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

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

Everything you said is correct except the bolded. If you think the fed “controls” the bond market (the largest global market in the world), just lol. Take your own advice and just “THINK”. Do you also believe that Santa Claus controls the stock market?

I never said the Fed "controls" the US Bond market. Read again. I said "in Japan's" case, i.e. the BOJ.

PP again. My apologies, I did say it, I see what you're getting at. Maybe "controls" was rather strong a word. "Outsized influence" would probably be a better phrase.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

+1 the idea that a bunch of “millennials” were homeless before March 2020, or were living with their parents even though they could afford it and are now clamoring to pay 40% more for a house, is ludicrous. Nor did millions of houses just stop existing.

That fact is, demand increased greatly because conditions to buy vs the other options were perceived as excellent in 2020. Extremely low interest rates (which very importantly created a whole new class of mom and pop investors), stimulus (student loan pause and mortgage moratoriums, child tax credits, checks for thousands of dollars, PPP loans, etc) wanting to buy a second home or moving to a low COL area because of WFH, etc. That whipped the media into a frenzy and created a FOMO atmosphere. Problem is, those factors are gone now and people aren’t so much fearing of missing out.

The good news is that the crazy rush didn’t last that long, so most people who bought before 2020 will still be very happy to sell their house for a tidy profit even if prices drop 20-30%. The only people requiring these crazy prices in the face of much lower demand will be people holding the bag of 2020-2021.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When have housing prices ever dropped 30-40%? Especially in the northeast/coastal areas for single family homes?

And whatever drops there were, how long did they remain?

When have housing prices ever increased 30-40% in two years?

When has the Fed ever directly injected trillions of dollars into the economy because a global pandemic ground virtually all economically productivity to a halt?

Please explain how exactly, or by what mechanism, the trillions of dollars being “injected into the economy” end up in the housing market. Please explain what “injecting money into the economy” actually means. Very few understand this but many repeat that the fed “prints money” or “injects money” so I think it’s worthwhile to see whether anyone here can actually explain how exactly a dollar goes from QE to potentially ending up in the housing market.

Anyone?

Do you get all of your economic history from DCUM? Google is your friend.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When have housing prices ever dropped 30-40%? Especially in the northeast/coastal areas for single family homes?

And whatever drops there were, how long did they remain?

When have housing prices ever increased 30-40% in two years?

When has the Fed ever directly injected trillions of dollars into the economy because a global pandemic ground virtually all economically productivity to a halt?

If you want to have any credibility in a discussion, you will answer questions instead of strawman arguments and ignorance of the premise.

I’ll show you how and answer yours:

How fast a market has risen has nothing to do with how fast, how far, or why it might fall. People have been saying the same thing about many other markets for years. one times they are right, like with beanie babies and baseball cards. Sometimes they are wrong, like with the stock market. There is no direct correlation so the insinuation of your question is proved fallacious.

As for your second question: maybe you’ve heard of other massive stimulus packages, like the New Deal and ARRA, for instance? Those did not precede a crash the real estate market or any other market.

So you fail.

Now answer the questions asked please?

When have housing prices ever dropped 30-40%? Especially in the northeast/coastal areas for single family homes?

And whatever drops there were, how long did they remain?

Lol, you were the one asking a question that insinuated an answer. I was pointing out that we are in uncharted territory. Except that, to answer your question, the only other time prices went up so quickly and to such high levels of unaffordability was 2004-2006 and we all know what happened then. Take at look at NJ. Prices peaked in 2006 and didn’t reach that level until 2021. That’ doesn’t even account for inflation.

https://fred.stlouisfed.org/series/NJSTHPI

As for stimulus, those examples you cited were instituted in times of great depressions/recessions and did NOT work to juice the economy. The markets were already crashed. Everyone, literally even the Fed, sees now that this stimulus was too much and went on for too long. Which is why they are now taking such a heavy handed approach.

Thanks, I believe in facts and data.

So according to the data you posted, when asked "When have housing prices ever dropped 30-40%?" the data would indicate "Never". (22% being much less than 30-40%)

The national data did surprise me, I admit, that the recovery time was 9 years, and 6 to the pre-bubble values. It was not that long where I live. So you get partial credit for that one.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:When have housing prices ever dropped 30-40%? Especially in the northeast/coastal areas for single family homes?

And whatever drops there were, how long did they remain?

When have housing prices ever increased 30-40% in two years?

When has the Fed ever directly injected trillions of dollars into the economy because a global pandemic ground virtually all economically productivity to a halt?

If you want to have any credibility in a discussion, you will answer questions instead of strawman arguments and ignorance of the premise.

I’ll show you how and answer yours:

How fast a market has risen has nothing to do with how fast, how far, or why it might fall. People have been saying the same thing about many other markets for years. one times they are right, like with beanie babies and baseball cards. Sometimes they are wrong, like with the stock market. There is no direct correlation so the insinuation of your question is proved fallacious.

As for your second question: maybe you’ve heard of other massive stimulus packages, like the New Deal and ARRA, for instance? Those did not precede a crash the real estate market or any other market.

So you fail.

Now answer the questions asked please?

When have housing prices ever dropped 30-40%? Especially in the northeast/coastal areas for single family homes?

And whatever drops there were, how long did they remain?

Lol, you were the one asking a question that insinuated an answer. I was pointing out that we are in uncharted territory. Except that, to answer your question, the only other time prices went up so quickly and to such high levels of unaffordability was 2004-2006 and we all know what happened then. Take at look at NJ. Prices peaked in 2006 and didn’t reach that level until 2021. That’ doesn’t even account for inflation.

https://fred.stlouisfed.org/series/NJSTHPI

As for stimulus, those examples you cited were instituted in times of great depressions/recessions and did NOT work to juice the economy. The markets were already crashed. Everyone, literally even the Fed, sees now that this stimulus was too much and went on for too long. Which is why they are now taking such a heavy handed approach.

Thanks, I believe in facts and data.

So according to the data you posted, when asked "When have housing prices ever dropped 30-40%?" the data would indicate "Never". (22% being much less than 30-40%)

The national data did surprise me, I admit, that the recovery time was 9 years, and 6 to the pre-bubble values. It was not that long where I live. So you get partial credit for that one.

If you plan to continue engaging in discussions on the internet, I’d suggest you rethink the pedantic shtick. It’s really off putting.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

+1 the idea that a bunch of “millennials” were homeless before March 2020, or were living with their parents even though they could afford it and are now clamoring to pay 40% more for a house, is ludicrous. Nor did millions of houses just stop existing.

That fact is, demand increased greatly because conditions to buy vs the other options were perceived as excellent in 2020. Extremely low interest rates (which very importantly created a whole new class of mom and pop investors), stimulus (student loan pause and mortgage moratoriums, child tax credits, checks for thousands of dollars, PPP loans, etc) wanting to buy a second home or moving to a low COL area because of WFH, etc. That whipped the media into a frenzy and created a FOMO atmosphere. Problem is, those factors are gone now and people aren’t so much fearing of missing out.

The good news is that the crazy rush didn’t last that long, so most people who bought before 2020 will still be very happy to sell their house for a tidy profit even if prices drop 20-30%. The only people requiring these crazy prices in the face of much lower demand will be people holding the bag of 2020-2021.

Back in Mar 2020, MOST urban millennials were living in condos, maybe townhouses. Professionals were just starting to have kids as they established careers, paid off student debt, and gotten married. They may have a baby, and planned to eventually move to the SFH in the burbs, but they wanted to be able to walk to bars and coffee shops and dog parks and artisanal pacifier shops. Then pandemic hits, and WFH with their spouse and dog and maybe a baby clinches it -- they need a proper SFH NOW. And thus began the great Millenial exodus (which was kinda of already underway, but this poured gasoline on it).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Ok this is from a FB video I watched this morning, but I’d it true?

For those who bought at the peak of the market, if the house loses value they’ll have negative equity. If the economy then winds up in a recession, that could work out very badly for the housing market. Is that super off-base?

It depends entirely on a number of factors.

If they bought all-cash they've already got 100% equity and value is basically irrelevant. If they put 20% down there's very little chance they will see a 20% drop in values. If they put less down it depends entirely on if they or a working spouse lose their jobs. An underwater house isn't a big deal unless you're forced to move.

DC has such a huge percentage of all cash buyers (25%) that alone will insulate the market a great deal. Our job market is also probably the most stable in the country. Fed jobs aren't going anywhere, fed contractor jobs aren't going anywhere. I imagine ultimately the number of people in this area who don't have significant equity, who also see their home value go underwater, who also lose their jobs, who also don't have savings to ride a brief period of unemployment out, who also don't have a working partner who can at least cover the mortgage while they cut costs elsewhere will be low.

Omg regardless of what you think about the housing market, please do not listen to this poster. Do you have any idea what equity means? It’s just the amount that you would get when you sell. Value always matters. Even if you paid all cash, you don’t want to sell for a loss.

You're completely missing the point. if you're not selling, value doesn't matter. Your payments don't change, the house still serves as shelter. Value is just a number on a page. Having negative equity may prevent you from voluntarily selling, but from an economic standpoint someone who wants to sell but can't, but is still able to make their payments is no different from someone just living in their home like normal. The only time negative equity changes anything is if the owner is unable to make payments and is forced to sell or get foreclosed on, and as I already pointed out, in this area you'd have to fall through so many cracks to reach that situation that the overall number of people who will end up there is very low.

Also, do YOU know what equity means? Tell me exactly where you believe I misused the term. If you pay for a house all in cash and have 100% equity at the time of purchase it is mathematically impossible to be underwater regardless of future changes in value unless your property somehow achieves negative value. If you put 20% down you will have positive equity unless your house value drops 20% or more from purchase price which is very unlikely in this area.

It might not matter to you, but it matters to a lot of people!

NP. It only “matters” if you are selling, trying to refi, or trying to get a HELOC.

If you aren’t selling then it’s a “paper loss”. Just like I was a “paper millionaire” 20 years ago.

If a loss happens in a forest does it ever realize?

Why do people here think that people never need to sell their house? Death, job changes, retirement, relocation…there are lots of reasons houses need to be sold, and judging by this board, there are a bunch of people who have extended themselves to the limit to buy. Even if feds are exempt (which is questionable), a recession will hurt.

How many people have you seen on here count their home equity as part of their retirement savings? Lots counting on selling and moving to a lower LCL area and buying all cash with the DC home equity.

The current run up in home prices has been unprecedented, and if the we see a decline in prices commensurate with 2008, we can see 30-40% losses. There are people out there who bought years ago who will only lose paper profits, but, as usual, anyone who bought toward the end of the boom could get burned. Will that happen, who knows? But it is not a risk to be scoffed at.

WTF are you smoking?

Do you get off on real estate collapse porn?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

+1 the idea that a bunch of “millennials” were homeless before March 2020, or were living with their parents even though they could afford it and are now clamoring to pay 40% more for a house, is ludicrous. Nor did millions of houses just stop existing.

That fact is, demand increased greatly because conditions to buy vs the other options were perceived as excellent in 2020. Extremely low interest rates (which very importantly created a whole new class of mom and pop investors), stimulus (student loan pause and mortgage moratoriums, child tax credits, checks for thousands of dollars, PPP loans, etc) wanting to buy a second home or moving to a low COL area because of WFH, etc. That whipped the media into a frenzy and created a FOMO atmosphere. Problem is, those factors are gone now and people aren’t so much fearing of missing out.

The good news is that the crazy rush didn’t last that long, so most people who bought before 2020 will still be very happy to sell their house for a tidy profit even if prices drop 20-30%. The only people requiring these crazy prices in the face of much lower demand will be people holding the bag of 2020-2021.

Back in Mar 2020, MOST urban millennials were living in condos, maybe townhouses. Professionals were just starting to have kids as they established careers, paid off student debt, and gotten married. They may have a baby, and planned to eventually move to the SFH in the burbs, but they wanted to be able to walk to bars and coffee shops and dog parks and artisanal pacifier shops. Then pandemic hits, and WFH with their spouse and dog and maybe a baby clinches it -- they need a proper SFH NOW. And thus began the great Millenial exodus (which was kinda of already underway, but this poured gasoline on it).

I..ah...er...uhh...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

+1 the idea that a bunch of “millennials” were homeless before March 2020, or were living with their parents even though they could afford it and are now clamoring to pay 40% more for a house, is ludicrous. Nor did millions of houses just stop existing.

That fact is, demand increased greatly because conditions to buy vs the other options were perceived as excellent in 2020. Extremely low interest rates (which very importantly created a whole new class of mom and pop investors), stimulus (student loan pause and mortgage moratoriums, child tax credits, checks for thousands of dollars, PPP loans, etc) wanting to buy a second home or moving to a low COL area because of WFH, etc. That whipped the media into a frenzy and created a FOMO atmosphere. Problem is, those factors are gone now and people aren’t so much fearing of missing out.

The good news is that the crazy rush didn’t last that long, so most people who bought before 2020 will still be very happy to sell their house for a tidy profit even if prices drop 20-30%. The only people requiring these crazy prices in the face of much lower demand will be people holding the bag of 2020-2021.

Back in Mar 2020, MOST urban millennials were living in condos, maybe townhouses. Professionals were just starting to have kids as they established careers, paid off student debt, and gotten married. They may have a baby, and planned to eventually move to the SFH in the burbs, but they wanted to be able to walk to bars and coffee shops and dog parks and artisanal pacifier shops. Then pandemic hits, and WFH with their spouse and dog and maybe a baby clinches it -- they need a proper SFH NOW. And thus began the great Millenial exodus (which was kinda of already underway, but this poured gasoline on it).

I..ah...er...uhh...

I mean this is legit me. Two bedroom apt, two kids in the city, always had about 400k in cash plus about 100k in the market. We could afford a house but the city treated us well. Got pregnant with number three and now moving 1.5 hrs out of the city. Bought house vis face time. Waived all contingencies.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

+1 the idea that a bunch of “millennials” were homeless before March 2020, or were living with their parents even though they could afford it and are now clamoring to pay 40% more for a house, is ludicrous. Nor did millions of houses just stop existing.

That fact is, demand increased greatly because conditions to buy vs the other options were perceived as excellent in 2020. Extremely low interest rates (which very importantly created a whole new class of mom and pop investors), stimulus (student loan pause and mortgage moratoriums, child tax credits, checks for thousands of dollars, PPP loans, etc) wanting to buy a second home or moving to a low COL area because of WFH, etc. That whipped the media into a frenzy and created a FOMO atmosphere. Problem is, those factors are gone now and people aren’t so much fearing of missing out.

The good news is that the crazy rush didn’t last that long, so most people who bought before 2020 will still be very happy to sell their house for a tidy profit even if prices drop 20-30%. The only people requiring these crazy prices in the face of much lower demand will be people holding the bag of 2020-2021.

Back in Mar 2020, MOST urban millennials were living in condos, maybe townhouses. Professionals were just starting to have kids as they established careers, paid off student debt, and gotten married. They may have a baby, and planned to eventually move to the SFH in the burbs, but they wanted to be able to walk to bars and coffee shops and dog parks and artisanal pacifier shops. Then pandemic hits, and WFH with their spouse and dog and maybe a baby clinches it -- they need a proper SFH NOW. And thus began the great Millenial exodus (which was kinda of already underway, but this poured gasoline on it).

Admittedly my sample is skewed but this rings true for me because it describes me and literally all of my friends. At least in my circles, the exodus continues…

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

+1 the idea that a bunch of “millennials” were homeless before March 2020, or were living with their parents even though they could afford it and are now clamoring to pay 40% more for a house, is ludicrous. Nor did millions of houses just stop existing.

That fact is, demand increased greatly because conditions to buy vs the other options were perceived as excellent in 2020. Extremely low interest rates (which very importantly created a whole new class of mom and pop investors), stimulus (student loan pause and mortgage moratoriums, child tax credits, checks for thousands of dollars, PPP loans, etc) wanting to buy a second home or moving to a low COL area because of WFH, etc. That whipped the media into a frenzy and created a FOMO atmosphere. Problem is, those factors are gone now and people aren’t so much fearing of missing out.

The good news is that the crazy rush didn’t last that long, so most people who bought before 2020 will still be very happy to sell their house for a tidy profit even if prices drop 20-30%. The only people requiring these crazy prices in the face of much lower demand will be people holding the bag of 2020-2021.

Back in Mar 2020, MOST urban millennials were living in condos, maybe townhouses. Professionals were just starting to have kids as they established careers, paid off student debt, and gotten married. They may have a baby, and planned to eventually move to the SFH in the burbs, but they wanted to be able to walk to bars and coffee shops and dog parks and artisanal pacifier shops. Then pandemic hits, and WFH with their spouse and dog and maybe a baby clinches it -- they need a proper SFH NOW. And thus began the great Millenial exodus (which was kinda of already underway, but this poured gasoline on it).

I..ah...er...uhh...

I mean this is legit me. Two bedroom apt, two kids in the city, always had about 400k in cash plus about 100k in the market. We could afford a house but the city treated us well. Got pregnant with number three and now moving 1.5 hrs out of the city. Bought house vis face time. Waived all contingencies.

Yes but this has been the story of professionals since time immemorial. At most, Covid accelerated it for some people, but that means that those people who did it sooner than they would have means those people are already gone and there will be fewer of them to make the same moves in the next few years. Google “demand pull.”

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

+1 the idea that a bunch of “millennials” were homeless before March 2020, or were living with their parents even though they could afford it and are now clamoring to pay 40% more for a house, is ludicrous. Nor did millions of houses just stop existing.

That fact is, demand increased greatly because conditions to buy vs the other options were perceived as excellent in 2020. Extremely low interest rates (which very importantly created a whole new class of mom and pop investors), stimulus (student loan pause and mortgage moratoriums, child tax credits, checks for thousands of dollars, PPP loans, etc) wanting to buy a second home or moving to a low COL area because of WFH, etc. That whipped the media into a frenzy and created a FOMO atmosphere. Problem is, those factors are gone now and people aren’t so much fearing of missing out.

The good news is that the crazy rush didn’t last that long, so most people who bought before 2020 will still be very happy to sell their house for a tidy profit even if prices drop 20-30%. The only people requiring these crazy prices in the face of much lower demand will be people holding the bag of 2020-2021.

Back in Mar 2020, MOST urban millennials were living in condos, maybe townhouses. Professionals were just starting to have kids as they established careers, paid off student debt, and gotten married. They may have a baby, and planned to eventually move to the SFH in the burbs, but they wanted to be able to walk to bars and coffee shops and dog parks and artisanal pacifier shops. Then pandemic hits, and WFH with their spouse and dog and maybe a baby clinches it -- they need a proper SFH NOW. And thus began the great Millenial exodus (which was kinda of already underway, but this poured gasoline on it).

Admittedly my sample is skewed but this rings true for me because it describes me and literally all of my friends. At least in my circles, the exodus continues…

Do your friends are the first people to move to the suburbs when they started having kids. Seriously, do you think this is novel?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

+1 the idea that a bunch of “millennials” were homeless before March 2020, or were living with their parents even though they could afford it and are now clamoring to pay 40% more for a house, is ludicrous. Nor did millions of houses just stop existing.

That fact is, demand increased greatly because conditions to buy vs the other options were perceived as excellent in 2020. Extremely low interest rates (which very importantly created a whole new class of mom and pop investors), stimulus (student loan pause and mortgage moratoriums, child tax credits, checks for thousands of dollars, PPP loans, etc) wanting to buy a second home or moving to a low COL area because of WFH, etc. That whipped the media into a frenzy and created a FOMO atmosphere. Problem is, those factors are gone now and people aren’t so much fearing of missing out.

The good news is that the crazy rush didn’t last that long, so most people who bought before 2020 will still be very happy to sell their house for a tidy profit even if prices drop 20-30%. The only people requiring these crazy prices in the face of much lower demand will be people holding the bag of 2020-2021.

Back in Mar 2020, MOST urban millennials were living in condos, maybe townhouses. Professionals were just starting to have kids as they established careers, paid off student debt, and gotten married. They may have a baby, and planned to eventually move to the SFH in the burbs, but they wanted to be able to walk to bars and coffee shops and dog parks and artisanal pacifier shops. Then pandemic hits, and WFH with their spouse and dog and maybe a baby clinches it -- they need a proper SFH NOW. And thus began the great Millenial exodus (which was kinda of already underway, but this poured gasoline on it).

Admittedly my sample is skewed but this rings true for me because it describes me and literally all of my friends. At least in my circles, the exodus continues…

PP here. And you and all of your friends are perfectly happy paying these absurdly high and superficially elevated prices, because...you just HAD to get out of the urban area/city??



if so, you're going to be in world of hurt financially, shortly. You're not just paying a high price to acquire an asset, you're gonna be paying elevated property taxes, home owners insurance, and unless you paid cash (which I promise you, none of you did) one lil blip in prices, and you're upside down on the asset. Sure, you may not have to sell, but you're continuing to pay for an asset (with interest) that is diminishing in value. Yes, I said diminishing in value, because unless the "Greater Fool Theory" holds true, the writing is on the wall. i.e. The Fed's wall. They are TELLING you (and you're not listening).

This is not unfounded doom and gloom, this is literally the markets in action, telling you what's coming.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

+1 the idea that a bunch of “millennials” were homeless before March 2020, or were living with their parents even though they could afford it and are now clamoring to pay 40% more for a house, is ludicrous. Nor did millions of houses just stop existing.

That fact is, demand increased greatly because conditions to buy vs the other options were perceived as excellent in 2020. Extremely low interest rates (which very importantly created a whole new class of mom and pop investors), stimulus (student loan pause and mortgage moratoriums, child tax credits, checks for thousands of dollars, PPP loans, etc) wanting to buy a second home or moving to a low COL area because of WFH, etc. That whipped the media into a frenzy and created a FOMO atmosphere. Problem is, those factors are gone now and people aren’t so much fearing of missing out.

The good news is that the crazy rush didn’t last that long, so most people who bought before 2020 will still be very happy to sell their house for a tidy profit even if prices drop 20-30%. The only people requiring these crazy prices in the face of much lower demand will be people holding the bag of 2020-2021.

Back in Mar 2020, MOST urban millennials were living in condos, maybe townhouses. Professionals were just starting to have kids as they established careers, paid off student debt, and gotten married. They may have a baby, and planned to eventually move to the SFH in the burbs, but they wanted to be able to walk to bars and coffee shops and dog parks and artisanal pacifier shops. Then pandemic hits, and WFH with their spouse and dog and maybe a baby clinches it -- they need a proper SFH NOW. And thus began the great Millenial exodus (which was kinda of already underway, but this poured gasoline on it).

Admittedly my sample is skewed but this rings true for me because it describes me and literally all of my friends. At least in my circles, the exodus continues…

PP here. And you and all of your friends are perfectly happy paying these absurdly high and superficially elevated prices, because...you just HAD to get out of the urban area/city??



if so, you're going to be in world of hurt financially, shortly. You're not just paying a high price to acquire an asset, you're gonna be paying elevated property taxes, home owners insurance, and unless you paid cash (which I promise you, none of you did) one lil blip in prices, and you're upside down on the asset. Sure, you may not have to sell, but you're continuing to pay for an asset (with interest) that is diminishing in value. Yes, I said diminishing in value, because unless the "Greater Fool Theory" holds true, the writing is on the wall. i.e. The Fed's wall. They are TELLING you (and you're not listening).

This is not unfounded doom and gloom, this is literally the markets in action, telling you what's coming.

Eh. Maybe. I think the point PPs and I are trying to make is that pre-pandemic the millennial generation was just getting into the swing of child bearing/raising into the post-toddler years and was also delaying the move to the suburbs longer than previous generations, but the pandemic changed that and so now you have the demographics of the largest generation all starting to swell toward elementary aged kids plus all ceasing with the delay to the move to the suburbs. So, demand is robust enough to withstand some headwinds….

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You think Jerome Powell has the nerve to shake up the housing market? No way. He was supposed to be a hardcore right wing rates guy but dropped to zero so fast it made your head spin. Then a few tweets from Trump and he didn’t touch rates for two years. He will raise twice to three times and that’s it.

He’s not going to do it on purpose. Trump wasn’t facing double-digit inflation, and the opposite is happening here. Biden is screaming at Powell to get inflation under control before the mid-term elections. The concern is that we’re already in the situation we were in in the early 80’s, when the Fed waited so long to act, that by the time Volcker did what he had to do, the cure was very painful.

Interest rates alone aren’t what is worrying. The amount of QE the Fed has to unwind is unprecedented. This is an oversimplification, but the problem is that the Fed has been buying up to $120 billion worth of Mortgage backed securities and Treasuries a month for years. That was $$ off the books of the banks, which allowed them to loan more $$. In May, they’re going to start letting $95 billion worth of those roll off as they mature. It’s not clear that they’ll meet that target, nor that simply letting the bonds roll off will do the trick. They may have to actively sell bonds, and no one has any idea what impact that will have on the loan market, other than not good. Banks will buy those bonds, but that will entail using cash that then won’t be available to loan out as mortgages.

Here’s the doomer perspective, which I don’t necessarily subscribe to, but it’s not outside the realm of possibility:

https://seekingalpha.com/article/4488903-another-housing-bubble-fed-holding-pin

Wait, seeingalpha is suggesting there's a housing bubble? Stop the presses:

https://seekingalpha.com/article/2790915-2015-housing-trends-will-the-echo-bubble-continue-expanding

https://seekingalpha.com/article/4066115-housing-bubble-is-back

https://seekingalpha.com/article/4187390-u-s-housing-bubble-enters-stage-2-suddenly-motivated-sellers

https://seekingalpha.com/article/4236567-splendid-housing-bubbles-in-america-shrink

I didn’t say I agree with them, but I give them credit for being consistent. They predicted that the unprecedented levels of QE would lead to inflation and an unsustainable boom in housing prices (check) and that it would become dangerous when it eventually had to be unwound (which is where we are now). Their position is that it was like a sugar high for the economy, and eventually the crash will come (and they weren’t alone in that, this has been openly discussed for years). We’re going from the Fed buying $40 billion a month to trimming $95 billion a month, and it’s not clear that will be enough to tame inflation. It may be that the Fed can navigate unloading $2.6 trillion in bonds (25% of the mortgage market, for perspective) without harming the market, but that entails a lot of finger crossing and hopium, and is not something that I’m willing to bet my own money on.

Consistent? Broke clock you mean. There is no proof the boom in housing prices is unsustainable, if you mean the prices will hoold. I don’t think any one is advocating that prices will keep rising at the same level, so you would be arguing against a straw man.

And to be honest, they and many others have been warning of inflation for DECADES. Yes it is here. Mostly from supply chain disruptions, but it is up to the Fed to help halt it.

If you think supply chain disruptions are our only problem, I’m not taking market advice from you.

Omg you twit. Demand that exceeds supply is what drives inflation. The vast majority of the injected QE went to rents and larg kk er mortgages. Wages only very recently started rising, lagging inflation so this can’t be the driver. So what has caused the wide spread rise in food, fuel, commodities ?

More clueless crap.



Yes, Deman has exceeded supply since the pandemic started. But the question is WHY? Why wasn't the demand there before? It's not like people suddenly went overnight "OMG!! I gotta buy a house NOW!". But wait...that is EXACTLY what happened. Again, the question is WHY? Answer (in no particular order):

- Eviction Moratorium - When you allow people to live rent free for over 2 years, that's real money/savings that add up. Who got screwed? Landlords.
- Freeze on student loan payments - When you allow people to not pay $1000-$2000 per month, that they are supposed to AND you give them indications that that they may never have to pay it back, that's real money/savings that add up.
- Child Credit - Suddenly people with kids are getting free money for just having kids.
- Enhanced unemployment benefits (including federal and state/local) - When you pay people more to NOT work, vs earning a living, their cost of living drops quite low, and they suddenly have more disposable income.
- PPP loans - I won't even go there..what a cluster$#@ck.

And these are just off the top of my head, and they ALL happened in the last two years. Well, guess what? That most certainly increases demand [b]artificially, for a short term[/b]. That demand is NOT so called milliners going, "ha! now I have kids and I have a good job, gotta go out and buy a house absolutely right NOW!". That's BS and any sane person (not too many here) knows it.

Well, all those "extraordinary" programs from the last 2 years have either already ended or will be ending shortly. AND given the rise in "real" inflation (i.e. cost of everyday goods), the Fed is on a warpath to raise interest rates at the fastest pace in the last 40 years. You REALLY think that will not end up in demand destruction on almost every front, including housing/RE?? If you think so, I got a bridge somewhere...

If DEMAND is what is causing prices to go exponential, then the demand DESTRUCTION is coming. Doesn't happen overnight, but it's coming, if not already being felt in RE already (it is). And RE is about the worst investment if hedging against inflation is your objective. No other asset class has a ~1.5% (property taxes/insurance/maintenance) carrying cost every YEAR. You could have bought any number of other investments (interest rate swaps, Eurodollar options, TIPS) and you'd be perfectly hedges against inflation without that huge carrying cost.

If the above makes your head spin, you have no business commenting on the state of markets/asset classes.

Alternatively, a more simple explanation: demographic boom as Millennial generation enters their prime child rearing years and putting very high demand for SFHs near job centers. A lost decade of development, particularly in family-sized homes, as part of the hangover of the Financial Crisis. And Boomers living in under-utilized real estate as they are not downsizing at rates previously predicted.

Nope. There's no "alternatively".

No demographic boom develops this fast. Millennials where there before the pandemic, are there now, and will be growing older as we speak. Their financial situation did not change OVERNIGHT or within the last 2 years. There's no "cliff" where suddenly all millennials went... ^read above.

This is what I meant by "sane". People are free to rationalize things however they want, nobody's stopping them from that. But when they start offering misguided, uninformed opinions on things that they shouldn't, is when I start getting frustrated about the BS being spewed. I do the above for a living, am very successful at it, and have access to information and markets that the average person does not. I can SEE markets reacting to these things on short/medium term basis. Longer term is always about predictions, and nobody is good at it, including me.

The ONLY reason housing/RE has such a big presence from a financial perspective, is not because "You need a place to live", it's because there are almost no other asset classes (for the average person) where you can leverage your (rather small) investment 20x or even unlimited (0% down). It's LEVERAGE that causes distortions in this space, not DEMAND.

Ask yourself this. When you get a 30 year fixed mortgage with 5% down, who da $#@! is lending you the other 95% at a pitiful rate of under 3% for THIRTY years. Somebody has to put up that money, right? Otherwise you'd never be able to get a mortgage. That's the Bond market. And the Fed controls it, is not outright own it (in Japan's case). Why would somebody lend you money at 3% for THIRTY years, when a 10Y treasury bond now pays 5%?? And that "LENDER OF LAST RESORT", i.e. the Fed is TELLING you (and you're not listening) that they are cutting back, if not stopping it altogether.

THINK. (Not too many people do that)

+1 the idea that a bunch of “millennials” were homeless before March 2020, or were living with their parents even though they could afford it and are now clamoring to pay 40% more for a house, is ludicrous. Nor did millions of houses just stop existing.

That fact is, demand increased greatly because conditions to buy vs the other options were perceived as excellent in 2020. Extremely low interest rates (which very importantly created a whole new class of mom and pop investors), stimulus (student loan pause and mortgage moratoriums, child tax credits, checks for thousands of dollars, PPP loans, etc) wanting to buy a second home or moving to a low COL area because of WFH, etc. That whipped the media into a frenzy and created a FOMO atmosphere. Problem is, those factors are gone now and people aren’t so much fearing of missing out.

The good news is that the crazy rush didn’t last that long, so most people who bought before 2020 will still be very happy to sell their house for a tidy profit even if prices drop 20-30%. The only people requiring these crazy prices in the face of much lower demand will be people holding the bag of 2020-2021.

Back in Mar 2020, MOST urban millennials were living in condos, maybe townhouses. Professionals were just starting to have kids as they established careers, paid off student debt, and gotten married. They may have a baby, and planned to eventually move to the SFH in the burbs, but they wanted to be able to walk to bars and coffee shops and dog parks and artisanal pacifier shops. Then pandemic hits, and WFH with their spouse and dog and maybe a baby clinches it -- they need a proper SFH NOW. And thus began the great Millenial exodus (which was kinda of already underway, but this poured gasoline on it).

Admittedly my sample is skewed but this rings true for me because it describes me and literally all of my friends. At least in my circles, the exodus continues…

PP here. And you and all of your friends are perfectly happy paying these absurdly high and superficially elevated prices, because...you just HAD to get out of the urban area/city??



if so, you're going to be in world of hurt financially, shortly. You're not just paying a high price to acquire an asset, you're gonna be paying elevated property taxes, home owners insurance, and unless you paid cash (which I promise you, none of you did) one lil blip in prices, and you're upside down on the asset. Sure, you may not have to sell, but you're continuing to pay for an asset (with interest) that is diminishing in value. Yes, I said diminishing in value, because unless the "Greater Fool Theory" holds true, the writing is on the wall. i.e. The Fed's wall. They are TELLING you (and you're not listening).

This is not unfounded doom and gloom, this is literally the markets in action, telling you what's coming.

Eh. Maybe. I think the point PPs and I are trying to make is that pre-pandemic the millennial generation was just getting into the swing of child bearing/raising into the post-toddler years and was also delaying the move to the suburbs longer than previous generations, but the pandemic changed that and so now you have the demographics of the largest generation all starting to swell toward elementary aged kids plus all ceasing with the delay to the move to the suburbs. So, demand is robust enough to withstand some headwinds….

"Eh. Maybe" - Seriously? That's all you can come up with?

Again, demographic changes don't happen overnight or within two years. They are a slow moving and happen over time. I'm not arguing with your premise that the millennial generation is reaching the household formation stage. What I'm arguing is that unless they are dumb %#cks, anybody sane would evaluate the current frenzy in the RE markets with an analytical frame of mind. Houses are "Need a place to live", but they are never "Need a place to live RIGHT $#@cking NOW". That's absurd and you know it.

Again, you can rationalize it however you want, that's your prerogative, but spewing an opinion that "So, demand is robust enough to withstand some headwinds…." is nucking futs, when you're not qualified to do so. I am, you're not.