Is the United States in another housing bubble? (how much, cost, money)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Housing prices, in some areas more than others, have been on a tear. We're talking 20% YOY for 2, going on 3, years. What surprises me is that many people believe it is realistic that it will continue this way indefinitely, when basic math says it cannot.
Traditional laws of house buying go like
* Down payment of 20%
* Pay off over 30 years (preferably 15 or 10)
* Monthly payment no more than 1/3 or 1/4 take-home pay
* House appreciates at 2-4% per year (nominal terms)
but this whole math is rewritten if you change the last bullet point so that house appreciation is on the order of 20% per year. In that scenario, you can put 0% down and be done paying in 5 years, which means you no longer care how much of your take-home pay goes to your house (heck, put it on a credit card). This creates a vicious cycle where house prices going up influences people to pay even more for houses which pushes them up further which ... (you get the picture).
I am presently investigating ways to short the housing market and welcome any advice you have on ETFs where one can 2-3x the inverse of a REIT if holding money in the inverse ETF for a period of several years. I'm aware of the mathematical consequences of the fact that inverse ETFs only track the inverted asset for 1 day before resetting.
Ignore the part about being a leading indicator of a recession, just look at the chart.
When people pay more for housing than they could get by renting, it's probably because they are expecting future appreciation to overcome the high price they paid. That's a symptom of a bubble as the OP pointed out.
This housing bubble legitimately dwarfs the last one.
What is going to make it "pop"? So many people swear up and down it's different this time, as if 2008 was the only time in history that it has "burst".
I believe it's always cyclical, what goes up, must come down.
What is going to make it "pop"? So many people swear up and down it's different this time, as if 2008 was the only time in history that it has "burst".
I believe it's always cyclical, what goes up, must come down.
The land my house is on + the cost of materials and all, my house is probably about 30K over valued and climbing. I was actually thinking about using a Home equity loan and building a new place and renting the current one, that is how I came to that conclusion.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
