No. 1074314)
Click bait and he’s off the mark. Housing prices are a function of very low inventory, not interest rates. The crash of 2008 drove most builders out of business and we haven’t recovered from that.
16 people like this.
Reply 2 - Posted by:
pc1eszm 2/17/2022 8:46:37 AM (No. 1074320)
Hubs and I were looking to move and even started the process of buying a new home, which in hindsight would’ve been one of the biggest mistakes of our lives. We’re not moving and if the market does crash, we’ll only suffer paper losses. You can’t foreclose on a house that doesn’t have a mortgage. I owe my guardian Angel big time!!
17 people like this.
Reply 3 - Posted by:
Rather Read 2/17/2022 8:51:42 AM (No. 1074327)
The number of affordable houses where I live is all but none. If you have tons of money, sure but not if you are an average person.
19 people like this.
Reply 4 - Posted by:
stablemoney 2/17/2022 9:03:01 AM (No. 1074349)
Real estate prices have skyrocketed. You can raise prices, but where are the customers that can pay those prices? When the Fed raises interest rates, the bubble is going to burst. Will it happen this year? Cynical people would correctly point to the election in November, and say probably afterwards.
12 people like this.
Reply 5 - Posted by:
Bluefindad 2/17/2022 9:03:53 AM (No. 1074352)
Rock, meet hard place.
The housing boom in North Carolina is incredible. New construction everywhere. Realtors are describing situations where there are multiple bids as soon as a home goes on the market and homes sell at well over asking price. Prices are skyrocketing. But sooner or later interest rates will have to go up to curb inflation. A couple of points will put many homes out of reach of new buyers. Construction will slow to a drip and the majority of the foreign nationals in the construction crews will be unemployed. Then what?
Hopefully we're not in the same situation as we were in the 2000s. People kept borrowing on their equity - fueled by rising home values - to barely stay ahead of their debt. Once their home values plateaued and they couldn't get more money out of their homes, they were overtaken and consumed by their debt. But, I do fear that that is happening because we get multiple offers for equity loans every week. Undoubtedly lots of others do as well. Maybe we have to learn the same lesson again.
11 people like this.
He says at the end of the article to “prepare accordingly.” I guess I’m a dummy, since I’m not a monetary type of person I don’t understand what I have to do to prepare. Hubs and I owe on this retirement home but we have enough assets to pay this place off many times over. Is this prepared enough?
10 people like this.
Reply 7 - Posted by:
Pinkpanther 2/17/2022 9:10:49 AM (No. 1074365)
Texas had always had affordable housing. Mr Pinkpanther and I bought our house 2 1/2 years ago in the DFW area for $330,000 ($60k less than appraisal) now it’s valued at $500k. This is both a good and bad thing for us but what I’m most concerned about is the ability of my children to get their own housing because rent has also skyrocketed.
14 people like this.
Reply 8 - Posted by:
JHHolliday 2/17/2022 9:26:30 AM (No. 1074397)
We have been in the same house for 44 years, and the mortgage was paid off years ago. It's a nice little house in a good neighborhood, and I never saw the need to "move up" as some people seem to need. They start making a decent income and want to buy a bigger house in a ritzier neighborhood and a bigger mortgage. The good times don't last forever and your debts will become toxic at that point.
11 people like this.
Reply 9 - Posted by:
franq 2/17/2022 9:29:49 AM (No. 1074404)
Good times or bad, the best position is to be debt-free. We started paying down our mortgage in earnest a year and a half ago. Payed it off about a month ago. I would suggest poster who has the funds "many times over" to do so. Bank accounts could be seized at government whim.
13 people like this.
Reply 10 - Posted by:
sunshinehorses 2/17/2022 9:31:25 AM (No. 1074407)
We just bought our house last winter and it took months to get a house. There were very few for sale and those that were available were well out of our price range. We bought a house that we could afford the mortgage on if the economy went to hell. Yes it has gained 30% in the past year, but that is on paper. What we hadn't counted on was utility prices going up 100% in one year. There are still very few houses for sale around here, people are holding onto their houses.
11 people like this.
Reply 11 - Posted by:
red1066 2/17/2022 9:47:50 AM (No. 1074431)
If the real estate market crashes, it will be because home loan interest rates will approach those of the mid to late 70's. Nobody in their right mind is going to buy a home with home loans that have a 15 to 18 percent interest rate. The fed has already pumped money into the economy which has helped to create inflation. Ten years ago, general inflation wasn't the issue for most people. Banks were lending money to people to buy homes who had little income, and the rush to buy homes with virtually free money got out of control. When all those people stopped paying the mortgages on the homes, the housing market crashed.
8 people like this.
Reply 12 - Posted by:
Strike3 2/17/2022 9:48:53 AM (No. 1074437)
Garbage guesswork by an amateur. Just try to find a home to buy and you will quickly find that it's a seller's market. Builders can't build new homes due to Biden's supply chain fiasco. Obama caused the last crisis with stupid democrat policy when he forced banks to award mortgages to every derelict on the street. "Key indicators" do not work when stupidity is at play.
14 people like this.
Reply 13 - Posted by:
NamVet70 2/17/2022 9:52:42 AM (No. 1074440)
On the other hand, with the devaluation of the dollar (inflation) going on under the Biden regime a real estate crash won't reduce the dollar value of many homes, it will only cause the homes to stagnate in value for a while. If spec builders find they can't build homes because the cost of building materials is too high (likely) then they will stop building and the value of existing homes will then begin to rise again.
6 people like this.
Reply 14 - Posted by:
Strike3 2/17/2022 9:55:59 AM (No. 1074444)
#6, if you have a very low interest rate, you are doing fine by sitting still. Make sure you have enough liquid cash on hand plus interest-earning assets to pay it off if it becomes necessary. #9 is correct though, debt-free is the best position to be in.
11 people like this.
Reply 15 - Posted by:
zephyrgirl 2/17/2022 11:10:20 AM (No. 1074542)
During uncertain economic times, the best approach is to get out of debt and stay that way. Once a house is paid off, it is relatively cheap to live in it - property taxes, maintenance, repairs and utilities are miniscule compared to a monthly mortgage payment. Even better, paid-odd homes won't be foreclosed. The only way to lose it is to fail to pay property taxes.
4 people like this.
Reply 16 - Posted by:
zephyrgirl 2/17/2022 11:12:33 AM (No. 1074544)
Sorry - paid-off.
2 people like this.
The key is not to panic. Whatever you paid for your house, as long as you can meet the mortgage payments. It is worth every penny, it is a roof over your head. You might have paid too much but it doesn't matter as long as you can meet your obligations. We have all bought something and later found that someone paid less or it is not quite we thought it was worth but you don't throw it out you just keep it and realize that it was worth it to you to possess it.
The market will recover sooner or later. The key in all of these so called corrections and crashes is to stay put. The big guys wait on the sidelines and watch the small investors panic and sell at a loss and then they jump in to buy up at bargain prices. Just sit tight and wait it out. The country will recover. We are a hard working people some say too hardworking but in any event our future is what we make it, not what some pundit who is merely a shill for some product or other or some nitwit who thinks he has all the answers to your problems but somehow can't even solve his own. Hang in there folks it might be a bumpy road ahead but we will prevail.
2 people like this.
Debt free is not necessarily the best position to be in. You must take into acct the present value of money. In other words if you borrow 100 and the inflation rate keeps rising the way it is, you are paying that hundred dollars back in money that is worth less and if you managed to get a really low interest rate you are actually making money on your debt. That is why a low interest mortgage is the best thing you can have and as long as you can meet the payments you will benefit in the long run. At these interest rates you should borrow as much as you can afford (that being the operative word here) because you will not see them again. I am not saying go in over your head I am saying that establishing credit particularly as a young person is important and a mortgage is the best possible loan you can make. Your home will always be your best and biggest asset. Don't overpay but also do not be afaid of borrowing.
3 people like this.
Reply 19 - Posted by:
JackBurton 2/17/2022 11:57:12 AM (No. 1074602)
Yup
0 people like this.
Reply 20 - Posted by:
RuckusTom 2/17/2022 1:27:54 PM (No. 1074699)
We're going to lose a lot more things if interest rates go back to even close to Carter era rates. 10% interest on $30,000,000,000,000 in debt is a lot different than .01% interest on $30,000,000,000,000 in debt. How much does the military, SS, Medicare, Medicaid, food stamps, etc. cost us?
1 person likes this.
Reply 21 - Posted by:
DVC 2/17/2022 1:41:09 PM (No. 1074715)
Home prices have been ridiculously high for a long time. I have no idea if a crash is coming, I do NOT consider my homes as investments. They are places I live, some most of the year, others part of the year.
Those who consider their homes to be their 'primary investment' are at great risk, it seems to me. But, I am absolutely no real estate expert. I buy or build homes that I need, never for investment.
0 people like this.
Reply 22 - Posted by:
WV.Hillbilly 2/17/2022 1:58:32 PM (No. 1074745)
They're already back to giving people who can't qualify for a mortgage 100% financing.
What could go wrong?
Again.
4 people like this.
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