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

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

Clickbait gets the clicks, amirite?

What specifically do you think is going to happen to “pop” this “bubble”? 
[/quote]

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

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

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

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

Being “house poor” doesn’t mean people “can’t afford” their homes.

How are they going to default on their loans? Lose their jobs while unemployment is crazy low?

Market cooldown <> bubble popping. 
[/quote]

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