Posted on 02/17/2022 7:16:48 AM PST by Az Joe
Reversed. Discount is usually above Fed Funds.
Well said.
Taken together, Brandon’s policies are designed to destroy the middleclass.
On the rubble, Bammy and Hillary can build the new Marxist man.
Like it . . . or else.
There will be a crash when people can’t make the mortgage payments. What also happens is that people walk away from their mortgages when their home’s value takes a big tumble.
In many states, mortgages are non-recourse. In other words, if a person gives their home back to the lender, the lender can’t come back at them for any deficiency. It’s sort of a protection to encourage lenders to not loan more than what property is worth in the short to medium term. Once that happens, look for house prices to fall dramatically.
Also, it is the investors buying up houses for rental income. When those values start to drop significantly, they will sell their properties. They will still have made a good return on their investments, but they don’t want to wait until the market hits bottom.
Yep......that’s right. You’ll own nothing and like it.
I sold right after the election theft in November 2020. Moved in state to a conservative area from a liberal craphole. A lot of people are doing the same thing.
I can see a geographic based crash
A home isn't an investment. It's a home. Anyone who treats it the same way they'd look at other types of investments has no idea what the heck they're doing. In some cases, I'd say people who do this are morons.
Meanwhile, the residential real estate market is mismatched, with investment money piling into existing properties but inadequate new construction. This suggests that many large investors and lenders are unwilling to chance the long lead times required to build new because they fear a price drop and weak sales before new construction can reach the current overheated market.
Paradoxically, for a time, this adds to upward pressure on prices, making for further distortion in the market and adding to the unreliability of price signals. Eventually though, even in real estate, markets must clear and will settle at a new, lower price level, but with many having to eat their losses.
Could be.
Example using my own home:
If Zillow is any guide, (maybe it is, maybe it isn’t,) exactly 1 year ago and proceeding for several months after, my home was appreciating at a rate of 6%.....A MONTH!
Then about mid-summer this stopped and by the Fall my home was appreciating at .6% a month!
Now it is appreciating at 2% a month. I have a modest, smaller home in the Phx metro market. The location is very good.
Again, I’m only going by Zillow and a couple other online listers BUT this last year seems to have some weird, unrealistic swings in it!
Recently, with losses in the residential investment unit mounting due to carrying costs, Zillow fired the leadership team and stopped new purchases. One day, these sorts of strains will be seen as the warning signs that housing was overbought and had reached unsustainable price levels.
Before the last real estate crash, an analyst in Connecticut was skeptical of the relentless price increases and the vast sums pouring into real estate via CDOs (collateralized debt obligations). He flew down to Miami-Dade to look at the subdivision his numbers showed was the epicenter of the price spikes.
Standing at the intersection that was ground zero, he saw that on the four corners, three of four homes were for sale, with the entire subdivision peppered with for sale signs. Research at the local clerk of courts and talks with local real estate experts showed a rising level of foreclosures and a spike in sales.
The analyst then raised every nickel he could and shorted interest rate options. When the crash came, he was up by about thirty million dollars.
As always though, the timing of market turns is chancy and there are people who saw the crash coming, tried the same strategy, but lost because they were too soon. And sometimes it is lucky to be late to the party.
Years ago, there was a vast run up in the prices of silver that was fueled by a billionaire intending on making silver an alternative reserve asset to gold. The silver price had risen so high that ordinary people were literally selling off family heirloom silverware because the metal value exceeded their value as objects.
My two brothers decided to get in on the silver boom and raised several thousand dollars in cash. Going to the silver merchant one morning to buy bullion, they were disappointed to find that he had sold out. That evening, the news reported that the silver prices had suffered a dramatic fall. The bubble had popped, with my brothers fortunate to have missed out entirely.
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