Why do expert say: Buckle in for a brutal free-fall in home prices - Housing Bubble

[Anonymous]

The UK has an issue not the US. There mortgagee are not 30 year fixed. Most reset rates ever 2-5 years.

Right now new 2021 mortgages in UK the payment is set to double upon reset.

[Anonymous]

Anonymous wrote:Prices are going to continue to fall because of interest rates. It’s a mathematical certainty.

No one knows exactly how far they will fall, but the prices will fall.

You really want to look to economists regarding this, not realtors. A lot of people think realtors have strong, economic backgrounds, or that they are experts in predicting markets. They are not.

I wouldn't trust economists either. (Of course no one should trust real estate agents on this.) But so far prices are not "falling" in the sense that sales prices are markedly lower than last year. They just seem to be going up less and taking longer to sell, and maybe with the usual contingencies in place on the contracts. Maybe things will change next year. I hope so. But given the overall strength of the economy in this area and the lack of supply, I don't see a big decline absent a severe recession.

[Anonymous]

Anonymous wrote:Prices are going to continue to fall because of interest rates. It’s a mathematical certainty.

No one knows exactly how far they will fall, but the prices will fall.

You really want to look to economists regarding this, not realtors. A lot of people think realtors have strong, economic backgrounds, or that they are experts in predicting markets. They are not.

Nobody thinks realtors have strong economic backgrounds... But some people do give them too much credit regarding predictions. Realtors can be good observers of empirical facts, they are closest to the market, if they are good they can accuretly predict local market seasonal trends. But i would never trust realtors' analysis in an evolving econ context or at more than a year

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Because interest rates are rising. What is going to happen when people with variable rate loans arm periods end???

Without predatory lending, the impact of arm rates inching up isn’t as severe as it was in 2008.

Perhaps not as bad, but it’s going to have an impact rest assured to say otherwise would imply zero understanding of economics.

Minimal impact. Not nearly as many ARMs, better underwriting, and better regulation - caps on adjustments, disclosure, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Prices are going to continue to fall because of interest rates. It’s a mathematical certainty.

No one knows exactly how far they will fall, but the prices will fall.

You really want to look to economists regarding this, not realtors. A lot of people think realtors have strong, economic backgrounds, or that they are experts in predicting markets. They are not.

I wouldn't trust economists either. (Of course no one should trust real estate agents on this.) But so far prices are not "falling" in the sense that sales prices are markedly lower than last year. They just seem to be going up less and taking longer to sell, and maybe with the usual contingencies in place on the contracts. Maybe things will change next year. I hope so. But given the overall strength of the economy in this area and the lack of supply, I don't see a big decline absent a severe recession.

+1

[Anonymous]

JP announced yesterday that they are slowing the pace of rate increases. Stock market is surging on the news.

[Anonymous]

Anonymous wrote:JP announced yesterday that they are slowing the pace of rate increases. Stock market is surging on the news.

slowing but still increasing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Because interest rates are rising. What is going to happen when people with variable rate loans arm periods end???

Without predatory lending, the impact of arm rates inching up isn’t as severe as it was in 2008.

When you have 2% resetting to 8%, even with strict underwriting, it’s bad

Very few ARM mortgages around here.

Very few, but if there are more ARM holders who have to sell than buyers (very little demand either right now), then prices will fall

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Because interest rates are rising. What is going to happen when people with variable rate loans arm periods end???

Without predatory lending, the impact of arm rates inching up isn’t as severe as it was in 2008.

When you have 2% resetting to 8%, even with strict underwriting, it’s bad

Very few ARM mortgages around here.

Very few, but if there are more ARM holders who have to sell than buyers (very little demand either right now), then prices will fall

Yes, if supply outstrips demand at the current prices, then prices are likely to fall. Congratulations on this insight.

[Anonymous]

Anonymous wrote:

Anonymous wrote:JP announced yesterday that they are slowing the pace of rate increases. Stock market is surging on the news.

slowing but still increasing.

THIS! The people here stating that interest rates are going anywhere but up are delusional. Also, the economy generally gets a short-term uptick this time of year due to holiday spending. A good few weeks doesn't mean we're escaping the bad economic times.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:JP announced yesterday that they are slowing the pace of rate increases. Stock market is surging on the news.

slowing but still increasing.

THIS! The people here stating that interest rates are going anywhere but up are delusional. Also, the economy generally gets a short-term uptick this time of year due to holiday spending. A good few weeks doesn't mean we're escaping the bad economic times.

I don't think they're going down anytime soon (and maybe never back down to where they were), but the biggest hikes are likely over. More modest hikes/stabilization going forward are not likely to lead to a "brutal free fall" in prices

[Anonymous]

The people who act as though DC area prices will not come down are just guessing. Sure, it's not 2007, but that doesn't mean different factors today won't yield the same outcome.

Folks should learn the term "black swan event" or "black swan theory," which describes many asset crashes. For the lazy:

"A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, severe impact, and the widespread insistence they were obvious in hindsight."

https://www.investopedia.com/terms/b/blackswan.asp

[Anonymous]

Anonymous wrote:The people who act as though DC area prices will not come down are just guessing. Sure, it's not 2007, but that doesn't mean different factors today won't yield the same outcome.

Folks should learn the term "black swan event" or "black swan theory," which describes many asset crashes. For the lazy:

"A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, severe impact, and the widespread insistence they were obvious in hindsight."

https://www.investopedia.com/terms/b/blackswan.asp

People who believe prices are going either direction are guessing. So far, prices have been going up y/o/y. I think the reasonable assumption is that they will come down a bit inside the beltway, probably not to below pre-pandemic levels, with some neighborhoods more stable than others. But yes, that's an educated guess. I wish they'd come down more, but there just isn't enough softness in the economy right now to do that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:JP announced yesterday that they are slowing the pace of rate increases. Stock market is surging on the news.

slowing but still increasing.

THIS! The people here stating that interest rates are going anywhere but up are delusional. Also, the economy generally gets a short-term uptick this time of year due to holiday spending. A good few weeks doesn't mean we're escaping the bad economic times.

I don't think they're going down anytime soon (and maybe never back down to where they were), but the biggest hikes are likely over. More modest hikes/stabilization going forward are not likely to lead to a "brutal free fall" in prices

I don't think there will be a brutal free fall but I don't think we've yet seen the full impact of the rate increases on prices. So it all remains to be seen. Spring is going to be very interesting!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:JP announced yesterday that they are slowing the pace of rate increases. Stock market is surging on the news.

slowing but still increasing.

THIS! The people here stating that interest rates are going anywhere but up are delusional. Also, the economy generally gets a short-term uptick this time of year due to holiday spending. A good few weeks doesn't mean we're escaping the bad economic times.

I don't think they're going down anytime soon (and maybe never back down to where they were), but the biggest hikes are likely over. More modest hikes/stabilization going forward are not likely to lead to a "brutal free fall" in prices

I don't think there will be a brutal free fall but I don't think we've yet seen the full impact of the rate increases on prices. So it all remains to be seen. Spring is going to be very interesting!

Agreed. Prices will continue to drop. Most people who thought they might sell already did. In 2023 we'll start seeing more homes come on the market because life happens. A return to 2019 prices or a little higher isn't what I would call a brutal free fall. I don't think anyone here thinks we're going back to 2010 prices.