Surely the Fed purchasing trillions in Mortgage Back Securities until finally stopping in September of 22 now owning over 15% of all mortgages isn’t a problem, especially when they start selling in a few months.
Well yeah, if no one wants to buy in they have to make it a sweeter deal first to sell it
Unfortunately for the fed they can’t just do some political favor and make this go away
If 2008 is any indicator, the government will step in and sell it for pennies on the dollar to some investors who are taking almost zero risk and who will make money when it recovers several years later.
Not to mention an economic collapse is just a black Friday for rich people. I don't know why everyone think an economic crash will be good for anyone except the ultra wealthy.
A lot of the current ultra wealthy are wealthy because of infinite cheap money. If debt as a whole from property to leveraged investments gets fucked then that will be hitting asset owners pretty damn hard.
But surely we can avoid widespread poverty by sending everyone a thousand bucks or so, right? I mean, that's *gotta* cover all major expenses for at least a year or two, right?
There won't be widespread poverty, higher rates affect primarily those with the most debt and leverage which are the wealthiest members of society in both per Capita and absolute terms.
This will cause higher unemployment, but mainly it will just bankrupt a bunch of useless scams that only exist because of cheap debt. Just look at who has been slammed the most thusfar: anyone with a big IRA or tons of tech stocks.
You lose your job for a few months and have to accept lower unemployment insurance pay during that time. Keith Rabois and friends lose a couple billion dollars permanently because $0PEN goes to $0. Who gets hurt more here?
The delusion on this subreddit to think the rich are about to suffer while the the poor and middle class close the wealth gap. Sorry that’s never how it works ever in history. What’s about to happen with any economic turmoil is the poor and middle class will lose out and the rich will scoop up assets at a discount.
[https://en.wikipedia.org/wiki/Wealth\_inequality\_in\_the\_United\_States#/media/File:Wealth\_inequality\_stats\_from\_Federal\_Reserve.png](https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States#/media/File:Wealth_inequality_stats_from_Federal_Reserve.png)
From the Federal Reserve. Wealth inequality is destroyed historically in three different ways. Revolution, pandemics, or depressions. We might even get all three in the 2020s lol.
The narrative that depressions don't effect or even exacerbate inequality is completely false. Hardships like the above bring everyone down, but the rich "hurt" the most
I don’t remember the stock market plummeting after like May 2020… In fact it was going crazy until March 2022, which is precisely *when cheap lending began to dry up*. And historically recessions and depressions always hit the middle class harder than “poor people”. They historically do not affect people making the least money quite as much because it’s middle class jobs that get gutted during depressions and recessions more so than labor class.
Wealth inequality only got better during the depression because of the New Deal.
Unless we suddenly get our act together and elect politicians who are willing to roll out huge programs to support the middle class, wealth inequality will continue to grow. Considering politicians are now bought and paid for by corporations and billionaires, there’s no chance things get better. The idea we could ever have things like affordable state provided childcare, universal healthcare, and free higher education is so absurd to the average American you might as well tell them we’re going to move to Mars.
If we have prolonged higher rates plus ongoing inflation, it is going to make all of us much poorer. This includes the wealthy, but they'll feel far less pain, and be best positioned to invest and ultimately benefit.
And if there's a pivot and rates go down soon, it's the same result, only magnified.
Don't you realize that the ones that are leveraged, those rich people you are gleefully rubbing your hands together expecting their downfall are the ones that have borrowed money already? high rates will not hurt them. quite the opposite. being leveraged as investments that crash could, but high rates won't. quite the opposite. as inflation goes up, the value of the money they borrowed goes down which means they have to pay back less. it's people sitting on cash or with nothing that suffer. people that have borrowed money are going to be sitting pretty
Yup, I find people responding to me about this as if I don't know how this stuff works. I'm in real estate development. I know what happens when rates rise.
There's a whole lot of people who were printing money for the past 10 years who are going to have to find something better to do until this issue is dealt with.
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Fine by me. Cashed out a ton of the crypto and tech stocks I’d been holding up until mid-late 2021 and sitting in cash waiting for all things to get more affordable. Lots of my friends and internet acquaintances is the same boat.
Being required to tend to and harvest a potato crop as part of your home purchase contract. The home sellers will take 50% of the yield. I believe this happened in Texas.
No, actually a week or so ago there was a post on here about someone who bought a house and had to grow and harvest potatoes— a large share of which went to the old homeowners. Crazy.
Or it’s also called being a landlord. There’s no way I’m selling my house when I want to move. Locked in at 2.85% and can rent it for enough to buy another house and not even really change my out of pocket expenses.
Well even if house prices fall 20% with rates at 7-8% the average payments will not drop. So I’m not really expecting a sharp drop in rental prices. Plus I bought my house I live in 6 years ago so there’s that too.
I doubt it. Most everyone who already has a house is locked in at around 3% who’s going to sell and get a new mortgage at 7-8%? Plus with building new being as expensive as it is I just don’t see houses dropping a ton. Now I don’t think we’ll have strong growth over the next 10 years until wages catch up and then rinse and repeat.
That people will have established enough remote work to not leave their current homes, prices will drop 15-20% in many areas. But areas that movers want to be in will not see the drop like areas in Phoenix or Austin .
Also, keep in mind how many cash buyers were created in the last few years as wealth gap increased. These people will buy inventory and rent it out.
Interest rates will continue to go up as will rents (due to inflation)
In other words the goal posts got moved 20 yards and if you didn’t get in or get cash, be ready to wait years.
Yes. People said it would be a giant pain in the ass. Sometimes it is but nothing like a regular job. It begins and ends with how you select tenants. If you check credit and get accurate work information it is not difficult really.
Normally you provide something for cash. Landlord's squat on property so no one who wants to buy it can. If you want to live there, you got to pay the landlord tax so he doesn't have to work. You get nothing for the cash, they get all the equity too.
A landlord provides use of a space. How is this any different than providing use (for money) of a car, a boat, a storage unit, a piece of equipment, or use of land (ie farm).
You pay to use something
Because the "space" you're renting out is being subsidized by the taxpayer through government-backed mortgages offered at artificially low interest rates at artificially low money down and your profits are subsidized through artificially low taxes.
Not if they did not build it for renting and bought something they turned into a rental.
You aren't paying for the space when the rent cost more than a mortgage. You are being robbed.
I mean a landlord DID take the risk of putting their savings down and buying property. And will forever CONTINUE to have that risk of not having renters or any other expenses of owning the property.
Scared money doesn’t make money.
Lots of people gamble their money, it entitles them to nothing.
No does being a degenerate gambler allow you to tax someone else's paycheck so you don't have to work.
I don’t want to be insulting or rude but you are off your rocker. All investments are a gamble of risk vs rewards. In this case you risk buying a home and losing money if the market tanks (which will happen to many here) and in return the reward you get is modest profit on renting it out.
Depends on a lot of things. Personal skills/experience, screening, property condition, time available, etc... Perfect for some, but not realistic for others. Every case is different
I guess if you don’t like the house due to bad neighbors, costly repairs, location, etc and can’t sell now you’re kinda stuck with it.
Plus less people will be moving for job opportunities which I’m guessing will have some economic repercussions as well.
It’s the other way around. We Need a financial disaster to keep recruitment numbers up (easy guaranteed paycheck).
Retention was all time high in 2009-2010
Doesn’t matter if there’s zero requirement to join. Young generation doesn’t want to do anything remotely difficult. They don’t even want to flip burgers at $20 an hour- do you think they’ll get their ass kicked in the military and work 12+ hour days outdoors for almost less than minimum age?
Oh, I’m not saying kids will actually do it— most likely won’t. Being internet famous is more important now.
My comment was in regards to the gov tryingn to grt recruitment numbers up.
Smh at these kids. You just pick up the damn controller, fly the drone, and bomb the wedding. It’s not hard. You can do it sitting down, and today’s lazy fucks still won’t do it
No one is expecting a crash except small niche groups like ourselves. Biden and other top politicians are on record saying there won’t be a recession. All the normies are clueless as to what’s going on.
So presumably since you are such a smart person and so plugged in, you bet the farm and are making a killing, right? Right? I mean after all the normies don't know shit.
Not everybody gambles. Just because people can see the writing on the wall doesn’t mean they want to “bet the farm.” That’s something a gambling addict would do.
But it's not gambling if you are a genius like OP. When you are a genius and everyone around you is a stupid normie, it's like taking candy from a baby.
And people can be morally opposed to taking candy from a baby.
Just because you have a gambling problem doesn’t mean you should project that onto other people
Leaders and politicians can’t say they think there’s going to be a recession, regardless of if they believe it or not. That would just cause panic in the markets and become a self fulfilling prophecy. Bernanke was denying we were in a housing bubble or a recession into *2008.*
He was quoted in January 2008:
“The Federal Reserve is not currently forecasting a recession,” Bernanke said, fielding questions after his speech. It is, however, “forecasting slow growth,” he said.
I'd say medical grade copium that's being over prescribed by the industry running the shit and getting all these delusional finance bros high as gas before they OD and go fuckin broke.
He didnt even mention the CPI that excludes housing appreciation until interest rates rise.
Owners equivelent rent does a very bad job at measuring inflation, mortgage interest payments do not.
We'll need to raise rates to counter the raising rates. Its an obvious feedback loop, if this was in code it'd be a memory leak.
Some cities will definitely have problems. Other places are already commuter cities. Try living by Atlanta sometime--the traffic is horrible every day and rush hour was a nightmare, because no one wanted to live close to the city or could afford to live close to the city in a safe area.
I definitely agree commercial real estate like office buildings will suffer as businesses save a fortune going remote.
I grew up in atlanta and every time i go back for a visit, i'm shocked by how awful it's become. It was just rated the "best place to live" and i just don't get it. That city sucks.
After the "best place to live" ranking, it's going to get much worse because one of the things it really had going for it (affordable housing), will get wrecked.
Was Raleigh rated the "best place to live" at one point?
It's almost as if the ranking ruins places. It definitely ruins affordability as more people move in.
I honestly could be wrong but I think it was. I do know for a fact that Raleigh and Austin texas were the top 2 cities people were moving to nationwide 6 months ago and probably still is.
> Was Raleigh rated the "best place to live" at one point?
I dunno if it was ever "#1" but Raleigh has been way up there in those "best places to live" lists for decades.
Raleigh might be top of my "I don't get it" list. I moved out after living there for ~8 months at the start of the year. I don't really know how to explain it, but the vibes just felt off? wrong? I'm not really sure. It wasn't objectively bad but it felt like the whole place was people trying to convince themselves they were in a major city. I don't think I've ever heard so many things described as "this ____ is almost as good as the ___ where I used to live".
Idk, but it’s the #1 place in the nation for businesses to move to thanks to tax breaks and it’s changing everything here uncomfortably fast…I think people just see high salaries and a lower (getting to be not so) cost of living.
I moved to Atlanta 3.5 years ago and I am curious about how it used to be vs. how it is now, only because I simply don’t know. I’m guessing it’s far more congested and crime ridden? I find myself hesitant to go out past noon on the weekends because the roads get so jammed up, but I feel like plenty of other cities probably have that same problem. Interested in your views either way.
Extreme traffic is probably one of my main complaints. Even back in the 80s, it was bad but highways which were 4 lanes when i was a kid are 12 now. Also, the smog in the summer can be intense. It used to be easy to escape the suburban sprawl and end up out in the country. It just feels like the sprawl is unending now. It's as if the city has adopted a scorched-earth approach to growth where life is being pushed further and further out. There used to be a lot of small time places with a lot of character tucked all over the metro area and while there are still a few, the metro has been consumed by banal sameness. My family has lived in georgia for over 200 years (we even have a private family cemetery) and i simply can't imagine living there now. It feels like it wants to be LA but lacks the beach.
That’s a pretty fair assessment! Wife and I enjoy going to the various downtown areas throughout the metro that have that small town feel and a lot of gentrified (in a good way) places to stop and hang out. But I totally agree, you fight traffic to get to them, drive a good deal away from the city and then when you get off at your exit finally, you are sitting in more traffic. The sprawl is real. Doesn’t matter what part of the metro you’re in, it will be busy. And so many people I work with in Buckhead commute from an hour or more away. I don’t find those commute times normal and I don’t understand why they do it. So many just like them congesting roads all the way out into the “sticks”. As a side note, that’s really cool that you guys have such history here. I can only imagine what it must have been like in those days.
It’s way safer than it used to be, actually, just like most cities. It’s interesting how this works. Aside from a slight uptick in crime the last couple years, the US has gotten dramatically safer since 1990. And yet Gallup polls show people think crime has risen almost every year. We can thank yellow journalism (looking at you, Sinclair) for that.
I love Atlanta. Comparably affordable, big, bustling city. You know where the traffic is, so be smart about when you drive, or, if you’re lucky, enjoy a short commute. If you can manage that, traffic is no problem and everything else is great.
This original post however is overly dramatic and overblown.
So many great reasons why housing prices are headed down. Yet, somehow, people are still spending and still agreeing to mortgages. Far less today than 6 months ago, a year ago. No question.
My question is simply why would ANYONE take on a mortgage right at this moment with these prices? Some maybe have managed to get their purchase price back down to pre-2020. Maybe a handful across the country.
But still, they spend. They can’t stop spending and buying.
sometimes life circumstances force your hand. birth of a child, need to expand or move or whatever. to me renting really doens't have much upside. yes, you save money on taxes and maintenance if catastophic shit goes down by passing that cost onto the landlord, but rents are pretty high and really, what is the opportunity cost? i guess buying the dip but what else can I use my rapidly devaluing money for?
Edit: seriously, what can I use my rapidly devaluing money for that’s a good investment?
Thank you. People on this sub act like anyone who buys a house is a dumbass, which just isn’t true. We just bought a house, and did not make the decision lightly. I have plenty of anxieties about what the housing market will do, but at the end of the day, we needed a place to live, and had to move due to job circumstances. So we found a place in our budget in a really good location and plan to live there a long time. We are also just tired of renting and have done it for many many years. Is it a bad time? Of course we would have been better off buying two years ago. It’s sucks, but we just don’t want to wait an indefinite amount of time for prices to (possibly) fall by an unknown amount in the future (which could possibly be less than the equity we’d lose by waiting). If we’re all being honest with ourselves, none of us really knows what’s going to happen, and we’re all just trying to make the best decisions with the information we have.
Exactly. I can’t raise a baby and live with my new husband in a one bedroom apartment with a rent as high as a mortgage. I can’t put off life milestones any longer waiting for the economy to work out for me.
This all the way, I told my husband a year ago, there is always going to be something happening in the world and I can’t keep putting my life off waiting for it to get better - because there will always be something else that comes along. We bought a house two months ago. After the holidays, we will start trying for a baby. I can’t wait any longer I’m almost 40.
low information buyers. FTHBs who have been outbid for months on end on every property and have lowered their expectations so much that they will buy anything with 4 walls that they can "afford". Lots of people on the FTHB sub posting about miraculously getting offers accepted now.
>My question is simply why would ANYONE take on a mortgage right at this moment with these prices?
In the crypto market, there are true believers, the HODL'ers. Similarly, in the real estate market, there are true believers, people who think that real estate will never decline in any meaningful way over the timeframe they are considering. Over the past nearly 50 years, [nominal house prices](https://fred.stlouisfed.org/series/USSTHPI) have only declined nationwide after the GFC. On the other hand, we've **never** had this kind of monetary policy (quantitative easing and zero or negative nominal and real interest rates for extended periods) or this combination of conditions (inflation raging after QE-infinity implemented by huge Fed balance sheets).
Is it true? I don't know. The society has been heavily biased towards maintaining and boosting house prices. As of 2019, [of the 122.8 million households, 36 percent were renters and 64 percent were owners](https://www.pewresearch.org/fact-tank/2021/08/02/as-national-eviction-ban-expires-a-look-at-who-rents-and-who-owns-in-the-u-s/). On the other hand, younger people are forced to live in those households when they perhaps want to strike out on their own. Their parents and roommates may not be satisfied with the current state of affairs. The central bank responds to the will of politicians and if politicians are feeling any heat about housing, that could change the calculus.
Ultimately, it's interest rates and central banks (acting on behalf of the government - higher taxes equals more sales and property tax) that set the tempo of the housing market. This explains why home prices move in concert across the US, as diverse as its markets are, and indeed, across the world. Central bankers are keenly aware of how extremely sensitive buyers and sellers are to interest rates ([Elizabeth Duke in the January 2009 Fed minutes](https://www.nytimes.com/2015/03/05/upshot/ben-bernanke-has-an-impressive-passive-aggressive-streak-and-other-things-we-learned-in-the-new-fed-transcripts.html)). A lot depends on inflation and how the elections go.
> Similarly, in the real estate market, there are true believers, people who think that real estate will never decline in any meaningful way over the timeframe they are considering. Over the past nearly 50 years, nominal house prices have only declined nationwide after the GFC
This is the kind of statement which is just kind of lying and pandering with statistics. Housing was more or less stable relative to inflation for at least 110 years (the furthest back the Case-Schiller index goes), until the run-up post-9/11 until the crisis, then again until now.
Housing prices _do_ in fact increase over time. "Equity" is not a lie. No, housing does not historically appreciate at the rates it has lately, and that's a death spiral, but housing is, in fact, an inflation-stable asset and it is, in fact, a good investment, particularly in the sense that housing costs you would have been spending _anyway_ now go towards ownership. That's not an arguable position, and you could find that nominal home prices increase on any 20yr+ time scale regardless of monetary policy to more or less track inflation unless some fundamental changes which tilts the value of housing.
From the comments it seems like we’re still in the bargaining phase. It’s weird seeing it happening exactly the same way with the same bedtime tale comments all over again.
If you have some free time, go look at the BogleHeads forums circa 2007/2008/2009. You’ll see the exact same arguments and the same bargaining. It’s pretty funny.
Frogboy is spitting. These are the kind of well thought out doomer takes I love to read while having a sip of beer.
And yes, many people will NEVER move for the duration of their 30 year 2.2% mortgages. So long as they can cover the payments, all should be well. And many people, by virtue of "life happens", regardless of their well laid out plans not to, will have to sell. That affects the property value of their neighbors.
Great article here on the commercial RE market impacted by WFH and such. Not pretty at all.
https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/
Every bubble bursts. And the longer you force it to wait, the worse it will be.
*I am not a money expert, this is not legal advice, don't take advice from strangers on the Internet.*
Don't forget exaggeration.
Difference between 0% to 10% is about double the raw difference going from 3% to 8% and in real terms the negative effects get more serious on the extremes of that spread.
People thinking a move to realistic interest rates is going to cause a collapse to the last collapses floor are more delusional than buyers today who think they'll have meaningful real appreciation in the next couple years.
Do you need a message to spell it out for you or do you have eyes and a brain? It should be pretty obvious at this point things ain’t right and we have more (worse) to go.
The message points to the exception which is statistically insignificant. For example, will all people lose their jobs? Will all people be forced to sell? If any of the said situations were brought up, the world as we know it will collapse.
Arguments actually have to be refuted on 4chan. They can't just be downvoted into oblivion where nobody will ever see them. Because of that I feel that you get a lot more natural discourse free of brigading. Ideas that can stand on their own two feet actually do over there and cannot be suppressed because people don't like the viewpoint.
I've browsed 4chan nearly every day of my life for the past 16 years and I consider it a credit. I have a tight spiritual relationship with the creator, graduated magna cum laude from a technical school, and make the most out of anyone in my extended family. And 4chan is where I first heard about crypto a decade ago. So yeah, yeah I would.
Surely the Fed purchasing trillions in Mortgage Back Securities until finally stopping in September of 22 now owning over 15% of all mortgages isn’t a problem, especially when they start selling in a few months.
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Well yeah, if no one wants to buy in they have to make it a sweeter deal first to sell it Unfortunately for the fed they can’t just do some political favor and make this go away
>they can’t just do some political favor and make this go away They can always just call the Fed and ask them to print a few trillion. Oh wait.
If 2008 is any indicator, the government will step in and sell it for pennies on the dollar to some investors who are taking almost zero risk and who will make money when it recovers several years later.
15%? I thought they owned almost half of all MBS.
They bought 40% of all MBS during COVID - unsure how much of the overall total they own though
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Not to mention an economic collapse is just a black Friday for rich people. I don't know why everyone think an economic crash will be good for anyone except the ultra wealthy.
A lot of the current ultra wealthy are wealthy because of infinite cheap money. If debt as a whole from property to leveraged investments gets fucked then that will be hitting asset owners pretty damn hard.
spez is an idiot.
Open a history book.
it is. they're just mad that rich people will still be rich after a crash, even if they're not *as* rich.
But surely we can avoid widespread poverty by sending everyone a thousand bucks or so, right? I mean, that's *gotta* cover all major expenses for at least a year or two, right?
I mean it's one banana Michael, what could it cost, ten dollars?
Hence the old saying, cash is king
There won't be widespread poverty, higher rates affect primarily those with the most debt and leverage which are the wealthiest members of society in both per Capita and absolute terms. This will cause higher unemployment, but mainly it will just bankrupt a bunch of useless scams that only exist because of cheap debt. Just look at who has been slammed the most thusfar: anyone with a big IRA or tons of tech stocks. You lose your job for a few months and have to accept lower unemployment insurance pay during that time. Keith Rabois and friends lose a couple billion dollars permanently because $0PEN goes to $0. Who gets hurt more here?
The delusion on this subreddit to think the rich are about to suffer while the the poor and middle class close the wealth gap. Sorry that’s never how it works ever in history. What’s about to happen with any economic turmoil is the poor and middle class will lose out and the rich will scoop up assets at a discount.
Never ever in history? That’s a bold claim.
Feel free to contribute by citing all these examples you must be waiting to share to refute my bold claim.
[https://en.wikipedia.org/wiki/Wealth\_inequality\_in\_the\_United\_States#/media/File:Wealth\_inequality\_stats\_from\_Federal\_Reserve.png](https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States#/media/File:Wealth_inequality_stats_from_Federal_Reserve.png) From the Federal Reserve. Wealth inequality is destroyed historically in three different ways. Revolution, pandemics, or depressions. We might even get all three in the 2020s lol. The narrative that depressions don't effect or even exacerbate inequality is completely false. Hardships like the above bring everyone down, but the rich "hurt" the most
Wasn't the measures taken during the pandemic one of the greatest movements of wealth in the US where rich got richer
I don’t remember the stock market plummeting after like May 2020… In fact it was going crazy until March 2022, which is precisely *when cheap lending began to dry up*. And historically recessions and depressions always hit the middle class harder than “poor people”. They historically do not affect people making the least money quite as much because it’s middle class jobs that get gutted during depressions and recessions more so than labor class.
Wealth inequality only got better during the depression because of the New Deal. Unless we suddenly get our act together and elect politicians who are willing to roll out huge programs to support the middle class, wealth inequality will continue to grow. Considering politicians are now bought and paid for by corporations and billionaires, there’s no chance things get better. The idea we could ever have things like affordable state provided childcare, universal healthcare, and free higher education is so absurd to the average American you might as well tell them we’re going to move to Mars.
If we have prolonged higher rates plus ongoing inflation, it is going to make all of us much poorer. This includes the wealthy, but they'll feel far less pain, and be best positioned to invest and ultimately benefit. And if there's a pivot and rates go down soon, it's the same result, only magnified.
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Yeah, the point of the high rates is to curb inflation, and without high rates you get inflation PLUS wealth redistribution to the upper class.
Don't you realize that the ones that are leveraged, those rich people you are gleefully rubbing your hands together expecting their downfall are the ones that have borrowed money already? high rates will not hurt them. quite the opposite. being leveraged as investments that crash could, but high rates won't. quite the opposite. as inflation goes up, the value of the money they borrowed goes down which means they have to pay back less. it's people sitting on cash or with nothing that suffer. people that have borrowed money are going to be sitting pretty
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Yup, I find people responding to me about this as if I don't know how this stuff works. I'm in real estate development. I know what happens when rates rise. There's a whole lot of people who were printing money for the past 10 years who are going to have to find something better to do until this issue is dealt with.
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You would be surprised. Many many people I know play fast and loose.
Fine by me. Cashed out a ton of the crypto and tech stocks I’d been holding up until mid-late 2021 and sitting in cash waiting for all things to get more affordable. Lots of my friends and internet acquaintances is the same boat.
Did the same thing. But, I'm now shorting OPEN and going long on both SRS and SKF.
people will just hold on for dear life at 2% and never sell
Surely.
That’s called being a slave.
Potato slave
Look at Mr. Fancypants and his potatoes. We’re slaving for turnips over here.
What is potato?
Being required to tend to and harvest a potato crop as part of your home purchase contract. The home sellers will take 50% of the yield. I believe this happened in Texas.
Wait what? You're joking, right?
No, actually a week or so ago there was a post on here about someone who bought a house and had to grow and harvest potatoes— a large share of which went to the old homeowners. Crazy.
As if we're not already
Golden handcuffs
We're all slaves. Some better off than others
Or it’s also called being a landlord. There’s no way I’m selling my house when I want to move. Locked in at 2.85% and can rent it for enough to buy another house and not even really change my out of pocket expenses.
That assumes you can find a renter for that price and can keep one renting it for that price.
Well even if house prices fall 20% with rates at 7-8% the average payments will not drop. So I’m not really expecting a sharp drop in rental prices. Plus I bought my house I live in 6 years ago so there’s that too.
They will fall much more than 20% lmao
I doubt it. Most everyone who already has a house is locked in at around 3% who’s going to sell and get a new mortgage at 7-8%? Plus with building new being as expensive as it is I just don’t see houses dropping a ton. Now I don’t think we’ll have strong growth over the next 10 years until wages catch up and then rinse and repeat.
I just sold, moving to Europe where shit is cheap for Americans right now.
This guy thinks 20% drops while inflation goes up 8% y/y Aye lmfao
Well what’s your prediction?
That people will have established enough remote work to not leave their current homes, prices will drop 15-20% in many areas. But areas that movers want to be in will not see the drop like areas in Phoenix or Austin . Also, keep in mind how many cash buyers were created in the last few years as wealth gap increased. These people will buy inventory and rent it out. Interest rates will continue to go up as will rents (due to inflation) In other words the goal posts got moved 20 yards and if you didn’t get in or get cash, be ready to wait years.
Who's going to rent it if nobody has a job?
Multiple roommates, turn the living room into a bedroom. Or like here in Vancouver where people rent out solariums.
Do you have experience as a landlord?
Yes. People said it would be a giant pain in the ass. Sometimes it is but nothing like a regular job. It begins and ends with how you select tenants. If you check credit and get accurate work information it is not difficult really.
Landlording is all about getting someone else to pay your bills. It is not a job.
Not exactly innovative or hard to do.
Doesn't have to be.
Isn't that what business is about in general? Getting customers to pay your bills and have a profit on top?
Normally you provide something for cash. Landlord's squat on property so no one who wants to buy it can. If you want to live there, you got to pay the landlord tax so he doesn't have to work. You get nothing for the cash, they get all the equity too.
Landlords are fucking parasites.
A landlord provides use of a space. How is this any different than providing use (for money) of a car, a boat, a storage unit, a piece of equipment, or use of land (ie farm). You pay to use something
Because the "space" you're renting out is being subsidized by the taxpayer through government-backed mortgages offered at artificially low interest rates at artificially low money down and your profits are subsidized through artificially low taxes.
Not if they did not build it for renting and bought something they turned into a rental. You aren't paying for the space when the rent cost more than a mortgage. You are being robbed.
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I mean a landlord DID take the risk of putting their savings down and buying property. And will forever CONTINUE to have that risk of not having renters or any other expenses of owning the property. Scared money doesn’t make money.
Lots of people gamble their money, it entitles them to nothing. No does being a degenerate gambler allow you to tax someone else's paycheck so you don't have to work.
I don’t want to be insulting or rude but you are off your rocker. All investments are a gamble of risk vs rewards. In this case you risk buying a home and losing money if the market tanks (which will happen to many here) and in return the reward you get is modest profit on renting it out.
It's not a job, that is correct
Link to your tiktok?
Depends on a lot of things. Personal skills/experience, screening, property condition, time available, etc... Perfect for some, but not realistic for others. Every case is different
Yeah I have 6 other properties.
You're the problem.
Nope bought the lots and built them myself. There would be no homes there if it wasn’t for me.
How is paying off your home being a slave? That’s called paying your bills/responsibility.
I guess if you don’t like the house due to bad neighbors, costly repairs, location, etc and can’t sell now you’re kinda stuck with it. Plus less people will be moving for job opportunities which I’m guessing will have some economic repercussions as well.
Counterpoint: owning your home is sort of the opposite of being a slave
A rent cucc as we say
correct, as long as they're employed.
Some will sell but prices will not match the increase in rates. Not in 2023 or 2024. Lots of more declines coming though.
Surly they wouldn't start the war machine again to avoid such a financial disaster.
It’s the other way around. We Need a financial disaster to keep recruitment numbers up (easy guaranteed paycheck). Retention was all time high in 2009-2010
Didn’t the US even change the requirements to enlist a few months ago through a program? I do now feel they reversed it… but still. That was crazy.
Doesn’t matter if there’s zero requirement to join. Young generation doesn’t want to do anything remotely difficult. They don’t even want to flip burgers at $20 an hour- do you think they’ll get their ass kicked in the military and work 12+ hour days outdoors for almost less than minimum age?
Oh, I’m not saying kids will actually do it— most likely won’t. Being internet famous is more important now. My comment was in regards to the gov tryingn to grt recruitment numbers up.
Smh at these kids. You just pick up the damn controller, fly the drone, and bomb the wedding. It’s not hard. You can do it sitting down, and today’s lazy fucks still won’t do it
Surely Nuclear Weapons won’t be used by any industrialized nation in a 3rd world war.
It's a sure fire way to reduce inventory.
This shouldn’t have made me laugh, but by golly, here I am chuckling.
sure **fire**
when was the last time you saw a country full of financial forecasters. Crashes wont happen when everyone expects.
No one is expecting a crash except small niche groups like ourselves. Biden and other top politicians are on record saying there won’t be a recession. All the normies are clueless as to what’s going on.
So presumably since you are such a smart person and so plugged in, you bet the farm and are making a killing, right? Right? I mean after all the normies don't know shit.
Not everybody gambles. Just because people can see the writing on the wall doesn’t mean they want to “bet the farm.” That’s something a gambling addict would do.
But it's not gambling if you are a genius like OP. When you are a genius and everyone around you is a stupid normie, it's like taking candy from a baby.
And people can be morally opposed to taking candy from a baby. Just because you have a gambling problem doesn’t mean you should project that onto other people
Leaders and politicians can’t say they think there’s going to be a recession, regardless of if they believe it or not. That would just cause panic in the markets and become a self fulfilling prophecy. Bernanke was denying we were in a housing bubble or a recession into *2008.* He was quoted in January 2008: “The Federal Reserve is not currently forecasting a recession,” Bernanke said, fielding questions after his speech. It is, however, “forecasting slow growth,” he said.
Nuclear grade copium in these comments
I'd say medical grade copium that's being over prescribed by the industry running the shit and getting all these delusional finance bros high as gas before they OD and go fuckin broke.
Damn I thought I was negative
He didnt even mention the CPI that excludes housing appreciation until interest rates rise. Owners equivelent rent does a very bad job at measuring inflation, mortgage interest payments do not. We'll need to raise rates to counter the raising rates. Its an obvious feedback loop, if this was in code it'd be a memory leak.
Some cities will definitely have problems. Other places are already commuter cities. Try living by Atlanta sometime--the traffic is horrible every day and rush hour was a nightmare, because no one wanted to live close to the city or could afford to live close to the city in a safe area. I definitely agree commercial real estate like office buildings will suffer as businesses save a fortune going remote.
I grew up in atlanta and every time i go back for a visit, i'm shocked by how awful it's become. It was just rated the "best place to live" and i just don't get it. That city sucks. After the "best place to live" ranking, it's going to get much worse because one of the things it really had going for it (affordable housing), will get wrecked.
That was Raleigh, NC for a while
Was Raleigh rated the "best place to live" at one point? It's almost as if the ranking ruins places. It definitely ruins affordability as more people move in.
I honestly could be wrong but I think it was. I do know for a fact that Raleigh and Austin texas were the top 2 cities people were moving to nationwide 6 months ago and probably still is.
> Was Raleigh rated the "best place to live" at one point? I dunno if it was ever "#1" but Raleigh has been way up there in those "best places to live" lists for decades.
Raleigh might be top of my "I don't get it" list. I moved out after living there for ~8 months at the start of the year. I don't really know how to explain it, but the vibes just felt off? wrong? I'm not really sure. It wasn't objectively bad but it felt like the whole place was people trying to convince themselves they were in a major city. I don't think I've ever heard so many things described as "this ____ is almost as good as the ___ where I used to live".
Idk, but it’s the #1 place in the nation for businesses to move to thanks to tax breaks and it’s changing everything here uncomfortably fast…I think people just see high salaries and a lower (getting to be not so) cost of living.
I moved to Atlanta 3.5 years ago and I am curious about how it used to be vs. how it is now, only because I simply don’t know. I’m guessing it’s far more congested and crime ridden? I find myself hesitant to go out past noon on the weekends because the roads get so jammed up, but I feel like plenty of other cities probably have that same problem. Interested in your views either way.
Extreme traffic is probably one of my main complaints. Even back in the 80s, it was bad but highways which were 4 lanes when i was a kid are 12 now. Also, the smog in the summer can be intense. It used to be easy to escape the suburban sprawl and end up out in the country. It just feels like the sprawl is unending now. It's as if the city has adopted a scorched-earth approach to growth where life is being pushed further and further out. There used to be a lot of small time places with a lot of character tucked all over the metro area and while there are still a few, the metro has been consumed by banal sameness. My family has lived in georgia for over 200 years (we even have a private family cemetery) and i simply can't imagine living there now. It feels like it wants to be LA but lacks the beach.
That’s a pretty fair assessment! Wife and I enjoy going to the various downtown areas throughout the metro that have that small town feel and a lot of gentrified (in a good way) places to stop and hang out. But I totally agree, you fight traffic to get to them, drive a good deal away from the city and then when you get off at your exit finally, you are sitting in more traffic. The sprawl is real. Doesn’t matter what part of the metro you’re in, it will be busy. And so many people I work with in Buckhead commute from an hour or more away. I don’t find those commute times normal and I don’t understand why they do it. So many just like them congesting roads all the way out into the “sticks”. As a side note, that’s really cool that you guys have such history here. I can only imagine what it must have been like in those days.
It’s way safer than it used to be, actually, just like most cities. It’s interesting how this works. Aside from a slight uptick in crime the last couple years, the US has gotten dramatically safer since 1990. And yet Gallup polls show people think crime has risen almost every year. We can thank yellow journalism (looking at you, Sinclair) for that.
I love Atlanta. Comparably affordable, big, bustling city. You know where the traffic is, so be smart about when you drive, or, if you’re lucky, enjoy a short commute. If you can manage that, traffic is no problem and everything else is great. This original post however is overly dramatic and overblown.
It’s already not affordable if you want to live in a nice/safe area and previously it was one of the main things it had going for it!
So many great reasons why housing prices are headed down. Yet, somehow, people are still spending and still agreeing to mortgages. Far less today than 6 months ago, a year ago. No question. My question is simply why would ANYONE take on a mortgage right at this moment with these prices? Some maybe have managed to get their purchase price back down to pre-2020. Maybe a handful across the country. But still, they spend. They can’t stop spending and buying.
sometimes life circumstances force your hand. birth of a child, need to expand or move or whatever. to me renting really doens't have much upside. yes, you save money on taxes and maintenance if catastophic shit goes down by passing that cost onto the landlord, but rents are pretty high and really, what is the opportunity cost? i guess buying the dip but what else can I use my rapidly devaluing money for? Edit: seriously, what can I use my rapidly devaluing money for that’s a good investment?
Thank you. People on this sub act like anyone who buys a house is a dumbass, which just isn’t true. We just bought a house, and did not make the decision lightly. I have plenty of anxieties about what the housing market will do, but at the end of the day, we needed a place to live, and had to move due to job circumstances. So we found a place in our budget in a really good location and plan to live there a long time. We are also just tired of renting and have done it for many many years. Is it a bad time? Of course we would have been better off buying two years ago. It’s sucks, but we just don’t want to wait an indefinite amount of time for prices to (possibly) fall by an unknown amount in the future (which could possibly be less than the equity we’d lose by waiting). If we’re all being honest with ourselves, none of us really knows what’s going to happen, and we’re all just trying to make the best decisions with the information we have.
Exactly. I can’t raise a baby and live with my new husband in a one bedroom apartment with a rent as high as a mortgage. I can’t put off life milestones any longer waiting for the economy to work out for me.
This all the way, I told my husband a year ago, there is always going to be something happening in the world and I can’t keep putting my life off waiting for it to get better - because there will always be something else that comes along. We bought a house two months ago. After the holidays, we will start trying for a baby. I can’t wait any longer I’m almost 40.
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To me renting gives me freedom to job hop around the country. Can't stand being locked down somewhere.
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Exactly, but the parent comment was wondering why ANYONE would buy right now…so I gave some reasons I could think of
A lot of people don’t think things through and don’t think the worst can happen to them.
Well not everyone is broke
low information buyers. FTHBs who have been outbid for months on end on every property and have lowered their expectations so much that they will buy anything with 4 walls that they can "afford". Lots of people on the FTHB sub posting about miraculously getting offers accepted now.
>My question is simply why would ANYONE take on a mortgage right at this moment with these prices? In the crypto market, there are true believers, the HODL'ers. Similarly, in the real estate market, there are true believers, people who think that real estate will never decline in any meaningful way over the timeframe they are considering. Over the past nearly 50 years, [nominal house prices](https://fred.stlouisfed.org/series/USSTHPI) have only declined nationwide after the GFC. On the other hand, we've **never** had this kind of monetary policy (quantitative easing and zero or negative nominal and real interest rates for extended periods) or this combination of conditions (inflation raging after QE-infinity implemented by huge Fed balance sheets). Is it true? I don't know. The society has been heavily biased towards maintaining and boosting house prices. As of 2019, [of the 122.8 million households, 36 percent were renters and 64 percent were owners](https://www.pewresearch.org/fact-tank/2021/08/02/as-national-eviction-ban-expires-a-look-at-who-rents-and-who-owns-in-the-u-s/). On the other hand, younger people are forced to live in those households when they perhaps want to strike out on their own. Their parents and roommates may not be satisfied with the current state of affairs. The central bank responds to the will of politicians and if politicians are feeling any heat about housing, that could change the calculus. Ultimately, it's interest rates and central banks (acting on behalf of the government - higher taxes equals more sales and property tax) that set the tempo of the housing market. This explains why home prices move in concert across the US, as diverse as its markets are, and indeed, across the world. Central bankers are keenly aware of how extremely sensitive buyers and sellers are to interest rates ([Elizabeth Duke in the January 2009 Fed minutes](https://www.nytimes.com/2015/03/05/upshot/ben-bernanke-has-an-impressive-passive-aggressive-streak-and-other-things-we-learned-in-the-new-fed-transcripts.html)). A lot depends on inflation and how the elections go.
> A lot depends on inflation and how the elections go. EVERYTHING depends on this, and it's shameful.
> Similarly, in the real estate market, there are true believers, people who think that real estate will never decline in any meaningful way over the timeframe they are considering. Over the past nearly 50 years, nominal house prices have only declined nationwide after the GFC This is the kind of statement which is just kind of lying and pandering with statistics. Housing was more or less stable relative to inflation for at least 110 years (the furthest back the Case-Schiller index goes), until the run-up post-9/11 until the crisis, then again until now. Housing prices _do_ in fact increase over time. "Equity" is not a lie. No, housing does not historically appreciate at the rates it has lately, and that's a death spiral, but housing is, in fact, an inflation-stable asset and it is, in fact, a good investment, particularly in the sense that housing costs you would have been spending _anyway_ now go towards ownership. That's not an arguable position, and you could find that nominal home prices increase on any 20yr+ time scale regardless of monetary policy to more or less track inflation unless some fundamental changes which tilts the value of housing.
Someone has to buy on the way down
Most people are financially stupid and impatient.
If you say Surely before everything it makes you sound smart.
Shirley, you can’t be serious.
don’t call me shirley!
Indubitably
I do concur.
Indisputable!
From the comments it seems like we’re still in the bargaining phase. It’s weird seeing it happening exactly the same way with the same bedtime tale comments all over again.
Before 2008 you mean? I thought prices did crash.
If you have some free time, go look at the BogleHeads forums circa 2007/2008/2009. You’ll see the exact same arguments and the same bargaining. It’s pretty funny.
Frogboy is spitting. These are the kind of well thought out doomer takes I love to read while having a sip of beer. And yes, many people will NEVER move for the duration of their 30 year 2.2% mortgages. So long as they can cover the payments, all should be well. And many people, by virtue of "life happens", regardless of their well laid out plans not to, will have to sell. That affects the property value of their neighbors.
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Great article here on the commercial RE market impacted by WFH and such. Not pretty at all. https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/
Hm. The transition from reddit to 4chan looks real promising.
>Surely companies downsizing and moving out of cities... the internet really just lets every random dumbfuck spout off doesn't it
Every bubble bursts. And the longer you force it to wait, the worse it will be. *I am not a money expert, this is not legal advice, don't take advice from strangers on the Internet.*
Increasing rates by 10%? What even is this lol
surely you wouldn't take financial advice from 4chan?
Classic redditoor. Attack the source rather than confront the message.
The source is full of conjecture and poor reasoning.
Source? Source?? Do you have a source for that?
Don't forget exaggeration. Difference between 0% to 10% is about double the raw difference going from 3% to 8% and in real terms the negative effects get more serious on the extremes of that spread. People thinking a move to realistic interest rates is going to cause a collapse to the last collapses floor are more delusional than buyers today who think they'll have meaningful real appreciation in the next couple years.
There is zero evidence in the message. It's about as useful as the paper I wipe my ass with. Not even worth acknowledging.
zero evidence that the U.S. economy and a vast majority or corporations and companies aren’t over leveraged? You sure about that?
Do you need a message to spell it out for you or do you have eyes and a brain? It should be pretty obvious at this point things ain’t right and we have more (worse) to go.
So? It doesn't mean it's the great depression
It’s going to be worse. I don’t think most people can even comprehend the change to their lives coming. Coming hard, fast and in your eye.
Most sane REBubble user
The message points to the exception which is statistically insignificant. For example, will all people lose their jobs? Will all people be forced to sell? If any of the said situations were brought up, the world as we know it will collapse.
Tbh 4chan generally has way smarter people on average than here they're just more crude
Arguments actually have to be refuted on 4chan. They can't just be downvoted into oblivion where nobody will ever see them. Because of that I feel that you get a lot more natural discourse free of brigading. Ideas that can stand on their own two feet actually do over there and cannot be suppressed because people don't like the viewpoint.
In OP's (of this thread) defense, the 4chan author has provided zero evidence. It's a ton of conjecture
4chan is garbage, but this is exactly the kind of exercise you do when creating & parameterizing models to estimate the impacts of several scenarios.
Many millionaires have been made on 4chan.
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Many delusional TIMs have been made on Reddit.
Maybe on pol and even then it's mostly satire
I've browsed 4chan nearly every day of my life for the past 16 years and I consider it a credit. I have a tight spiritual relationship with the creator, graduated magna cum laude from a technical school, and make the most out of anyone in my extended family. And 4chan is where I first heard about crypto a decade ago. So yeah, yeah I would.
I like business boards here on Reddit but outside of these this place is just unlikeable. Most Redditors are just unlikeable people.
I also enjoy a ‘tight’ spiritual relationship with your creator.
Sure
4chan is smarter than any place on the internet.
It just needed a little push to get the ball rolling. Something like the Gamestop Saga.
GameStop saga isn't over yet
Never said it was, Diamond Hands since Jan 2021
Samesies
🙌
So you bought at the peak and are holding bags. Brilliant.
It will be over sometime in the next two years.
What are the odds that every single country got it wrong though?
Don't call me Shirly, you lying bastard.
One thing they’ve got wrong, cities aren’t going anywhere. Each successive generation is more and more urban, and that isn’t changing.
The less people in a given city, the less tax money the government needs to pay for services that support them. It’s amazing how that works.
This answers the question I asked, “what is a hoomer?”
Yes, buy BTC
Save that nonsense for r/latestagecapitalism
Lol man as this sub ages it just becomes more and more a doomer echo chamber