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I thought the mortgage broker hit it pretty close. I think we have 2-4 years left to go (so a little quicker than he thought), slow down after with small downturn (10-15%), but no major bubble pop this time.
If we have another bout of major layoffs all of a sudden it will change all that though.
If we start to see wages rise more we could roll right through that 2-4 years. It will still slow down some no matter what, but it would probably just go flat for a few years before the next run up.
If we start to see wages rise more we could roll right through that 2-4 years.
But they won't rise. Not appreciably certainly.
Why? We still have too many people scrambling for too few jobs. Millions too many.
Until the value of labor hours can have a market based reason to be worth more... they won't be.
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(the overheated RE market) will still slow down some no matter what
but it would probably just go flat for a few years before the next run up.
Most of what price rising pressure we see is location based.
Location has a "good" job market? Prices will rise.
Location has an insane job market (eg SF)... prices will rise insanely.
Just don't confuse what happens in Palo Alto or even Pittsburg with Peoria.
problem is that wages are rising very slowly and any small rise is being eaten by commodity inflation. In addition I think a big difference this time is that bubbles have been created in hotspots around the country and not nationwide. A lot of it is based on cheap money and nobody knows how long that will last.
In my opinion inflation is very high (I don't believe the fake government numbers of almost zero inflation because I can see it with my own eyes, prices are rising very fast!).
SF has an insane job market but many see a huge tech bubble on the verge of bursting there and everything in SF is related to tech! If tech goes it takes out everything with it like a tornado.
The market today is nothing like early 2000s. It's much harder to get a loan today, even for people with excellent credit and income.
You also don't see the number of people out there expecting to make a quick buck flipping houses. Back in the early 2000s all kinds of people were "real estate investors."
The fundamentals support the markets that are hot (e.g. SF) as well as most of the rest of the country.
Yes, mortgage rates are insanely low now, which means people can buy more relative to their income. However, mortgage rates won't rise until there is inflationary pressure in the economy, which will help real estate prices.
problem is that wages are rising very slowly and any small rise is being eaten by commodity inflation. In addition I think a big difference this time is that bubbles have been created in hotspots around the country and not nationwide. A lot of it is based on cheap money and nobody knows how long that will last.
In my opinion inflation is very high (I don't believe the fake government numbers of almost zero inflation because I can see it with my own eyes, prices are rising very fast!).
SF has an insane job market but many see a huge tech bubble on the verge of bursting there and everything in SF is related to tech! If tech goes it takes out everything with it like a tornado.
The market today is nothing like early 2000s. It's much harder to get a loan today, even for people with excellent credit and income.
You also don't see the number of people out there expecting to make a quick buck flipping houses. Back in the early 2000s all kinds of people were "real estate investors."
The fundamentals support the markets that are hot (e.g. SF) as well as most of the rest of the country.
Yes, mortgage rates are insanely low now, which means people can buy more relative to their income. However, mortgage rates won't rise until there is inflationary pressure in the economy, which will help real estate prices.
I agree with your take. The market is much more accurately priced and supported by fundamentals today than back in 2005-2006. Back then, values were rising due to a credit bubble and market speculation. Credit was handed out in a similar fashion to how car loans are handed out today. The new construction boom resulted in a massive over-supply of homes.
None of those conditions are present today. Lending practices have tightened greatly and supply of new homes has dwindled considerably. It does seem that homes in large metro areas with good job markets (SF, SEA, NYC, FL, etc) have appreciated at a much greater rate and will likely continue to do so.
Perhaps the market cools off in the next few years, but I don't see this massive downside that we had back in 2008.
Given that the "problem" was a very specific niche of mortgage lending (sub-prime) I doubt we'll see a repeat of the last debacle, which should be noted as a "credit crash." Houses in the Seattle area lost little "value" over the years, same in any of the large, prosperous metro areas in the US. The prole housing that was built with the sub prime borrower in mind took the worst hit, we saw tons of them sitting empty for years here in the Pacific NW. The speculative aspect of the so called "housing market" is at the bottom of our collective problem of not enough affordable housing.
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