Most Americans would part with a nut to get on the housing ladder. And government knew it. Smart people have basically lived for free for most of their lives.
It is going to take a lot to turn housing back to a form of shelter instead of a great investment.
Let's see how pinhead does verses trend in terms of national debt growth:
Looking at recent history, by decade, the U.S. added $1 trillion to the Debt:
Be careful of recency bias. (Not sure who I’m saying that to. You Americans or myself)
Canada, NZ and Australia have had house prices go beyond USA prices for decades. No drop during the GFC in Australia.
Since Covid it dawned on me that it might not be interest rates that topple the mighty Australian property market but inflation.
As the cost of goods and services rise, or the purchasing power on the earned weekly wage decreases, surely the ability to pay the mortgage decreases. Surely 🙏
But I’ve been foolishly wrong for a long while now.
Costs exceed ability to buy. Homes need to to sell at a price point that will attract buyers. I would expect some banks are going to face defaults and so loans will be harder to get so buyers will still not be able to buy. This is why it could be a long time. Basically everyone is broke or underwater. You try to sell house but you can't get what you owe. Might have to mail in your keys and make other arrangements for housing
Great article John, and timely for so many waiting to buy while stuck in rental units, which are being built helter skelter without regard to taste and appearance. I have family who have been fruitlessly looking for affordable housing who will welcome your analysis.
I live in Lakewood Ranch, Florida. It's a location between Tampa/St Pete and Sarasota. I have tracked the Zillow Zestimate value of my home every month from its high in May 2022, and it has dropped every month since. It has now dropped a full 20% since May 2022. Thankfully, I never considered my home as an investment, but rather just a nice place to spend my golden years.
Most Americans would part with a nut to get on the housing ladder. And government knew it. Smart people have basically lived for free for most of their lives.
It is going to take a lot to turn housing back to a form of shelter instead of a great investment.
Let's see how pinhead does verses trend in terms of national debt growth:
Looking at recent history, by decade, the U.S. added $1 trillion to the Debt:
Every 24 months in the 2000s, on average
Every 11 months in the 2010s, on average
Every 5 months in the 2020s, on average
Be careful of recency bias. (Not sure who I’m saying that to. You Americans or myself)
Canada, NZ and Australia have had house prices go beyond USA prices for decades. No drop during the GFC in Australia.
Since Covid it dawned on me that it might not be interest rates that topple the mighty Australian property market but inflation.
As the cost of goods and services rise, or the purchasing power on the earned weekly wage decreases, surely the ability to pay the mortgage decreases. Surely 🙏
But I’ve been foolishly wrong for a long while now.
Costs exceed ability to buy. Homes need to to sell at a price point that will attract buyers. I would expect some banks are going to face defaults and so loans will be harder to get so buyers will still not be able to buy. This is why it could be a long time. Basically everyone is broke or underwater. You try to sell house but you can't get what you owe. Might have to mail in your keys and make other arrangements for housing
Great article John, and timely for so many waiting to buy while stuck in rental units, which are being built helter skelter without regard to taste and appearance. I have family who have been fruitlessly looking for affordable housing who will welcome your analysis.
I live in Lakewood Ranch, Florida. It's a location between Tampa/St Pete and Sarasota. I have tracked the Zillow Zestimate value of my home every month from its high in May 2022, and it has dropped every month since. It has now dropped a full 20% since May 2022. Thankfully, I never considered my home as an investment, but rather just a nice place to spend my golden years.
If the Fed tries to cut interest rates, I’d bet on the bond vigilantes forcing up long rates and mortgage rates.
18 months, probably. Years? BS