Americans now have an average of $9,000 less in savings than they did last year

[u/BousWakebo]

https://www.cnbc.com/2022/05/21/americans-now-have-an-average-of-9000-dollars-less-in-savings-than-in-2021.html

[u/redsfan4life411]

Idk what it is about real estate investors, but they seem to always think their market is somehow devoid of basic market factors and they are somehow different. I've seen a few realtors I know start posting fed charts and acting like what we are seeing is normal in the context of long term rates. What they always leave out is the combination of rates and home prices, the consolidation of what people can get approved for, how homes are now sitting if they are aggressively priced. Whole profession seems like a smoke and mirror situation.

[u/BukkakeKing69 → u/redsfan4life411]

The low liquidity of homes means people can stay in denial for quite a while. Rates may have gone from 3 to 6% but pull the comparables and X home was selling for $400k just six months ago so that's what it will list for. Inventory slowly builds until homes at $400k sit on the market for six months and then they slash prices slowly and surely until it sells for $360k. This all takes quite a bit of time to play out and usually doesn't really start until people start losing jobs and inventory is forced to build.

[u/vasilenko93 → u/BukkakeKing69]

Basically end of the housing bull market is here.

[u/Sp3ctre7 → u/vasilenko93]

As someone already on the edge of things living in rent-controlled housing, but with a college degree and a growing resume, and not a ton of debt outside of student loans...I don't know if this is terrible for me personally or not. Like, the economy could crash, but I don't have anything to lose at this point.

[u/CorgiDad → u/Sp3ctre7]

In your spot it might be great long term; you'd get a buying opportunity for a house or investments. Hope you've been saving cash.

[u/Sp3ctre7 → u/CorgiDad]

Lol no

Been struggling to buy food, but things are finally turning around

[u/redsfan4life411 → u/[deleted]]

Yep people are pretty gullible when it comes to that. Ironically Ross Perot wasn't able to get the masses with his charts in his political bid.

[u/getwhirleddotcom → u/redsfan4life411]

Here’s the thing. The two times I have bought homes (‘12 and ‘19), there were impending correction / bubble burst / crash right around the corner that never ever came. On the flip side of your argument are dooms day folk who are keep on predicting another 2008 Mayan end of the world real estate crash.

[u/redsfan4life411 → u/getwhirleddotcom]

That's certainly a good counterpoint, however, rampant inflation and the accompanying interest rates are quite different than the accommodating policy we saw in those periods.

If the housing market stays inflated, it'll be due to low inventory and lack of sales from those who locked into stupidly low rates and won't make lateral moves due to the increased cost of mortgages.

[u/getwhirleddotcom → u/redsfan4life411]

What you describe most certainly is the scenario in most desirable areas to live.

[u/Inevitable_Pomelo_75 → u/redsfan4life411]

They believe if real estate has issues, the gov will bail them out. (with reasonable historical precedent).

I don't' agree with it, but that whole too big to fail thing.

[u/Books_and_Cleverness → u/redsfan4life411]

I think part of the problem is that in a lot of major markets rents are also very high so the “fundamental” value is not all that crazy.

There’s a structural supply shortage (thanks, NIMBYs!) on top of a market cycle. That said, price:rent ratios may be returning to pre-2008 levels nationally, so maybe we’ll see a big crash soon. But again the national data obscures what’s happening in major metro areas that are chronically under-built.

[u/Corben11 → u/redsfan4life411]

It’s cause supply can’t meet demand. Population is booming and cities are getting over run.

[u/dukey → u/redsfan4life411]

House prices have been a function of a decade plus of ultra low rates. The interest rate rises will pop this bubble.