Federal Reserve: signs abound that housing market is entering bubble territory

[Anonymous]

Gee, did they really need a slide ruler to figure this one out?

https://www.dallasfed.org/research/economics/2022/0329

[Anonymous]

”Based on present evidence, there is no expectation that fallout from a housing correction would be comparable to the 2007–09 Global Financial Crisis in terms of magnitude or macroeconomic gravity. Among other things, household balance sheets appear in better shape, and excessive borrowing doesn’t appear to be fueling the housing market boom.”

Unless there are a slew of personal bankruptcies - which doesn’t look likely - it will be, at most, a minor correction. The frenzy cools. Prices stabilize. No “bubble”.

[Anonymous]

“Our evidence points to abnormal U.S. housing market behavior for the first time since the boom of the early 2000s. Reasons for concern are clear in certain economic indicators—the price-to-rent ratio, in particular, and the price-to-income ratio—which show signs that 2021 house prices appear increasingly out of step with fundamentals.”

The whole article is about how there is a bubble - the fallout might not be as bad as as 2008 but bubble nonetheless. Warning signs are flashing all over.

[Anonymous]

Anonymous wrote:“Our evidence points to abnormal U.S. housing market behavior for the first time since the boom of the early 2000s. Reasons for concern are clear in certain economic indicators—the price-to-rent ratio, in particular, and the price-to-income ratio—which show signs that 2021 house prices appear increasingly out of step with fundamentals.”

The whole article is about how there is a bubble - the fallout might not be as bad as as 2008 but bubble nonetheless. Warning signs are flashing all over.

Market cooling <> bubble

You think there will be a bunch of bankruptcies? Foreclosures?

[Anonymous]

“Bubble” gets clicks, but the article basically says appreciation will cool, which is a smart bet.

That doesn’t mean housing prices with significantly drop, if at all.

[Anonymous]

A lotta speculators, investors, people who bought at peak FOMO, and RE agents are in denial ITT. The Federal Reserve must be wrong when they use the B word. Prices on assets only ever go up, amirite?

[Anonymous]

Anonymous wrote:A lotta speculators, investors, people who bought at peak FOMO, and RE agents are in denial ITT. The Federal Reserve must be wrong when they use the B word. Prices on assets only ever go up, amirite?

Clickbait gets the clicks, amirite?

What specifically do you think is going to happen to “pop” this “bubble”?

[Anonymous]

Anonymous wrote:

Anonymous wrote:A lotta speculators, investors, people who bought at peak FOMO, and RE agents are in denial ITT. The Federal Reserve must be wrong when they use the B word. Prices on assets only ever go up, amirite?

Clickbait gets the clicks, amirite?

What specifically do you think is going to happen to “pop” this “bubble”?

Not the PP, but who knows. Could be anything. We won’t know until we know.

I’m more worried that we have an “all asset” bubble that will take stocks down too. The minor stock market correction earlier this year didn’t affect things much.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A lotta speculators, investors, people who bought at peak FOMO, and RE agents are in denial ITT. The Federal Reserve must be wrong when they use the B word. Prices on assets only ever go up, amirite?

Clickbait gets the clicks, amirite?

What specifically do you think is going to happen to “pop” this “bubble”?

Not the PP, but who knows. Could be anything. We won’t know until we know.

I’m more worried that we have an “all asset” bubble that will take stocks down too. The minor stock market correction earlier this year didn’t affect things much.

So…irrational fears.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A lotta speculators, investors, people who bought at peak FOMO, and RE agents are in denial ITT. The Federal Reserve must be wrong when they use the B word. Prices on assets only ever go up, amirite?

Clickbait gets the clicks, amirite?

What specifically do you think is going to happen to “pop” this “bubble”?

Federal Reserve writings are now 'clickbait', lol.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A lotta speculators, investors, people who bought at peak FOMO, and RE agents are in denial ITT. The Federal Reserve must be wrong when they use the B word. Prices on assets only ever go up, amirite?

Clickbait gets the clicks, amirite?

What specifically do you think is going to happen to “pop” this “bubble”?

Federal Reserve writings are now 'clickbait', lol.

+1

Clickbait implies a salacious headline to get clicks and ad views. The Fed doesn't have ads on it's site.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A lotta speculators, investors, people who bought at peak FOMO, and RE agents are in denial ITT. The Federal Reserve must be wrong when they use the B word. Prices on assets only ever go up, amirite?

Clickbait gets the clicks, amirite?

What specifically do you think is going to happen to “pop” this “bubble”?

Federal Reserve writings are now 'clickbait', lol.

Apparently.

What specifically do you think is going to happen?

Investors suddenly selling - and facing tax consequences? Foreclosures? Why?

Things will slow at some point but it’s not a “bubble popping”.

[Anonymous]

Be wary of over confidence on either side. For my job I get exposure to some of the greatest minds on finance, and the amount of folks that predicted that the market would hit all time highs in the midst of record setting coronavirus numbers and new variants is zilch. The point being, people on an anonymous forum, most of whom are lawyers, doctors, lobbyists, stay at home moms, won’t be able to predict what happens to asset prices, so stop mentally masturbating on here even though it can be fun because it’s a waste of time.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A lotta speculators, investors, people who bought at peak FOMO, and RE agents are in denial ITT. The Federal Reserve must be wrong when they use the B word. Prices on assets only ever go up, amirite?

Clickbait gets the clicks, amirite?

What specifically do you think is going to happen to “pop” this “bubble”?

Not the PP, but who knows. Could be anything. We won’t know until we know.

I’m more worried that we have an “all asset” bubble that will take stocks down too. The minor stock market correction earlier this year didn’t affect things much.

+1. Ever hear of credit default swaps before 2008? Because that is what really caused things to go nuclear. Yes, in 2007–8 there was an increase in foreclosures (FOMO ended in 2006, people couldn’t afford the crazy mortgages they took out at the same time prices were declining, and those people who couldn’t afford their payments also couldn’t sell for what they bought so they walked away), but it was the liquidity crisis caused by banks doing risky things with mortgage products that really caused the tailspin. That is what caused the 2008 crisis (Lehman and Bear Stearns going under, etc) that caused recession and job loss, which is what really caused the vast majority of foreclosures in 2008-12. Do you really think banks have stopped taking risks? And do you really think normal people stopped taking risks, too? Just look at all the crazy stuff investors are doing right now to get into real estate. Normal people quitting their jobs, taking out HELOCs and cash out refis on multiple houses, etc.

Right now we are already on the brink of a recession. For two years people have been FOMOing into houses they can’t afford. Prices are way out of line with incomes. Banks will loan you way more than you can afford (not everyone will be smart enough not to buy at the top of their preapproval, especially when OMG I have to buy now or less be priced out forever, homes only go up!).

[Anonymous]

Doesn't the fed have a steak in wanting to cool the market? Well a note like that will cool the market.