Has inflation pushed you over the edge?

[ASAP]

Originally Posted by tgrundke

100% agree. Where the political class failed in 2009/2010 was in not letting more bad actors fail and suffer the consequences. As a result, the bubble being blown right now is even more massive, across more asset classes than just real estate.

Do you know what is the absolute scariest?

There are a ton of people that have used the extra equity in their homes, financed out and invested that money in the stock market lol.

The crash could be of spectacular proportions... 2008 no one wanted to stop the party... feels very similar now.

[ASAP]

Originally Posted by 3.0L

Here in California we enjoy the benefits of Prop 13 where your home is taxed on what you paid for it; not what it's worth. This is particularly good for folks who purchased their homes long ago and are still living in them when they retire. Prior to prop 13 I saw some retired folks lose their homes because they could not afford the ever increasing property taxes as the value of their homes continually increased. Owning a valuable home is great, but that is not money in your pocket.

I think thats very fair on your first... ie homestead property that you live in, definitely not on others you own.

With that being said, the extra equity in people's homes has caused them to do dumb things as I've mentioned above... the only true benefit in inflated housing prices is if you are trying to sell and invest into another asset class or time the market by hoping for a drop and rebuying something nicer or perhaps larger.

Outside of that, if you are staying in your own home... or trying to swap for another it's 1 for 1 expensive... there is little to no value in it.

[DenverSteve]

Originally Posted by ASAP

Do you know what is the absolute scariest?
The crash could be of spectacular proportions... 2008 no one wanted to stop the party... feels very similar now.

Fortunately, there is no similarity between 2008 and now. The current situation has nothing to do with banking problems. Anyone who is moving money around that involves their primary residence is foolish.

[ASAP]

Originally Posted by DenverSteve

Fortunately, there is no similarity between 2008 and now. The current situation has nothing to do with banking problems. Anyone who is moving money around that involves their primary residence is foolish.

There is no similarity from a subprime loan perspective... but if we have a bubble burst and the business slows in other assets it will have an immediate impact on real estate... perhaps a lot of people are affording their homes due to "other investments". All of that security will fly out the window if we have an overall asset crash.

[DenverSteve]

Originally Posted by ASAP

There is no similarity from a subprime loan perspective... but if we have a bubble burst and the business slows in other assets it will have an immediate impact on real estate... perhaps a lot of people are affording their homes due to "other investments". All of that security will fly out the window if we have an overall asset crash.

Having gone through too many real-estate ups and downs in California I've learned to never leverage any property on, or for, another - and pay cash for all my purchases. Unless you're carrying debt, no ups and downs will affect you more than a mild inconvenience. In fact when there are upheavals in the real estate market I make more money on rentals than when things are smooth and stable. If you are "affording" your home due to "other investments" - you can't afford your home.

[ryan stewart]

We are in a bubble but nothing about this even closely resembles 2007-2008. You don't have the secondary derivative market driving it like you did then

It's a combination of free money and rebounding from a literal once in a century event. The latter is going to take time to shake out, the former requires unpopular changes being made. I've been worried about our corporate debt load for a few years now.

[Tyga11]

Originally Posted by ryan stewart

We are in a bubble but nothing about this even closely resembles 2007-2008. You don't have the secondary derivative market driving it like you did then

It's a combination of free money and rebounding from a literal once in a century event. The latter is going to take time to shake out, the former requires unpopular changes being made. I've been worried about our corporate debt load for a few years now.

I agree with this. iBuyers accounted for a little over 30% of the home purchases in Phoenix before Zillow exited the market a month or so ago. They were artificially driving home prices up but that seems to have leveled off and prices are coming down now.

[DenverSteve]

Originally Posted by ryan stewart

We are in a bubble but nothing about this even closely resembles 2007-2008. You don't have the secondary derivative market driving it like you did then

It's a combination of free money and rebounding from a literal once in a century event. The latter is going to take time to shake out, the former requires unpopular changes being made. I've been worried about our corporate debt load for a few years now.

Let's hope it's a once-in-a-lifetime event. My concern with so many things changing on the planet, that we're going to see more of these viruses/bacteria released and see more frequent pandemics and other mutations that wreak havoc. Let's hope not.

[ASAP]

Originally Posted by ryan stewart

We are in a bubble but nothing about this even closely resembles 2007-2008. You don't have the secondary derivative market driving it like you did then

It's a combination of free money and rebounding from a literal once in a century event. The latter is going to take time to shake out, the former requires unpopular changes being made. I've been worried about our corporate debt load for a few years now.

I am confused... you are saying "rebounding".

This is true... but that is somehow missing that we havent raised rates in the 9 years prior that created an asset bubble. We never had a single downturn in the last 10 years... this doesnt follow economic cycles and we've been feeding it. If Covid never happened, I feel we would be even in a worse spot from a bubble perspective.

[BenoBVB]

Personally, inflation not so much. More so the new rules with international covid regulations. I travel frequently internationally and there's definitely more of a "process" to entering countries. Sometimes a pain in the *** depending on where you're going.

Hopefully no monkeypox disease as broadcasted on the news recently. As if people cant travel abroad without making love to some random animals and bringing back a virus.

[OkieSnuffBox]

Originally Posted by freakystyly

When a $200k income is having a hard time getting into these markets, what does that leave for the $20k?

A roommate?

[ryan stewart]

Originally Posted by ASAP

I am confused... you are saying "rebounding".

This is true... but that is somehow missing that we havent raised rates in the 9 years prior that created an asset bubble. We never had a single downturn in the last 10 years... this doesnt follow economic cycles and we've been feeding it. If Covid never happened, I feel we would be even in a worse spot from a bubble perspective.

Not sure the disconnect here. Rebounding in the context that we just came out of a once in a century event. That should be pretty obvious. We did also have a quarter of retraction in 2018 but it had its own trigger.

Rates are a problem, I dont deny that. I just dont think they are the key driver to this most current problem. But I stated before Im concerned about the current debt load due to that free money and, of course, there is the impact on the housing markets.

[ryan stewart]

Originally Posted by DenverSteve

Let's hope it's a once-in-a-lifetime event. My concern with so many things changing on the planet, that we're going to see more of these viruses/bacteria released and see more frequent pandemics and other mutations that wreak havoc. Let's hope not.

The hope is we have some time but even Bush and Obama agreed it was going to be a much bigger, and more frequent problem. As we continue to encroach on more environments we get exposed to new pathogens, couple that with considerably increased mobility and pandemics can move much more quickly.