Million Dollar Question - Buy or Wait? 2022 Edition (Howe: foreclosed, calculated)

[Wittgenstein's Ghost]

Originally Posted by Xalistiq

Exactly.

This housing bubble is a Fed-driven, and a Fed-created crisis. Drop interest rates to historic lows, purchase $1T of mortgage-backed securities, print $4.5T out of thin air, and then distribute that money disproportionately to the wealthy, and you get a run up in asset prices and stocks.

It doesn’t take a Wharton MBA to figure out that these policies are inflationary and increase economic inequality. Yet, the Fed refused abandon the “inflation is transitory” rationale until late 2021, after it was patently obvious that the price of homes was accelerating at unsustainable levels.

Most homeowners who’ve seen their home values increase upwards of +40% in two years are loath to denounce the Fed’s actions, but asset bubbles are bad for everyone. When they pop, a recession often ensues and that adversely impacts everyone.

It is unfortunate that most Americans do not understand the role the Fed has played in this housing bubble and worse yet, that the architects of this bubble will never be held accountable.

While this is all true, we had -30% annualized GDP growth and were facing another Great Depression due to completely unprecedented economic shutdowns. At worst, the Fed was a few months late on tightening and bit too confident in their transitory narrative. But the Fed isn't Congress, and there was a lot of money being pumped by Congress that was needed.

Hindsight is always 20/20, which is why every Fed chair in history has been thought an idiot by the regular Joe with the luxury of future information. There was too little stimulus in 2008, and we had a very slow economic recovery. There was too much stimulus in 2020, but we probably shouldn't have expected to avoid a recession when shutting the economy down like that.

[Xalistiq]

Jobless claims are on the rise, and this unfortunately is just the beginning.

According to Bloomberg, “ Applications for US state unemployment insurance rose for a third week to the highest since November as more companies announce job cuts, suggesting some softening in the labor market”:

https://www.bloomberg.com/news/artic...n-eight-months

[DabOnEm]

Originally Posted by Wile E. Coyote

That's just Texas

No it's not. Happening in markets across the country

[usc619]

As I said, we're in a housing bust.

[Xalistiq]

Expect an avalanche of bad economic news next week, including a likely official declaration that the US is in fact in a recession.

According to PJ Media:

“Consumer confidence numbers (which currently stink) hit on Tuesday. A Federal Reserve meeting and decision on interest rates, coupled with a press conference from Fed Chair Jerome Powell, follows up on Wednesday.

The first reading on second quarter economic growth drops on Thursday. And the latest numbers on our vexing run of historically high consumer price inflation close out the monster run of data on Friday. In a note to clients today, analysts at Deutsche Bank suggested the flood of information will “leave you breathless.”

https://pjmedia.com/news-and-politic...-week-n1615339

If the impending economic data is as bad as it’s predicted to be, demand for housing will continue to fall dramatically throughout the summer/early Fall, putting more downward pressure on prices while inventory nationwide continues to rise.

[Wittgenstein's Ghost]

Originally Posted by Xalistiq

Expect an avalanche of bad economic news next week, including a likely official declaration that the US is in fact in a recession.

According to PJ Media:

“Consumer confidence numbers (which currently stink) hit on Tuesday. A Federal Reserve meeting and decision on interest rates, coupled with a press conference from Fed Chair Jerome Powell, follows up on Wednesday.

The first reading on second quarter economic growth drops on Thursday. And the latest numbers on our vexing run of historically high consumer price inflation close out the monster run of data on Friday. In a note to clients today, analysts at Deutsche Bank suggested the flood of information will “leave you breathless.”

https://pjmedia.com/news-and-politic...-week-n1615339

If the impending economic data is as bad as it’s predicted to be, demand for housing will continue to fall dramatically throughout the summer/early Fall, putting more downward pressure on prices while inventory nationwide continues to rise.

You seriously think the NBER is going to declare a recession this week?

[BLDSoon]

Originally Posted by Xalistiq

If the impending economic data is as bad as it’s predicted to be, demand for housing will continue to fall dramatically throughout the summer/early Fall, putting more downward pressure on prices while inventory nationwide continues to rise.

But…
Isn’t this the intended result? Sounds to me like the Fed’s strategy is working. Part of easing inflation is a resulting downward trend in prices due to reduced demand. Which is what we want.

Or am I missing something?

[Kenro911]

Originally Posted by BLDSoon

But…
Isn’t this the intended result? Sounds to me like the Fed’s strategy is working. Part of easing inflation is a resulting downward trend in prices due to reduced demand. Which is what we want.

Or am I missing something?

No, not really. The Fed is literally trying to induce a recession and crash prices down - including housing.

What's more interesting is the 'HIVE MIND' mentality, especially in housing. The huge swings up or down have very little to do with the actual underlying reason. The rates have not gone up so much that we went from 800K homes being sold in 12 hrs with 10-20% over asking price to now sitting on market and going through multiple price reductions. It's all part of the herd mentality, everyone is freaking out about recession right now so they pumped the brakes. Yet somehow buying into a world unseen pandemic-recession was not a problem - back then no one actually thought the Gov would print so much stimulus.

If I'm being honest, it's frustrating that everything is becoming like gambling. I much rather have stable prices rather than be in a constant state of lottery. You either bought and having doubled in 3-4 years or will be underwater for next 10+

[Leonard123]

It could be just that my focus has been too narrow, but it looks to me like the demand is as high as ever for the larger houses and at the higher end of the price ranges. The demand for smaller houses and lots is less than it used to be, and there are a lot more young families with children moving in those smaller houses that traditionally would have appealed to older generations seeking less maintenance.

[Wittgenstein's Ghost]

Originally Posted by Kenro911

If I'm being honest, it's frustrating that everything is becoming like gambling. I much rather have stable prices rather than be in a constant state of lottery. You either bought and having doubled in 3-4 years or will be underwater for next 10+

I'm right there with you. Asset bubbles have victims on both sides. I was lucky enough to have made a lot of money on the recent runup, but housing is a basic human need like food and water. Price stability and affordability should take priority over short-term returns.