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

[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.

Prices are going to go down because housing is an overvalued asset and the affordability is a huge issue that the Fed is determined to address. If prices don't come down through other pressures, the Fed will continue to increase rates until the bubble bursts. The Fed is trying to control inflation by devaluing overvalued assets, and housing is the most inflated sector of the economy. The Fed is determined to force a housing correction as a mechanism to control inflation in other sectors of the economy. It hasn't hit the tipping point yet, but it will.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m old enough to have learned that predicting markets is a fool’s errand, so all I have is scenarios in my head and the probabilities that I guesstimate for them. That being said, have caution about DCUM predictions as I’ve seen this site’s echo chamber tendencies. Back during bidding wars, the mantra on here was that prices are going up and folks will be priced out forever. Now the mantra is prices will crash in epic fashion. I think this site is an excellent barometer of current market psychology, but not necessarily a place that has a track record of predictive strength.

But we don't have to guess. Powell has been clear that he's raising the rates and even said that there's a housing bubble that he's trying to correct.

Will you provide a link? I can’t find anything with Powell calling it a “housing bubble.” I can find references to housing inflation, but not a bubble. My assumption is that people aren’t understanding the difference between a market slowing and calming down and a market crashing.

Here you go. https://fortune.com/2022/12/01/housing-market-in-housing-bubble-says-fed-chair-powell/

Question isn’t slow down vs crash. Housing prices have been falling since June. The question is whether the bubble will burst or slowly deflate. How low will they go and how quickly will they get there.

[Anonymous]

Anonymous wrote:

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.

Prices are going to go down because housing is an overvalued asset and the affordability is a huge issue that the Fed is determined to address. If prices don't come down through other pressures, the Fed will continue to increase rates until the bubble bursts. The Fed is trying to control inflation by devaluing overvalued assets, and housing is the most inflated sector of the economy. The Fed is determined to force a housing correction as a mechanism to control inflation in other sectors of the economy. It hasn't hit the tipping point yet, but it will.

Well said.

[Anonymous]

Anonymous wrote:

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.

Prices are going to go down because housing is an overvalued asset and the affordability is a huge issue that the Fed is determined to address. If prices don't come down through other pressures, the Fed will continue to increase rates until the bubble bursts. The Fed is trying to control inflation by devaluing overvalued assets, and housing is the most inflated sector of the economy. The Fed is determined to force a housing correction as a mechanism to control inflation in other sectors of the economy. It hasn't hit the tipping point yet, but it will.

No way. The Fed was trying to calm down the market and stop the rapid price increases. That has stopped.

Powell even referred to the bubble in past tense.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

Prices are going to go down because housing is an overvalued asset and the affordability is a huge issue that the Fed is determined to address. If prices don't come down through other pressures, the Fed will continue to increase rates until the bubble bursts. The Fed is trying to control inflation by devaluing overvalued assets, and housing is the most inflated sector of the economy. The Fed is determined to force a housing correction as a mechanism to control inflation in other sectors of the economy. It hasn't hit the tipping point yet, but it will.

No way. The Fed was trying to calm down the market and stop the rapid price increases. That has stopped.

Powell even referred to the bubble in past tense.

It has stopped for now. I'm afraid if they lower rates (which no one has said they are doing) - that the frenzy will ramp up again. There are a ton of buyers on the side lines.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Prices are going to go down because housing is an overvalued asset and the affordability is a huge issue that the Fed is determined to address. If prices don't come down through other pressures, the Fed will continue to increase rates until the bubble bursts. The Fed is trying to control inflation by devaluing overvalued assets, and housing is the most inflated sector of the economy. The Fed is determined to force a housing correction as a mechanism to control inflation in other sectors of the economy. It hasn't hit the tipping point yet, but it will.

No way. The Fed was trying to calm down the market and stop the rapid price increases. That has stopped.


Powell even referred to the bubble in past tense.

It has stopped for now. I'm afraid if they lower rates (which no one has said they are doing) - that the frenzy will ramp up again. There are a ton of buyers on the side lines.

If this is true, it suggests the assets are not overvalued and there is no bubble. A bubble is a speculative rise that is premised on the idea that other speculators ("greater fools") will be there to buy at higher prices. That is why once prices start to decline, they decline rapidly. This is usually the case for products for which there is little inherent value. As mad as I've been about the crazy run up in housing prices, you just can't say that about housing in an area with a strong economy. People need places to live. They want to live in a house that is nice enough for a comfortable life. Absent a destruction of the local economy, a huge change in population, or a massive increase in housing that people want to live in, I just don't see how far the prices can go.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m old enough to have learned that predicting markets is a fool’s errand, so all I have is scenarios in my head and the probabilities that I guesstimate for them. That being said, have caution about DCUM predictions as I’ve seen this site’s echo chamber tendencies. Back during bidding wars, the mantra on here was that prices are going up and folks will be priced out forever. Now the mantra is prices will crash in epic fashion. I think this site is an excellent barometer of current market psychology, but not necessarily a place that has a track record of predictive strength.

But we don't have to guess. Powell has been clear that he's raising the rates and even said that there's a housing bubble that he's trying to correct.

Will you provide a link? I can’t find anything with Powell calling it a “housing bubble.” I can find references to housing inflation, but not a bubble. My assumption is that people aren’t understanding the difference between a market slowing and calming down and a market crashing.

Here you go. https://fortune.com/2022/12/01/housing-market-in-housing-bubble-says-fed-chair-powell/

Question isn’t slow down vs crash. Housing prices have been falling since June. The question is whether the bubble will burst or slowly deflate. How low will they go and how quickly will they get there.

Have housing prices been falling, or just increasing less quickly? And falling compared to the last month, or year over year? My understanding is that around here, housing prices are not falling in absolute terms. I wish they would, but at least where I am looking, they don't seem to be.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m old enough to have learned that predicting markets is a fool’s errand, so all I have is scenarios in my head and the probabilities that I guesstimate for them. That being said, have caution about DCUM predictions as I’ve seen this site’s echo chamber tendencies. Back during bidding wars, the mantra on here was that prices are going up and folks will be priced out forever. Now the mantra is prices will crash in epic fashion. I think this site is an excellent barometer of current market psychology, but not necessarily a place that has a track record of predictive strength.

But we don't have to guess. Powell has been clear that he's raising the rates and even said that there's a housing bubble that he's trying to correct.

Will you provide a link? I can’t find anything with Powell calling it a “housing bubble.” I can find references to housing inflation, but not a bubble. My assumption is that people aren’t understanding the difference between a market slowing and calming down and a market crashing.

Here you go. https://fortune.com/2022/12/01/housing-market-in-housing-bubble-says-fed-chair-powell/

Question isn’t slow down vs crash. Housing prices have been falling since June. The question is whether the bubble will burst or slowly deflate. How low will they go and how quickly will they get there.

Have housing prices been falling, or just increasing less quickly? And falling compared to the last month, or year over year? My understanding is that around here, housing prices are not falling in absolute terms. I wish they would, but at least where I am looking, they don't seem to be.

Home values in most areas have dropped lower than they were at the peak (Spring 2022). However, they're currently still higher than they were in 2019. But they're falling. How far will they go - who knows. It won't be the same percentage across the countries. It will be very localized. Places that boomed during the pandemic have already been falling a bit, and will likely fall quite a bit more. But even if some areas fall the way back to 2019 prices, it wouldn't be catastrophic.

[Anonymous]

Other factor is RTO and rising flood insurance and home insurance costs on vacation homes by beach might impact prices some homes regardless of mortgage rates

[Anonymous]

Anonymous wrote:Other factor is RTO and rising flood insurance and home insurance costs on vacation homes by beach might impact prices some homes regardless of mortgage rates

We just closed on a beach house we would have otherwise not gotten if the market were not like it is.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m old enough to have learned that predicting markets is a fool’s errand, so all I have is scenarios in my head and the probabilities that I guesstimate for them. That being said, have caution about DCUM predictions as I’ve seen this site’s echo chamber tendencies. Back during bidding wars, the mantra on here was that prices are going up and folks will be priced out forever. Now the mantra is prices will crash in epic fashion. I think this site is an excellent barometer of current market psychology, but not necessarily a place that has a track record of predictive strength.

But we don't have to guess. Powell has been clear that he's raising the rates and even said that there's a housing bubble that he's trying to correct.

Will you provide a link? I can’t find anything with Powell calling it a “housing bubble.” I can find references to housing inflation, but not a bubble. My assumption is that people aren’t understanding the difference between a market slowing and calming down and a market crashing.

Here you go. https://fortune.com/2022/12/01/housing-market-in-housing-bubble-says-fed-chair-powell/

Question isn’t slow down vs crash. Housing prices have been falling since June. The question is whether the bubble will burst or slowly deflate. How low will they go and how quickly will they get there.

Have housing prices been falling, or just increasing less quickly? And falling compared to the last month, or year over year? My understanding is that around here, housing prices are not falling in absolute terms. I wish they would, but at least where I am looking, they don't seem to be.

Home values in most areas have dropped lower than they were at the peak (Spring 2022). However, they're currently still higher than they were in 2019. But they're falling. How far will they go - who knows. It won't be the same percentage across the countries. It will be very localized. Places that boomed during the pandemic have already been falling a bit, and will likely fall quite a bit more. But even if some areas fall the way back to 2019 prices, it wouldn't be catastrophic.

Is there data supporting this? I just haven't seen it. Maybe that's because around here, or in the areas where I am looking, it's not the case. And I googled it but nothing compelling and trustworthy came up in the results.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m old enough to have learned that predicting markets is a fool’s errand, so all I have is scenarios in my head and the probabilities that I guesstimate for them. That being said, have caution about DCUM predictions as I’ve seen this site’s echo chamber tendencies. Back during bidding wars, the mantra on here was that prices are going up and folks will be priced out forever. Now the mantra is prices will crash in epic fashion. I think this site is an excellent barometer of current market psychology, but not necessarily a place that has a track record of predictive strength.

But we don't have to guess. Powell has been clear that he's raising the rates and even said that there's a housing bubble that he's trying to correct.

Will you provide a link? I can’t find anything with Powell calling it a “housing bubble.” I can find references to housing inflation, but not a bubble. My assumption is that people aren’t understanding the difference between a market slowing and calming down and a market crashing.

Here you go. https://fortune.com/2022/12/01/housing-market-in-housing-bubble-says-fed-chair-powell/

Question isn’t slow down vs crash. Housing prices have been falling since June. The question is whether the bubble will burst or slowly deflate. How low will they go and how quickly will they get there.

Have housing prices been falling, or just increasing less quickly? And falling compared to the last month, or year over year? My understanding is that around here, housing prices are not falling in absolute terms. I wish they would, but at least where I am looking, they don't seem to be.

Home values in most areas have dropped lower than they were at the peak (Spring 2022). However, they're currently still higher than they were in 2019. But they're falling. How far will they go - who knows. It won't be the same percentage across the countries. It will be very localized. Places that boomed during the pandemic have already been falling a bit, and will likely fall quite a bit more. But even if some areas fall the way back to 2019 prices, it wouldn't be catastrophic.

Is there data supporting this? I just haven't seen it. Maybe that's because around here, or in the areas where I am looking, it's not the case. And I googled it but nothing compelling and trustworthy came up in the results.

Look at the case shiller index. It’s the gold standard. It shows that nationally houses are down almost 4% from the June peak.

Here is the data for DC. You can clearly see the line going down. And this is the September reading, which is an average of the data from June (the peak) through august. And note that those are closings in June, July, august - so contracts signed back in the spring and early summer. It doesn’t include the declines that came after the big rate spikes in September and October. https://fred.stlouisfed.org/series/WDXRSA

[Anonymous]

Dropping in Arlington:

https://www.arlnow.com/2022/11/29/ask-eli-arlington-housing-market-performance-metrics-rea1/

[Anonymous]

Anonymous wrote:Dropping in Arlington:

https://www.arlnow.com/2022/11/29/ask-eli-arlington-housing-market-performance-metrics-rea1/

But but but not in MY area!

[Anonymous]

It’s funny how crash predictors refuse to acknowledge that the DC metro area is a microcosm of its own. We have the most stable job economy of any market in the country, which has led to slight price decreases on houses that need updating (like ours) and continued bidding wars on houses that don’t in desired areas because of low inventory. No big crashes in price unless the house truly sucked. And with all the buyers on the sidelines, as soon as there is a slight improvement, more will jump back in.

You CANNOT look at real estate as the same across every market in the country. My family lives in the Beaufort SC area and it’s acting exactly like ours because of the retirement desirability. Each market is its own microcosm.