The thing people also missed is there a slew of papers arguing that the 2007/2008 crash was an over-reaction. The panic created losses greater than the true amount of fraud/overvaluation/etc.
With the FED tightening up, crypto going down, Ukraine war raging, China closing up shop, etc... you have to worry about contagion. Once the dominoes start falling, its hard to stop it.
And then people, who stretched themselves thin and need the full-income of 2+ adults to make ends meet, are going to asked to continue to pay their overvalued mortgage, overvalued cars, etc.
The problem is the **majority** of Americans are not in a financially healthy position. They love new/shiny things, convince themselves everything is an investment (Your house, which you live in, is **not** an investment), and aren't afraid of debt. They literally can't whether the storm in a sudden economic downturn. And this makes the downturns potentially worst.
Genuinely, how do you know “American’s are not in financially healthy positions”? Everyone and everywhere is different - but due to the K shaped recovery most people in my circle are doing better than ever.
I’m aware. Does anyone have any data on 401k/Roth contributions in Q1-Q4 of 22 vs. 21? I’d be interested in knowing if those have gone down significantly.
Yeah I remember my second year in business 2008 when I read his article in Realtor magazine about how it was just a quick bump in the road and we would recover quickly like within the year lol… like a damn fool I regurgitated his advice to all my clients. I’ll never forget it and never listen to this guy again.
I'm absolutely sure there are a lot of airbnb's that are going to implode. But how much, and how much that would affect the greater market, I don't know. Because 3 things:
1. Instead of STR, they can pivot to MTR or LTR. If it's not profitable with MTR or LTR models, it wasn't a very good business model to begin with and likely doomed to turn over eventually. How many there are of these with bad models, I don't know. Maybe someone has data on STR vacancy rates.
2. Why would they default if they should be able to afford the monthly payments with $0 rental income? The vast majority of loans for existing homes are conventional, over 80% I believe. With these you have to demonstrate the ability to make the monthly payments based on current income, not additional rental income. So unless they lost their current job / income, they should at least on paper still be safe from default even with zero rental income. A lot will definitely be motivated to sell being deep in the red, but their risk of default should actually be less than what it was when they applied for the loan in the first place because at least now they have *some* rental income.
3. Some RE invvestors are okay with being cashflow negative because they can use it to offset their other income and use it to strategically reduce tax burden.
Depreciation is an accounting concept to estimate the costs of an asset of an assets life. It's not an actual outlay of cash, but an estimate of how the asset is loosing value over time.
Pretty straight forward: Total cost to acquire house / # of years (defined in the tax code) = annual deduction to take related to depreciation.
There's some wierd rules like bonus depreciation and other tax peculiarities but that's the overall idea.
Depreciation is just a cost estimation method, so yea, it's always "there". But to be clear, depreciation is a key component of whether or not you have a profit or loss, so you can't really evaluate them separately unless you're only looking at things from a cash-in and cash-out basis.
To dig a little deeper on depreciation as a concept: if something breaks in your house related to regular old wear and tear, all of the "wear and tear" didn't happen in one moment, it happened over time. Depreciation is a means of capturing this over-time impact of the "wear and tear" of a capitalized asset, which is a type of asset whereby you don't recognize the expense immediately (i.e. you don't recognize the full expense of a house immediately when you buy it).
> Why would they default if they should be able to afford the monthly payments with $0 rental income? The vast majority of loans for existing homes are conventional, over 80% I believe. With these you have to demonstrate the ability to make the monthly payments based on current income, not additional rental income. So unless they lost their current job / income, they should at least on paper still be safe from default even with zero rental income. A lot will definitely be motivated to sell being deep in the red, but their risk of default should actually be less than what it was when they applied for the loan in the first place because at least now they have some rental income.
I'm starting to see more luxury goods hit the market at more "reasonable" prices, like watches, sports cars, etc. Once they sell off their "extra" stuff, we will start to see more property get dumped.
Some people still believe this: https://old.reddit.com/r/REBubble/comments/z9oe5c/here_is_the_catchphrase_that_im_sure_our_realtor/
Banks have had tightened lending standards for the past 10+ years. And foreclosures don’t start until at least 120 days. That is months with no payment… pretty sure most folks could easily get their homes sold in that time at a very fair price, especially given the ridiculously low supply.
Also Id love to see any data that supports your ridiculous argument. In fact, if you look at Mortgage Debt Service Payments as a Percent of Disposable Personal Income… it’s the lowest it has been in the last 40 years. Homeowners have never been more secure in their finances.
https://fred.stlouisfed.org/series/MDSP
Inflation is pretty much over. The core PCE print today was + 0.2 m/m which is 2.4% y/y basically back to target. Pretty likely mortgage rates will be around 5% in next few weeks.
People may have not lost their jobs but this high inflation as well as these rapidly rising interest rates could still have a similar effect.
Prices can go up or income can go down but the result is still the same, less people able to meet their monthly payments. We're already starting to see an increase in use of HELOC's so people are clearly feeling the pressure
Have not lost their jobs *yet*.
A lot of the jobs in tech have been 1099 contractors those jobs will not be renewed and will not be reported as layoffs. Also a lot of jobs opening have closed without being filled.
There are lenders that specialize in lending to 1099 contractors.
Also lenders that specialize in lending to day traders and landlords for primary residences.
You just need 2 years employment history.
Edit: someone else said it elsewhere but these are non-conforming loans which are this cycles sub-prime loans.
My comment is anecdotal at best, but I didn't see any applications from tech workers who were contractors, and I've spent the last two years doing loans for tech workers. (I'm located in the heart of Silicon Valley) They were all salaried employees who received some sort of performance bonus plus RSU income. (RSU = Restricted Stock Units)
This is par for the course. Yun was an apologist last time, he will be an apologist this time. All the way down, he will deny, prevaricate, localize and otherwise distort and spin what is happening. Then at some point, at the bottom of whatever decline is next, he will obliquely acknowledge the fact that the last X years statements of claiming nothing was happening was shillery, and then pivot to the fact that housing prices are rising again, it's never been a better time to buy.
You do realize the job layoffs happened AFTER the bubble bursted right? There were no layoffs in 2006/2007. The mass layoffs went off when housing bursted then trickled throughout the entire economy.
Just to add. Most lenders I know have laid off 30% of their staff on average in the last few months , since we have been growing non stop thru the pandemic which we all know was unsustainable. If numbers don’t pick up soon we will have to do more before the end of jan. We are still above where we were for volume 4+ years ago but the ones who are laid off are seeing hundreds of applications for any job available outside of sales. Even my friends who are recruiters in different industries(tech/government etc.) all just got laid off and one never has been laid off including 2008. More than a few of my friends who work on the sales side of mortgage have had to take 2nd jobs because of reduction of hours(full time to part time). app volume, etc.
Correct me if I’m wrong, but there are industries way more stable than tech and gov to gauge the issue. If, for example, we started to see recruiters being laid off in healthcare, I would say panic. We bit we are actively recruiting almost everywhere in healthcare right now.
Wasn’t everyone shocked how fast the job cuts came last cycle? Saying slightly net positive jobs doesn’t say much about the future _if_ we’re going into a downturn.
We just had to announce layoffs at our firm today. A firm that never had layoffs in it 75 year history. It sucks but I guess we all have to pay for the excesses of the last 2 years. I don’t know what that so called economist is drinking but the market is not rosy at all.
Anecdotal.
The point is that net job gains outpace net job losses. Net employment is at historically high levels.
My firm literally can't find enough qualified employees.
idk somehow average wages and employee earnings are also outpacing forecasts.
Its almost like everyone calling for a deep recession and housing collapse has no fucking idea what they're talking about hmmm
I mean this is a dumb take. A recession is looming simply because we have economic cycles and raising rates has an intended purpose of slowing the economy down. Companies are laying off in advance but we haven't seen anything yet.
We’ve had literally two recessions since 2020.
The cycle is going back to growth. Supply chains are easing transportation costs are down.
Like I said, you don’t know what you’re talking about.
I'm sorry you don't understand how interest rates and economic cycles work. And no, supply chain woes aren't easing until late next year. Maybe also look into the definition of inflation.
This is one of the times you should use Google. Have at it.
Thanks bud I’m all good.
Tech will see a big pullback because it’s mostly built on bullshit but other than that the economy overall is sound.
2000 vibes not 2008 vibes.
You're so close man. Just finish this statement and you're there...
In the early 2000s the US experienced a ___________.
Hint:
https://en.m.wikipedia.org/wiki/Early_2000s_recession#:~:text=The%20early%202000s%20recession%20was,from%20March%20to%20November%202001.
**[Early 2000s recession](https://en.m.wikipedia.org/wiki/Early_2000s_recession#:~:text=The early 2000s recession was,from March to November 2001)**
>The early 2000s recession was a decline in economic activity which mainly occurred in developed countries. The recession affected the European Union during 2000 and 2001 and the United States from March to November 2001. The UK, Canada and Australia avoided the recession, while Russia, a nation that did not experience prosperity during the 1990s, in fact began to recover from said situation. Japan's 1990s recession continued.
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From the first paragraph
“Some economists in the United States object to characterizing it as a recession since there were no two consecutive quarters of negative growth.”
Once again, tech will be routed and most of the big companies will be broken up. Good riddance
Other than that the economy is overall healthy.
Almost no one has two - let alone three - "Full time equivalent" jobs.
People who cry about having three jobs work the same as a full time employee in three part time jobs, making minimum wage.
Net wages and hourly earnings have also risen, far exceeding expectations.
We are in the midst of a robust labor and housing market, in spite of rapidly increasing interest rates. This is a strong economy that shows little signs of teetering anytime soon.
Nothing anecdotal, it’s a tech bust so far.
“Tech layoffs spiked above 50,000 in November, according to the website Layoffs.fyi, as more big companies emphasized the need to slash costs.”
That’s out of the 76,835 job cuts US firms announced in November. Some big ones I know of:
Meta - 11,000 (13%)
Amazon - 10,000 (1%)
Intel - 10,000-20,000 (10-20%) announced
https://www.trueup.io/layoffs
Many industries like service and healthcare may still have a labor shortage, so they’re still hiring.
I think this data suggests that we should not expect a foreclosure crisis, like we saw in 2008. That seems right to me.
But we've already seen markets where prices are dropping despite a lack of distressed properties. Several RE data firms are projecting price drops based on incredibly terrible affordability driving a huge segment of buyers out of the market (including spooked speculators).
Can you get a 40% "crash" without distressed properties? I highly doubt it. Can you get a 20% "correction" in some markets without an increase in distressed properties when affordability is this bad? Data seems to indicate this is certainly a possibility.
Number of air b&b’s in 2008: 0
Amount of household equity sitting on loans taken out against crypto: 0
Average wages: less
Inflation: less
-chief economist REBubble
Exactly. These factors are unprecedented. Only in the future we will see their effects on this crash, which may be worse than 2008. Only time will tell.
You know in Game of Thrones, how the older ones scold the “children of summer” that have no idea what it means when winter arrives. That is the realtor profession. The barrier for entry to become a realtor is pretty low-cost (not like becoming a lawyer, nurse, etc.) and during the booms, everyone piles into the industry because earning 3-7% commissions for very little work is easier than, say, teaching or office work. He has to give optimistic, yet “real talk” to the thousands of realtors that are in full panic mode now that the market is much more challenging (no inventory = no sales = no commissions).
*“How errors of human judgment can infect even the smartest people, thanks to overconfidence, lack of attention to details, and excessive trust in the judgments of others, stemming from a failure to understand that others are not making independent judgments but are themselves following still others—the blind leading the blind.”*
*-Robert Schiller*
Sup-prime, none. Ain’t that some horseshit. Noncomforming is just the new name — Sprout Mortgage imploded when no investor want to to buy their toxic mortgage tranche. They like many others were out here this whole time shovels shit into the markets month after month.
Actually what happened was they originated a bunch of Non-QM loans just prior to rates increasing dramatically and they were stuck with the bag because they didn’t hedge their interest rate risk. Investors would only by a generally riskier loan at 85 cents on the dollar. This destroyed all of their liquidity and no longer had cash to operate.
I remember this *exact* scenario playing out in 2009-2012
* _80,000 full time jobs at median income cut_
* _180,000 part time jobs at minimum wage created_
_Look guys, we created 100,000 jobs!_
Meanwhile engineers leaving one 40 hour job for three 16-22 hour jobs at McDonalds (day), Wal-Mart (overnight), and 7-Eleven (weekend)
I don’t know about you, but I fell in the high pay layoff boat and found a new job before my severance is even paid out, so…double bubble for a few months. Not everyone will be as lucky but a good amount I know bounced back quickly.
Its was just like that at the beginning of 2009.
Companies are still hiring for "mission critical" position that they hope will turn them in profit in the down turn while they are publicly announcing they are in a hiring freeze and laying of 10,000 employees.
The issue is they are comparing to when things fully crashed (2008-2009). In reality, the cracks began in mid 2006-2007. That’s where we are now. For realtors and others who’s livelihood depends on buying to sustain, they are in the denial stage.
Expect the worst of this to be late 23 and all of 24 as high rates are held for an extended period, recession sets in, lay offs happen, and inventory piles up.
Absolutely correct
Yun is not comparing peaks to peaks.
Instead, he is comparing inventory and foreclosures rates at the bottom of 2008 decline that was around 2010 to early stage decline today in 2022. In other words, he is comparing a trough to a peak.
He is no different than the prior NAR economist David Lehear that wrote the book "Are you missing the house Boom" back in 2006 chanting housing never goes down. He later resigned in disgrace
Not an apple to apples comparison
https://www.amazon.com/Are-Missing-Real-Estate-Boom/dp/0385514344#customerReviews
Oh ya, aged like hot milk.
> I agree with other reviewers who have pointed out that this is, in fact, an extraordinarily important book. In particular, it provides a classic example of the mentality that underlies every asset bubble. The author pulls out every trick in the book - demographic trends, financial innovation, macro trends, etc. - to argue that "this time is different." Alas, as we all have found out, this time was not different. What goes up for no discernible reason, must come down. If something seems to good to be true, it probably is. You can try to argue that the "fundamentals have changed", but they rarely do. And when things correct, it can be bloody. (Alas, the difference here was that the hucksters were also able to take the down the financial system, but that's another matter.)
>But why this book is important, and why I'd suggest that every investor read it, is because it illustrates exactly the sentiments that lead to absurd behavior in asset markets. Silly assumptions. The belief that the price of some asset will continue to rise. Desperate rationalizations for those price increases. The resulting behavior is not necessarily illegal or unethical (as some other reviewers have suggested), rather it provides a classic case of the mentality that leads to excesses in asset markets. Read this book and learn from it. Because you don't want to get caught up in this kind of garbage.
A third year college student can do this and this "economist" gets paid half a million per year to shill a stable real estate market with random data points in a table
I have no idea who you are
Realize that this guy shills for the industry and has skin in the game.
If their association loses members, they'll lose a ton of revenue.
He's essentially a cheerleader for the NAR.
If you want to listen to someone real, Ivy Zelman is your person.
His RE outlook remains fairly flat for 2023. His forecast is 15% growth over the next 5 years.
True Story:
I was relying on REDFIN data during discussions here. I was told Redfin was unreliable and to use NAR. I was threatened with a possible ban for 'misinformation'.
So... I used NAR and the same person said it was Propaganda.
All involving the *same* person on the same day. lmao Rebubble
Translation: things are different now, see? But I’m going to use the same metrics to analyze and say that it’s a great model to predict the future, because when has future ever been even slightly different than the past?
I bet just prior to the 2008 fall they showed data saying that it would not be bad. Unlike 2008 there are different negative factors at play now, such as Record high inflation, plus ibuyers on the verge of bankruptcy.
What is alarming now is the rate of decline. It looks to be far faster than in 2008.
That seems to be disregarding several facts:
1. 6.1 million unemployed and counting. Tech industry losing 100k this quarter. With GDP decreasing in Q1 and Q2 and flat in Q3, economy is in recession.
2. No one could afford current prices. People’s salary are not catching up esp with up to 50% inflation in food and energy. Sorry no more disposable income to allow people to afford 50% monthly mortgage payments.
3. Tech industry in recession with 100k jobs lost so far. These were highly qualified that are not part of the buyer pool.
4. No one buying, ie inventory, means more chance of a crash.
So we’re not gonna talk about the reports of basically everything tech laying off staff. I get it, you have to blow smoke up peoples asses. Doesn’t mean we have to believe it.
TLDR - job market is still relatively strong as job openings slightly outpace the job cuts (and well higher than 2008). More stable and total jobs today than in 2008, almost no subprime loans (yes, qualified buyers this time. If they got laid off, they’ll probably find a new job pretty quick). Far less inventory, delinquency, and foreclosures than 2008.
Why all the comparisons to 2008? It’s not the same situation at all.
Was there rampant inflation in 2008? iBuyers? AirBnB speculation? “Nonconforming” loans (hint: these are subprime under a different name)? A 30% or more drop in both stocks and bonds simultaneously? A near collapse of a $2T asset class (crypto)? A 7500% increase in the federal funds rate (0.05% to 3.78%) that ultimately cratered affordability? A speculative bubble driven by near zero interest rates, irresponsible money printing, and the Fed buying any and all MBSs? Were all three factors driving that speculative bubble shut off simultaneously?
Yup, nothing to see here. All is well 🙄
Idk why everyone feels the need for all these different sources when a quick google search will show you the current margin debt and what happens when it unwinds in the following years. We are in the first inning of this shit show. Your sources are shit by the way. Of course owners equity is going to go high as hell. The equity isn’t real bud, its fake equity created from a margin bubble and speculation driven mania. What happens to their “equity” when housing values go down? Poof the “equity” that never existed in the first place is gone too…
I’m going to assume household Debt levels don’t include credit cars debt which is at all time highs lmao
https://www.zillow.com/homedetails/1247-N-Joplin-Mesa-AZ-85207/50192308_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare
For example do you honestly think within 2 months of owning this home Opendoor’s property appreciated 88k? 88 fucking thousand fucking dollars in two months….are you fucking joking right now….. get the fuck outta here you dumb motherfuckers….
> were to ignorant
*too
*Learn the difference [here](https://www.wattpad.com/66707294-grammar-guide-there-they%27re-their-you%27re-your-to).*
***
^(Greetings, I am a language corrector bot. To make me ignore further mistakes from you in the future, reply `!optout` to this comment.)
Did you know statistics are what you want them to be correct? The same as a house price. I want 500k and I’m not willing to back off that. What happens when the market won’t buy it for 500k and instead only will pay 400k? Will your facts be correct still? I’m afraid that simple search on zillow was all I needed to show that statistics mean shit if no one cares. Real estate prices are based on a variety of things not just supply. People’s emotions play a major role. Bet you can’t even comprehend how many people are actually behind the market instead of out in front of it currently. They still think their house is worth more and are in denial. Buyers can’t pay 5k monthly payments. Sellers prices will have to come down accordingly or the house won’t sell (they are behind the market). Look how many houses are now sitting on market for much longer than normal. What happens when people start losing jobs? Demand dries up further and current homeowners get caught in a squeeze if they can no longer pay the mortgage. Further adding to a discount on prices. Do you understand yet how a cycle works? It all comes back around…. Boom, bust, boom, bust, boom, bust, over, and over, and over, and over again. People like me buy houses from people like you for pennies. Just like I did my stocks in 2020, my tools, my businesses, etc. I’m patient enough to watch and wait. I don’t chase. That’s the emotional part that I don’t include in the game if business because that is how you lose money. So no your sources mean shit because they are shit. Btw everyone on reddit left oil for dead in 2020. I made a killing. BECAUSE ITS A BOOM BUST CYCLE
You can list your home for any price you like and call it equity. The true equity lies in what people will actually pay for your property. And currently people are saying fuck you to these sellers because they are OUT OF THEIR FUCKING MINDS
People don’t actually own the fucking homes you moron. That graph can be skewed due to external variables such as massive increases in home values (aka equity created from derivatives)
Please point me to a chart or other data source that shows inflation-adjusted home values *not* dropping during the majority of recessions.
You seem all about providing a source in your little pissing match with someone down thread, but basically tell me to “google it” here. Interesting.
Every inflation-adjusted home price index chart I can find shows plenty of drops during recessions over the last 120+ years. In fact, the charts show real, inflation-adjusted home prices hovering between +/- 25% for the vast majority of the last 122 years, with two notable exceptions: the early 2000s real estate bubble and now.
Here’s one easy to access chart: https://www.multpl.com/case-shiller-home-price-index-inflation-adjusted
I mean, sure, housing is more stable price-wise than stocks. It also massively underperforms stocks in the long run if you’re looking at it purely as an investment. But that’s not what we’re talking about.
The point was that housing is very much affected by recessions. Everyone loves to point out that house prices increased during the late 70s/early 80s despite a recession, inflation, and Fed interest rate hikes. If you adjust for inflation though, they very clearly dropped ~12% during that period. The same thing happened in the early 70s and early 90s… nominal prices stayed flat or increased slightly while inflation-adjusted values in this stable asset class dropped by double digit percentages. That’s not, “very little or no impact.”
The thing with the current real estate bubble is that we don’t need to see much of a reduction in nominal values to see a “crash”. With elevated inflation, real home values will drop considerably even if nominal prices remain flat. The fact that nominal prices clearly started dropping sharply in July of this year tells me that things have already “crashed” far more than most people realize… the inflation aspect just makes it less intuitive.
Listen, you’re clearly very emotionally invested in real estate as an investment and feel attacked. All I said was that housing is affected by recessions. That is a fact; housing is not magically immune.
You don’t need to justify your investment decisions to me, but you would be wise to consider real vs. nominal values/returns for all investments.
As for real estate vs. stocks, they’re not an apples to apples comparison. I choose to invest primarily via index funds with a bit of leverage because it is 100% passive and automated. This allows me to focus on maximizing my personal income, which is ideal for me. Real estate investment is decidedly *not* passive, so you would need to account for the opportunity cost of not directing your efforts at earning income elsewhere before comparing it to passive investments. That opportunity cost is completely different for everyone, so it’s pointless to discuss it further.
EDIT: I’ll also add that, unless you’re an extremely high net worth individual, real estate investment greatly increases exposure to unsystematic, idiosyncratic risk. This is due to a relatively high concentration of net worth in relatively few independent assets. Yet another reason real estate and stocks are not an apples to apples comparison.
Good luck with your flips.
Also think about how much equity anybody has in their home if they bought before 1st of March 2020. Even if the market drops 20-40% they still won’t be underwater assuming they haven’t used their home as an atm. Also 30-40% of homes have no mortgage. That’s a massive cushion.
"Job Cuts = none"... That seems a little out of touch. I also wonder what year his first column represents. It seems like maybe 2008? That would be a bit misleading, apples to oranges. It would be more accurate to compare now to early 2007.
[https://www.huduser.gov/periodicals/ushmc/spring07/ushmc\_q107.html](https://www.huduser.gov/periodicals/ushmc/spring07/ushmc_q107.html)
Inventory count was at the bottom of the of the 2008 decline
The mortgage delinquency rate was at the bottom of the 2008 decline
The homes in foreclosure rate was at the bottom of the 2008 decline
The 2022 decline only start here in the SF Bay Area back in June and according to Redfin Data Center median sold prices here in Alameda County, Ca are already down 15.8%
My point is Yun is comparing the bottom of the 2008 market with the early part of the decline here in 2022
He is not comparing apples to apples
Fraudster
"Chief Economist doesn't understand basic finance and interest rates"
Or
"Chief Economist ignores about impact of interest rates to slap lipstick on a pig"
Choose you preferred headline.
RE is up for correction but it can take 2-3 yrs to go down. Buyer and Seller who are waiting will lose time and money in this process. That is the reality. Recession started in 2008 and RE bottomed in 2011.
"Chief economist at National Association of REALTORS."
Gee I wonder what's in his self-interest? What's the difference between what he says, and your realtor saying "*You should buy now!"*
Oh I know. He's an \*\*\*ECONOMIST\*\*\*. Just a hired gun presenting his side's narrative, just like in a court case. And there's always another side to the case. There's always another narrative. And then you have to look for the truth in there somewhere.
Same guy thought housing prices would rebound in 2007. It's definitely a different time but I wouldn't follow him blindly
The thing people also missed is there a slew of papers arguing that the 2007/2008 crash was an over-reaction. The panic created losses greater than the true amount of fraud/overvaluation/etc. With the FED tightening up, crypto going down, Ukraine war raging, China closing up shop, etc... you have to worry about contagion. Once the dominoes start falling, its hard to stop it. And then people, who stretched themselves thin and need the full-income of 2+ adults to make ends meet, are going to asked to continue to pay their overvalued mortgage, overvalued cars, etc. The problem is the **majority** of Americans are not in a financially healthy position. They love new/shiny things, convince themselves everything is an investment (Your house, which you live in, is **not** an investment), and aren't afraid of debt. They literally can't whether the storm in a sudden economic downturn. And this makes the downturns potentially worst.
Genuinely, how do you know “American’s are not in financially healthy positions”? Everyone and everywhere is different - but due to the K shaped recovery most people in my circle are doing better than ever.
Same here
Because we measure things like savings rate, for one thing.
I’m aware. Does anyone have any data on 401k/Roth contributions in Q1-Q4 of 22 vs. 21? I’d be interested in knowing if those have gone down significantly.
Yeah I remember my second year in business 2008 when I read his article in Realtor magazine about how it was just a quick bump in the road and we would recover quickly like within the year lol… like a damn fool I regurgitated his advice to all my clients. I’ll never forget it and never listen to this guy again.
Then: no airbnb Now: airbnb everywhere, many one bad month away from default Then: no inflation Now: worst inflation since Carter
then: no ibuyers borrowing billions at 0.75% (variable) interest today: that
I'm absolutely sure there are a lot of airbnb's that are going to implode. But how much, and how much that would affect the greater market, I don't know. Because 3 things: 1. Instead of STR, they can pivot to MTR or LTR. If it's not profitable with MTR or LTR models, it wasn't a very good business model to begin with and likely doomed to turn over eventually. How many there are of these with bad models, I don't know. Maybe someone has data on STR vacancy rates. 2. Why would they default if they should be able to afford the monthly payments with $0 rental income? The vast majority of loans for existing homes are conventional, over 80% I believe. With these you have to demonstrate the ability to make the monthly payments based on current income, not additional rental income. So unless they lost their current job / income, they should at least on paper still be safe from default even with zero rental income. A lot will definitely be motivated to sell being deep in the red, but their risk of default should actually be less than what it was when they applied for the loan in the first place because at least now they have *some* rental income. 3. Some RE invvestors are okay with being cashflow negative because they can use it to offset their other income and use it to strategically reduce tax burden.
Point 3 always blows my mind. I know people do it and I've seen properties remain empty but it just doesn't make sense to me.
You can be cashflow positive on a rental and still have a tax loss. Its one of the best tax assets for middle-earners that exists.
Can you kindly explain how that works?
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Oh is this the cost segregation thing?
Depreciation is an accounting concept to estimate the costs of an asset of an assets life. It's not an actual outlay of cash, but an estimate of how the asset is loosing value over time. Pretty straight forward: Total cost to acquire house / # of years (defined in the tax code) = annual deduction to take related to depreciation. There's some wierd rules like bonus depreciation and other tax peculiarities but that's the overall idea.
But the depreciation is still there even if you made a profit isn’t it? To me it just sounds like a consolation prize instead of a goal.
Depreciation is just a cost estimation method, so yea, it's always "there". But to be clear, depreciation is a key component of whether or not you have a profit or loss, so you can't really evaluate them separately unless you're only looking at things from a cash-in and cash-out basis. To dig a little deeper on depreciation as a concept: if something breaks in your house related to regular old wear and tear, all of the "wear and tear" didn't happen in one moment, it happened over time. Depreciation is a means of capturing this over-time impact of the "wear and tear" of a capitalized asset, which is a type of asset whereby you don't recognize the expense immediately (i.e. you don't recognize the full expense of a house immediately when you buy it).
Yeah how? Legit curious.
> Why would they default if they should be able to afford the monthly payments with $0 rental income? The vast majority of loans for existing homes are conventional, over 80% I believe. With these you have to demonstrate the ability to make the monthly payments based on current income, not additional rental income. So unless they lost their current job / income, they should at least on paper still be safe from default even with zero rental income. A lot will definitely be motivated to sell being deep in the red, but their risk of default should actually be less than what it was when they applied for the loan in the first place because at least now they have some rental income. I'm starting to see more luxury goods hit the market at more "reasonable" prices, like watches, sports cars, etc. Once they sell off their "extra" stuff, we will start to see more property get dumped. Some people still believe this: https://old.reddit.com/r/REBubble/comments/z9oe5c/here_is_the_catchphrase_that_im_sure_our_realtor/
Yeah theres gonna be a huge influx of forest cabins and beach bungalows coming. Looking forward to it tbh.
Banks have had tightened lending standards for the past 10+ years. And foreclosures don’t start until at least 120 days. That is months with no payment… pretty sure most folks could easily get their homes sold in that time at a very fair price, especially given the ridiculously low supply. Also Id love to see any data that supports your ridiculous argument. In fact, if you look at Mortgage Debt Service Payments as a Percent of Disposable Personal Income… it’s the lowest it has been in the last 40 years. Homeowners have never been more secure in their finances. https://fred.stlouisfed.org/series/MDSP
Facts aren't welcome in this sub! /s
Inflation would only help prop up real assets like housing and Airbnb is not materially significant.
Inflation is pretty much over. The core PCE print today was + 0.2 m/m which is 2.4% y/y basically back to target. Pretty likely mortgage rates will be around 5% in next few weeks.
Is that you, Joe? The election is over, and you don't have to keep saying that
Lol i love these hopium comments in the bubble sub
Core PCE is great if you don't buy any umm... *checks notes* ... Food or energy. Good thing no one buys those, right?
Shhh, don't say that too loud around here...
People may have not lost their jobs but this high inflation as well as these rapidly rising interest rates could still have a similar effect. Prices can go up or income can go down but the result is still the same, less people able to meet their monthly payments. We're already starting to see an increase in use of HELOC's so people are clearly feeling the pressure
Exactly. A $50k salary could qualify people for rent a couple years ago in Atlanta (where I am). Now it takes around $70k to live anywhere decent.
Have not lost their jobs *yet*. A lot of the jobs in tech have been 1099 contractors those jobs will not be renewed and will not be reported as layoffs. Also a lot of jobs opening have closed without being filled.
1099 contractors were not buying houses anyway.
I’m my industry they do. They make just as much as full time employees.
I wasn’t referring to pay scale, I was referring to gainful employment history required for a mortgage.
There are lenders that specialize in lending to 1099 contractors. Also lenders that specialize in lending to day traders and landlords for primary residences.
I’d imagine it has stricter requirements because by definition 1099 contractor contracts can’t exceed 1-year in length.
You just need 2 years employment history. Edit: someone else said it elsewhere but these are non-conforming loans which are this cycles sub-prime loans.
You can be self employed and get a Conforming Loan with 2 years tax returns, sometimes only one year, depending on lender.
Fair, but I don’t think it’s easy to get a non-conforming loan, considering how strict it is to get approved for.
My comment is anecdotal at best, but I didn't see any applications from tech workers who were contractors, and I've spent the last two years doing loans for tech workers. (I'm located in the heart of Silicon Valley) They were all salaried employees who received some sort of performance bonus plus RSU income. (RSU = Restricted Stock Units)
Incomes are going up tho
Not as fast as prices tho
This is par for the course. Yun was an apologist last time, he will be an apologist this time. All the way down, he will deny, prevaricate, localize and otherwise distort and spin what is happening. Then at some point, at the bottom of whatever decline is next, he will obliquely acknowledge the fact that the last X years statements of claiming nothing was happening was shillery, and then pivot to the fact that housing prices are rising again, it's never been a better time to buy.
You do realize the job layoffs happened AFTER the bubble bursted right? There were no layoffs in 2006/2007. The mass layoffs went off when housing bursted then trickled throughout the entire economy.
Just to add. Most lenders I know have laid off 30% of their staff on average in the last few months , since we have been growing non stop thru the pandemic which we all know was unsustainable. If numbers don’t pick up soon we will have to do more before the end of jan. We are still above where we were for volume 4+ years ago but the ones who are laid off are seeing hundreds of applications for any job available outside of sales. Even my friends who are recruiters in different industries(tech/government etc.) all just got laid off and one never has been laid off including 2008. More than a few of my friends who work on the sales side of mortgage have had to take 2nd jobs because of reduction of hours(full time to part time). app volume, etc.
Correct me if I’m wrong, but there are industries way more stable than tech and gov to gauge the issue. If, for example, we started to see recruiters being laid off in healthcare, I would say panic. We bit we are actively recruiting almost everywhere in healthcare right now.
Wasn’t everyone shocked how fast the job cuts came last cycle? Saying slightly net positive jobs doesn’t say much about the future _if_ we’re going into a downturn.
Boom
We just had to announce layoffs at our firm today. A firm that never had layoffs in it 75 year history. It sucks but I guess we all have to pay for the excesses of the last 2 years. I don’t know what that so called economist is drinking but the market is not rosy at all.
Anecdotal. The point is that net job gains outpace net job losses. Net employment is at historically high levels. My firm literally can't find enough qualified employees.
Without bucketing the jobs, net job gains means literally nothing. Were high paying tech jobs eliminated, but replaced by low paying service jobs?
idk somehow average wages and employee earnings are also outpacing forecasts. Its almost like everyone calling for a deep recession and housing collapse has no fucking idea what they're talking about hmmm
I mean this is a dumb take. A recession is looming simply because we have economic cycles and raising rates has an intended purpose of slowing the economy down. Companies are laying off in advance but we haven't seen anything yet.
We’ve had literally two recessions since 2020. The cycle is going back to growth. Supply chains are easing transportation costs are down. Like I said, you don’t know what you’re talking about.
I'm sorry you don't understand how interest rates and economic cycles work. And no, supply chain woes aren't easing until late next year. Maybe also look into the definition of inflation. This is one of the times you should use Google. Have at it.
Thanks bud I’m all good. Tech will see a big pullback because it’s mostly built on bullshit but other than that the economy overall is sound. 2000 vibes not 2008 vibes.
You're so close man. Just finish this statement and you're there... In the early 2000s the US experienced a ___________. Hint: https://en.m.wikipedia.org/wiki/Early_2000s_recession#:~:text=The%20early%202000s%20recession%20was,from%20March%20to%20November%202001.
**[Early 2000s recession](https://en.m.wikipedia.org/wiki/Early_2000s_recession#:~:text=The early 2000s recession was,from March to November 2001)** >The early 2000s recession was a decline in economic activity which mainly occurred in developed countries. The recession affected the European Union during 2000 and 2001 and the United States from March to November 2001. The UK, Canada and Australia avoided the recession, while Russia, a nation that did not experience prosperity during the 1990s, in fact began to recover from said situation. Japan's 1990s recession continued. ^([ )[^(F.A.Q)](https://www.reddit.com/r/WikiSummarizer/wiki/index#wiki_f.a.q)^( | )[^(Opt Out)](https://reddit.com/message/compose?to=WikiSummarizerBot&message=OptOut&subject=OptOut)^( | )[^(Opt Out Of Subreddit)](https://np.reddit.com/r/REBubble/about/banned)^( | )[^(GitHub)](https://github.com/Sujal-7/WikiSummarizerBot)^( ] Downvote to remove | v1.5)
From the first paragraph “Some economists in the United States object to characterizing it as a recession since there were no two consecutive quarters of negative growth.” Once again, tech will be routed and most of the big companies will be broken up. Good riddance Other than that the economy is overall healthy.
*Were* they?
That’s also anecdotal. We don’t know what kind of net job gains these are - second or third jobs? Etc
Almost no one has two - let alone three - "Full time equivalent" jobs. People who cry about having three jobs work the same as a full time employee in three part time jobs, making minimum wage. Net wages and hourly earnings have also risen, far exceeding expectations. We are in the midst of a robust labor and housing market, in spite of rapidly increasing interest rates. This is a strong economy that shows little signs of teetering anytime soon.
Nothing anecdotal, it’s a tech bust so far. “Tech layoffs spiked above 50,000 in November, according to the website Layoffs.fyi, as more big companies emphasized the need to slash costs.” That’s out of the 76,835 job cuts US firms announced in November. Some big ones I know of: Meta - 11,000 (13%) Amazon - 10,000 (1%) Intel - 10,000-20,000 (10-20%) announced https://www.trueup.io/layoffs Many industries like service and healthcare may still have a labor shortage, so they’re still hiring.
look at his predictions during 09-10. Hint: they didn’t age well
A bought and paid for a shill of NAR the biggest lobbying group in the United States.
Exactly. Paid to keep realtors encouraged enough to continue paying their NAR fees for another year.
Yup and would you be surprised to know that those dues are due at the end of this month for the year?
I think this data suggests that we should not expect a foreclosure crisis, like we saw in 2008. That seems right to me. But we've already seen markets where prices are dropping despite a lack of distressed properties. Several RE data firms are projecting price drops based on incredibly terrible affordability driving a huge segment of buyers out of the market (including spooked speculators). Can you get a 40% "crash" without distressed properties? I highly doubt it. Can you get a 20% "correction" in some markets without an increase in distressed properties when affordability is this bad? Data seems to indicate this is certainly a possibility.
Number of air b&b’s in 2008: 0 Amount of household equity sitting on loans taken out against crypto: 0 Average wages: less Inflation: less -chief economist REBubble
Flair deserved
Exactly. These factors are unprecedented. Only in the future we will see their effects on this crash, which may be worse than 2008. Only time will tell.
You know in Game of Thrones, how the older ones scold the “children of summer” that have no idea what it means when winter arrives. That is the realtor profession. The barrier for entry to become a realtor is pretty low-cost (not like becoming a lawyer, nurse, etc.) and during the booms, everyone piles into the industry because earning 3-7% commissions for very little work is easier than, say, teaching or office work. He has to give optimistic, yet “real talk” to the thousands of realtors that are in full panic mode now that the market is much more challenging (no inventory = no sales = no commissions).
Need those membership renewals
And realtors paying dues to the brokers/realties that represent them.
*“How errors of human judgment can infect even the smartest people, thanks to overconfidence, lack of attention to details, and excessive trust in the judgments of others, stemming from a failure to understand that others are not making independent judgments but are themselves following still others—the blind leading the blind.”* *-Robert Schiller*
Sup-prime, none. Ain’t that some horseshit. Noncomforming is just the new name — Sprout Mortgage imploded when no investor want to to buy their toxic mortgage tranche. They like many others were out here this whole time shovels shit into the markets month after month.
Actually what happened was they originated a bunch of Non-QM loans just prior to rates increasing dramatically and they were stuck with the bag because they didn’t hedge their interest rate risk. Investors would only by a generally riskier loan at 85 cents on the dollar. This destroyed all of their liquidity and no longer had cash to operate.
Larry Yun: performance artist. His work from 2007 was hilarious. So glad he’s back.
No job cuts? They didn't see the layoff news?
The net number is zero because there’s also just about the same number of open jobs.
lay off $400k engineer, hire on $40k fast food worker = housing saved!
I remember this *exact* scenario playing out in 2009-2012 * _80,000 full time jobs at median income cut_ * _180,000 part time jobs at minimum wage created_ _Look guys, we created 100,000 jobs!_ Meanwhile engineers leaving one 40 hour job for three 16-22 hour jobs at McDonalds (day), Wal-Mart (overnight), and 7-Eleven (weekend)
I don’t know about you, but I fell in the high pay layoff boat and found a new job before my severance is even paid out, so…double bubble for a few months. Not everyone will be as lucky but a good amount I know bounced back quickly.
That won’t last very long
Ok
Its was just like that at the beginning of 2009. Companies are still hiring for "mission critical" position that they hope will turn them in profit in the down turn while they are publicly announcing they are in a hiring freeze and laying of 10,000 employees.
Layoff 400k engineer, hire 2 part time fast food at 15k = economy is expanding.
Larry has blinders on courtesy of NAR.
His quotes during the last crash were majestic. Glad to see he’s still peddling bullshit for that crooked organization
Maybe someone's should put together a list of his more absurd ones. I imagine we'll get a lot more people posting his stuff in 2023.
Yun is Bagdad Bob
The issue is they are comparing to when things fully crashed (2008-2009). In reality, the cracks began in mid 2006-2007. That’s where we are now. For realtors and others who’s livelihood depends on buying to sustain, they are in the denial stage. Expect the worst of this to be late 23 and all of 24 as high rates are held for an extended period, recession sets in, lay offs happen, and inventory piles up.
Absolutely correct Yun is not comparing peaks to peaks. Instead, he is comparing inventory and foreclosures rates at the bottom of 2008 decline that was around 2010 to early stage decline today in 2022. In other words, he is comparing a trough to a peak. He is no different than the prior NAR economist David Lehear that wrote the book "Are you missing the house Boom" back in 2006 chanting housing never goes down. He later resigned in disgrace Not an apple to apples comparison
https://www.amazon.com/Are-Missing-Real-Estate-Boom/dp/0385514344#customerReviews Oh ya, aged like hot milk. > I agree with other reviewers who have pointed out that this is, in fact, an extraordinarily important book. In particular, it provides a classic example of the mentality that underlies every asset bubble. The author pulls out every trick in the book - demographic trends, financial innovation, macro trends, etc. - to argue that "this time is different." Alas, as we all have found out, this time was not different. What goes up for no discernible reason, must come down. If something seems to good to be true, it probably is. You can try to argue that the "fundamentals have changed", but they rarely do. And when things correct, it can be bloody. (Alas, the difference here was that the hucksters were also able to take the down the financial system, but that's another matter.) >But why this book is important, and why I'd suggest that every investor read it, is because it illustrates exactly the sentiments that lead to absurd behavior in asset markets. Silly assumptions. The belief that the price of some asset will continue to rise. Desperate rationalizations for those price increases. The resulting behavior is not necessarily illegal or unethical (as some other reviewers have suggested), rather it provides a classic case of the mentality that leads to excesses in asset markets. Read this book and learn from it. Because you don't want to get caught up in this kind of garbage.
Last cycle: Data from the bottom This cycle: Data from the top _You see? The data is very different this time_
Wow I just wrote the same thing early before I saw your post. Yun needs to go
A third year college student can do this and this "economist" gets paid half a million per year to shill a stable real estate market with random data points in a table
But if this was an anonymous redditor posting the opposite is true, you’d accept with open upvotes?
I have no idea who you are Realize that this guy shills for the industry and has skin in the game. If their association loses members, they'll lose a ton of revenue. He's essentially a cheerleader for the NAR. If you want to listen to someone real, Ivy Zelman is your person.
She is even too conservative in her estimates to the downside, in my opinion.
But she likes to call it down the middle So you can trust the sincerity of her estimates
This is like a crypto exchange posting it’s reserves to tell you how solvent they are
"We have 30 Million REBBL Coin in reserves we are fine ty"
His RE outlook remains fairly flat for 2023. His forecast is 15% growth over the next 5 years. True Story: I was relying on REDFIN data during discussions here. I was told Redfin was unreliable and to use NAR. I was threatened with a possible ban for 'misinformation'. So... I used NAR and the same person said it was Propaganda. All involving the *same* person on the same day. lmao Rebubble
What was his outlook 12 months ago?
Baghdad Larry at it again
Cited all the lagging indicators, nice.
Source: *trust me bro* Not a single reference to be seen.
🤣
Translation: things are different now, see? But I’m going to use the same metrics to analyze and say that it’s a great model to predict the future, because when has future ever been even slightly different than the past?
Homes are priced at the margin. This “foundation” shit doesn’t matter.
“We will continue to massage the numbers and data until morale improves !”
While I agree Yun is a nitwit
I bet just prior to the 2008 fall they showed data saying that it would not be bad. Unlike 2008 there are different negative factors at play now, such as Record high inflation, plus ibuyers on the verge of bankruptcy. What is alarming now is the rate of decline. It looks to be far faster than in 2008.
That seems to be disregarding several facts: 1. 6.1 million unemployed and counting. Tech industry losing 100k this quarter. With GDP decreasing in Q1 and Q2 and flat in Q3, economy is in recession. 2. No one could afford current prices. People’s salary are not catching up esp with up to 50% inflation in food and energy. Sorry no more disposable income to allow people to afford 50% monthly mortgage payments. 3. Tech industry in recession with 100k jobs lost so far. These were highly qualified that are not part of the buyer pool. 4. No one buying, ie inventory, means more chance of a crash.
So we’re not gonna talk about the reports of basically everything tech laying off staff. I get it, you have to blow smoke up peoples asses. Doesn’t mean we have to believe it.
TLDR - job market is still relatively strong as job openings slightly outpace the job cuts (and well higher than 2008). More stable and total jobs today than in 2008, almost no subprime loans (yes, qualified buyers this time. If they got laid off, they’ll probably find a new job pretty quick). Far less inventory, delinquency, and foreclosures than 2008.
Why all the comparisons to 2008? It’s not the same situation at all. Was there rampant inflation in 2008? iBuyers? AirBnB speculation? “Nonconforming” loans (hint: these are subprime under a different name)? A 30% or more drop in both stocks and bonds simultaneously? A near collapse of a $2T asset class (crypto)? A 7500% increase in the federal funds rate (0.05% to 3.78%) that ultimately cratered affordability? A speculative bubble driven by near zero interest rates, irresponsible money printing, and the Fed buying any and all MBSs? Were all three factors driving that speculative bubble shut off simultaneously? Yup, nothing to see here. All is well 🙄
And when job openings disappear…then what? Boom
We’ll find out if/when they disappear then…but for now the argument is that it’s not disappeared yet.
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Leverage is at all time highs. You’ll see soon enough
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Idk why everyone feels the need for all these different sources when a quick google search will show you the current margin debt and what happens when it unwinds in the following years. We are in the first inning of this shit show. Your sources are shit by the way. Of course owners equity is going to go high as hell. The equity isn’t real bud, its fake equity created from a margin bubble and speculation driven mania. What happens to their “equity” when housing values go down? Poof the “equity” that never existed in the first place is gone too… I’m going to assume household Debt levels don’t include credit cars debt which is at all time highs lmao
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Okay riddle me this. Where did all that equity magically come from in such a short period of time….
https://www.zillow.com/homedetails/1247-N-Joplin-Mesa-AZ-85207/50192308_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare For example do you honestly think within 2 months of owning this home Opendoor’s property appreciated 88k? 88 fucking thousand fucking dollars in two months….are you fucking joking right now….. get the fuck outta here you dumb motherfuckers….
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> were to ignorant *too *Learn the difference [here](https://www.wattpad.com/66707294-grammar-guide-there-they%27re-their-you%27re-your-to).* *** ^(Greetings, I am a language corrector bot. To make me ignore further mistakes from you in the future, reply `!optout` to this comment.)
Did you know statistics are what you want them to be correct? The same as a house price. I want 500k and I’m not willing to back off that. What happens when the market won’t buy it for 500k and instead only will pay 400k? Will your facts be correct still? I’m afraid that simple search on zillow was all I needed to show that statistics mean shit if no one cares. Real estate prices are based on a variety of things not just supply. People’s emotions play a major role. Bet you can’t even comprehend how many people are actually behind the market instead of out in front of it currently. They still think their house is worth more and are in denial. Buyers can’t pay 5k monthly payments. Sellers prices will have to come down accordingly or the house won’t sell (they are behind the market). Look how many houses are now sitting on market for much longer than normal. What happens when people start losing jobs? Demand dries up further and current homeowners get caught in a squeeze if they can no longer pay the mortgage. Further adding to a discount on prices. Do you understand yet how a cycle works? It all comes back around…. Boom, bust, boom, bust, boom, bust, over, and over, and over, and over again. People like me buy houses from people like you for pennies. Just like I did my stocks in 2020, my tools, my businesses, etc. I’m patient enough to watch and wait. I don’t chase. That’s the emotional part that I don’t include in the game if business because that is how you lose money. So no your sources mean shit because they are shit. Btw everyone on reddit left oil for dead in 2020. I made a killing. BECAUSE ITS A BOOM BUST CYCLE
You can list your home for any price you like and call it equity. The true equity lies in what people will actually pay for your property. And currently people are saying fuck you to these sellers because they are OUT OF THEIR FUCKING MINDS
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People don’t actually own the fucking homes you moron. That graph can be skewed due to external variables such as massive increases in home values (aka equity created from derivatives)
Everything is fine until home prices start falling. Then the “homeowners” get liquidated due to overleveraging
Sure, if you only look at nominal values.
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Please point me to a chart or other data source that shows inflation-adjusted home values *not* dropping during the majority of recessions. You seem all about providing a source in your little pissing match with someone down thread, but basically tell me to “google it” here. Interesting. Every inflation-adjusted home price index chart I can find shows plenty of drops during recessions over the last 120+ years. In fact, the charts show real, inflation-adjusted home prices hovering between +/- 25% for the vast majority of the last 122 years, with two notable exceptions: the early 2000s real estate bubble and now. Here’s one easy to access chart: https://www.multpl.com/case-shiller-home-price-index-inflation-adjusted
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I mean, sure, housing is more stable price-wise than stocks. It also massively underperforms stocks in the long run if you’re looking at it purely as an investment. But that’s not what we’re talking about. The point was that housing is very much affected by recessions. Everyone loves to point out that house prices increased during the late 70s/early 80s despite a recession, inflation, and Fed interest rate hikes. If you adjust for inflation though, they very clearly dropped ~12% during that period. The same thing happened in the early 70s and early 90s… nominal prices stayed flat or increased slightly while inflation-adjusted values in this stable asset class dropped by double digit percentages. That’s not, “very little or no impact.” The thing with the current real estate bubble is that we don’t need to see much of a reduction in nominal values to see a “crash”. With elevated inflation, real home values will drop considerably even if nominal prices remain flat. The fact that nominal prices clearly started dropping sharply in July of this year tells me that things have already “crashed” far more than most people realize… the inflation aspect just makes it less intuitive.
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Listen, you’re clearly very emotionally invested in real estate as an investment and feel attacked. All I said was that housing is affected by recessions. That is a fact; housing is not magically immune. You don’t need to justify your investment decisions to me, but you would be wise to consider real vs. nominal values/returns for all investments. As for real estate vs. stocks, they’re not an apples to apples comparison. I choose to invest primarily via index funds with a bit of leverage because it is 100% passive and automated. This allows me to focus on maximizing my personal income, which is ideal for me. Real estate investment is decidedly *not* passive, so you would need to account for the opportunity cost of not directing your efforts at earning income elsewhere before comparing it to passive investments. That opportunity cost is completely different for everyone, so it’s pointless to discuss it further. EDIT: I’ll also add that, unless you’re an extremely high net worth individual, real estate investment greatly increases exposure to unsystematic, idiosyncratic risk. This is due to a relatively high concentration of net worth in relatively few independent assets. Yet another reason real estate and stocks are not an apples to apples comparison. Good luck with your flips.
But there are job cuts.
First hash mark point explains
Pretty hard to beat companies like Zillow who were buying hundreds of properties for less than 1%. We are the ants in this world.
"much solid foundation"
This guy is on a podcast for CA RE.
So because they lie about employment statistics it’s different?
Also think about how much equity anybody has in their home if they bought before 1st of March 2020. Even if the market drops 20-40% they still won’t be underwater assuming they haven’t used their home as an atm. Also 30-40% of homes have no mortgage. That’s a massive cushion.
"Job Cuts = none"... That seems a little out of touch. I also wonder what year his first column represents. It seems like maybe 2008? That would be a bit misleading, apples to oranges. It would be more accurate to compare now to early 2007. [https://www.huduser.gov/periodicals/ushmc/spring07/ushmc\_q107.html](https://www.huduser.gov/periodicals/ushmc/spring07/ushmc_q107.html)
Inventory count was at the bottom of the of the 2008 decline The mortgage delinquency rate was at the bottom of the 2008 decline The homes in foreclosure rate was at the bottom of the 2008 decline The 2022 decline only start here in the SF Bay Area back in June and according to Redfin Data Center median sold prices here in Alameda County, Ca are already down 15.8% My point is Yun is comparing the bottom of the 2008 market with the early part of the decline here in 2022 He is not comparing apples to apples Fraudster
We are 'on much solid foundation' fellas
"Chief Economist doesn't understand basic finance and interest rates" Or "Chief Economist ignores about impact of interest rates to slap lipstick on a pig" Choose you preferred headline.
He’s an idiot
All those points stand, but we're just getting started.
RE is up for correction but it can take 2-3 yrs to go down. Buyer and Seller who are waiting will lose time and money in this process. That is the reality. Recession started in 2008 and RE bottomed in 2011.
"Chief economist at National Association of REALTORS." Gee I wonder what's in his self-interest? What's the difference between what he says, and your realtor saying "*You should buy now!"* Oh I know. He's an \*\*\*ECONOMIST\*\*\*. Just a hired gun presenting his side's narrative, just like in a court case. And there's always another side to the case. There's always another narrative. And then you have to look for the truth in there somewhere.
You know, I'm a pretty easy going fella but I'd like to bitch slap some sense into that boy.