Likely the introduction of the 40 and 50 year mortgage will come first. Delaying a crash temporarily. But as rates rise, corporations will start laying off. Forcing unemployed people to sell their homes for what little equity is left. That will add to supply and should bring prices down as well.
Problem is we have no cheap rental market right now. So people will do all they can to keep their low mortgage rates, they won’t be walking away like 2008-2010
Also many people have cash on the sidelines waiting for the crash. When buying in cash, rates affect you less. So we will continue to have assets transferred from poor to rich increasing income inequality. Basically it’s all FU&#ed. Hence why you don’t print 10 trillion out of thin air…
Good old days. 80s
Good Public universities Tution cost was $1800 for full year.
Mortgage was around 12 to 15% on a 30 yr fixed.
Nice 4 bedroom Houses were like 40k to 60k.
Black Monday 1987. When mkt crash 22% in one day.
There was a thread here about real estate crashing that got closed quickly.
I don’t think it’s as tenuous as some think.
Just remember… many people bought prior to the big upswing in prices and fixed mortgages were record lows (or they refi’d into them). The majority of homeowners have very low carrying costs especially compared to today’s rents as you mentioned.
There will not be a large amount of people who can’t afford their payments like back in the ninja loan days and so we won’t see a huge sell off. And if the last crash taught us anything… you can basically stop paying your mortgage and be in foreclosure for a long time. Like I said, Fed/Bank winky winky stuff will happen first.
I’m also a doubter of double digit rates… but there was a time when no one thought Fed would go to 0 and mortgages would be in the 3s.
I’ll openly admit, I still don’t really understand the banking system. It’s all funny money, made up numbers by governments and every single country has a debt. To me none of it makes sense, and none of the currencies have any real value. I mean they just print/create more whenever they feel like it.
Agree that precious metals is probably a safe bet.
Anything is better then holding dollars. I’ll admit I hold a good amount hoping for a crash, but so is almost everyone. Which makes me think there will be no crash valued in dollars.
Pro tip. Open a Walmart credit card, they sell gold/silver bullion pretty cheap, allow credit and give you a 5% discount to use the card. Basically you can buy gold ounces at spot price this way…
Paper gold will crash if the market crashes but physical gold/silver has been holding up well during any drops. Silver eagles actually sell for almost double spot pricing. That should tell you how worthless the dollar is…
Just a local observation since as they say all real estate is local - house went up for sale in the neighborhood for $900. Typical 4bd, 3k sq ft, 1ac, $12 in tax, with septic, well, etc.
Was on the market for 19 days and now in “accepting backup offers”
Doesn’t look to me that 7% mortgage rates are slowing people down.
But then again - there isn’t much inventory in the neighborhood. Supply part of the equation is still out of whack where I’m at and there is no new construction to add any.
It’s not just housing. The inflation we’re seeing is because the supply chain is still healing so demand is still outstripping supply. Just look here on LH at the deals we had 2 years ago vs now. Once inventory catches up to pre-pandemic levels we should see a slow return to normalcy. Putting the interest rate up might slow things down a little bit, but in a lot of segments, supply is still the problem.
I think thats in reference to those who are entitled to refunds on already closed loans in their qualified loans forgiveness period. The folks who still have a student loan balance after the forgiveness will just see an amount applied to the principal.
Maybe for certain niches in the car market. Even that is changing overnight, when X5 orders are now 10% off. Yukons have been posted with discounts. Overall consumer spending has greatly decreased in past months, it has dropped two straight quarters. We are actually seeing unprecedented high inventories in many sectors. Companies like Target, Walmart, Nike, Adidas, etc have all warned about high inventories and the need to move inventory at lower prices(even losses in some cases). This Black Friday is going to have crazy deals, these companies and retailers are sitting on masses of inventory. Look at imports, they are massively down. Consumers are spending income on living expenses, retailers have recognized this and pulled back greatly on imported goods. This time of year should be peak imports, with stores gearing up for Holiday sales. Nope our imports dropped 6.9%. Consumer demand has all but dried up, the entire auto sector will soon feel it as well. Personal savings rate has dropped to 3.3%, far below historical average. 2023 is going to something to watch play out.
Also these people taking victory laps about this GDP number is not too smart. The topline number is hiding the weakness and uncoiling of supply chain. The numbers reflect a 14.4% surge in exports and a 6.9% drop in imports, which caused the U.S. trade deficit to drop dramatically, adding roughly 2.8 percentage points to GDP growth. Even worse the exports represent sending record number of oil, petroleum products and natural gas to EU amid their energy crisis. While pulling millions of barrels out of strategic oil reserve.
But wasn’t most of that just oil/gas related? Imports of consumer goods only down .2% with an increase in auto imports.
Excepting oil and gas, I would assume imports will increase and exports decrease over the next year since that is the normal course of events when in short order one currency (dollar) gets much stronger and most other currencies (Yen, Euro, Pound) lose value.
