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

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

Market cooling &lt;&gt; bubble

You think there will be a bunch of bankruptcies? Foreclosures? 
[/quote]

I think when people’s homes are underwater they walk away.  Especially second homes - vacation or rental.  [/quote]

[b]I don't understand why you think people just walk away if their house is underwater, [/b]second homes included.  If you need a place to live or don't need to sell your second home, you wait it out until the value rises again.  It isn't like your home is a checking account where you suddenly have less money to spend. [/quote]

People walk away when they don't have any equity in the house because of reduced value, and they can no longer afford to pay the monthly mortgage. Or they don't want to keep paying the mortgage if they can rent for less. If you have no equity in the house, you are not losing anything (other than your credit rating) when you walk away. Read about the 2007-2008 housing crisis. [/quote]

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