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Old 05-22-2022, 11:06 AM
 
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Can anyone look at this graph....and then honestly say we are not in a bubble? Keep in mind these numbers ARE ADJUSTED FOR INFLATION!!!


https://fred.stlouisfed.org/series/CSUSHPINSA
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Old 05-22-2022, 08:25 PM
 
Location: Occupant of USA.
938 posts, read 424,288 times
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Not going to happen. Not like the last one. That was fueled by renters becoming homeowners. Really!

So, think back. Ready?

What presidential campaign that had both saying. Wait for it.

Every American who wants to be a homeowner should be a homeowner.

Bamm! All those stinking loans got invented.

Boom! Stinky loans no good.
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Old 05-22-2022, 11:24 PM
 
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Quote:
Originally Posted by ncole1 View Post
Can anyone look at this graph....and then honestly say we are not in a bubble? Keep in mind these numbers ARE ADJUSTED FOR INFLATION!!!


https://fred.stlouisfed.org/series/CSUSHPINSA
One BIG, FAT and UGLY BUBBLE

Good Luck!
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Old 05-23-2022, 05:39 AM
 
7,348 posts, read 4,134,790 times
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Quote:
Originally Posted by C2BP View Post
One BIG, FAT and UGLY BUBBLE

Good Luck!
I agree. However, housing bubble can last for a decade or longer and don't brake evenly across the country.

My parents brought their home in 1968 for $24,000. There have been many housing bubbles since 1968 and that house's value has gone up and down over 54 years. However, it is never going to be available for $24,000 again.

I remember when the late 1990's dot.com bubble broke and NY real estate prices dropped. In 2008, there was the housing bubble broke and again. NY housing prices in dropped more than Boston's.

Quote:
Bubbles in housing markets are more critical than stock market bubbles. Historically, equity price busts occur on average every 13 years, last for 2.5 years, and result in about 4 percent loss in GDP. Housing price busts are less frequent, but last nearly twice as long and lead to output losses that are twice as large. A recent laboratory experimental study also shows that, compared to financial markets, real estate markets involve longer boom and bust periods. Prices decline slower because the real estate market is less liquid.
https://en.wikipedia.org/wiki/Real-estate_bubble
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Old 05-23-2022, 06:10 AM
 
10,864 posts, read 6,480,995 times
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I recall a nice house was $40K,then in late 1970s,it was $150K,then $450K,and now over $1 million.
But look at wages,back then $20k is a big deal,then $55K,then $80K and now a college grad with the right degree working for the right employer,his starting salary is $120k.
So if he gets married and bought a house for $1 million,is that too much?
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Old 05-23-2022, 09:40 AM
 
7,809 posts, read 3,817,548 times
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Quote:
Originally Posted by ncole1 View Post
Can anyone look at this graph....and then honestly say we are not in a bubble? Keep in mind these numbers ARE ADJUSTED FOR INFLATION!!!


https://fred.stlouisfed.org/series/CSUSHPINSA
Me.

Bubbles are extremely difficult to see until long after they have popped. Indeed, more than a few Nobel Prize winning economists have said they don't think housing bubbles exist in the first place.

Just about everyone agrees the Dutch Tulip Mania was a bubble: https://en.wikipedia.org/wiki/Tulip_mania. Similarly, Just about everyone agrees the stock of the South Sea Company was a bubble. https://en.wikipedia.org/wiki/South_Sea_Company


But a housing bubble? What does that even mean? There is no precise definition, and hence there is no test.

Without a test, there is no way to say either:
  • "Yes, conditions pass the test so we are in a bubble" or
  • "No, conditions fail the test so we are not in a bubble."

There is no model of bubbles that provides any predictive power.

To purchase a house, the buyer typically finances the purchase with a mortgage. But mortgages have to come from someone else's savings. So -- does that mean that a hypothetical housing bubble can only exist if there is a concomitant savings bubble? What does it mean to save too much?

About 70% of homes are purchased with a mortgage while the other 30% are bought all cash. So - does a hypothetical real estate bubble mean that mortgage originators are issuing too many mortgages?

There is no question that the price of residential real estate has gone up. But that isn't a bubble. Perhaps it is a reallocation of capital from one asset class to another.

During the Pandemic, US household balance sheets grew by a cumulative $40 Trillion. To put that in perspective, the stock market sell-off has been a cumulative $5 Trillion contraction - about 12.5% contraction of the wealth created during the Pandemic. That still leaves a massive chunk of wealth available.

Moreover, while housing is expensive, it is quite affordable to those who purchase. Every house that comes on the market receives multiple offers within days and goes into contract with a week (except for homes with fatal flaws). That is evidence of affordability despite costing more than it did a few years ago.

Last edited by moguldreamer; 05-23-2022 at 09:51 AM..
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Old 05-23-2022, 09:56 AM
 
5,907 posts, read 4,431,507 times
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Maybe people value a home more because they’re working from home and spending more family time there with the pandemic? Maybe older folks are trading down to smaller homes after their kids left or in concentrated areas of the country? Maybe the large millennial generation now has kids and want homes?

Is that a bubble? Or do people value housing enough to bid up prices?
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Old 05-23-2022, 10:32 AM
 
4,952 posts, read 3,055,358 times
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Foreign demand is high, and then there's Blackrock.
Was it ever a bubble, or has the market changed?.
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Old 05-23-2022, 11:26 AM
 
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foreign demand is mostly in major cities in Florida,CA,NY.
After 2008,builders have not built as many houses,hence the shortage.
I have not seen any construction since 2008??
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Old 05-23-2022, 11:54 AM
46H
 
1,652 posts, read 1,400,947 times
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This is probably not a bubble.
1. Jobs are plentiful as the unemployment rate is below 4% (3.6% today).

2. Mortgage standards were tightened after 2008. There are no more crazy mortgages. People who have mortgages from the last 12 years were highly qualified.

3. The 30 year rate has been mostly under 5% since 2010 and there are years where it was below 4%. That is cheap money.

4. Millenials are coming into their prime earning and kid years. This is another reason for the high demand not dropping, especially in suburbs.

5. Babyboomers have watched the stock market supercharge their retirement accounts. Boomers who might have had to move to cheaper areas can now afford to stay put and not put their houses on the market.

6. Covid has messed with the building industry. There were less houses being built.


Even if interest rates go much higher, that still does not effect people who are working and have affordable mortgages.
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