Economy The great housing market crash of 2022

[deadon]

Inflation is hurting people but its not going to make them default on their homes, unless they use their jobs. The first logical thing they will do is stop spending money on gas which is the thing that's increased the most.... but demand destruction for gas hasn't even happened yet.

How do you stop spending money on gas or food?
Let's say you own a suv and a lot of people do along with trucks. How do you sell them when the price of fuel is so high?
Not going to the office or not traveling for vacations leads to what? Service areas of the economy will see a decline in customers. That leads to what? More job losses.
Think about what working from home is doing to restaurants. No lunches right?
Like I said, it's all a domino affect. This all plays a role in housing. But don't worry they're building apartments everywhere.

 

[jimjamjammer]

How do you stop spending money on gas or food?
Let's say you own a suv and a lot of people do along with trucks. How do you sell them when the price of fuel is so high?
Not going to the office or not traveling for vacations leads to what? Service areas of the economy will see a decline in customers. That leads to what? More job losses.
Think about what working from home is doing to restaurants. No lunches right?
Like I said, it's all a domino affect. This all plays a role in housing. But don't worry they're building apartments everywhere.

Banks here are already stress testing for 7+% rates... let that sink in.

 

[MeatheadMike]

Can I ask when the last time you bought a home was?

Sure, I bought a condo in 2010 when I was still single.

Now I'm married, have a daughter who was born in 2019 , and have been looking to move out of the condo and buy a house ever since late 2019. Trying to buy a home during this time period has been the single most unpleasant experience of my life. Anyone who already owns a house has no clue what a nightmare this is, and will never understand the singular misery buyers are facing. Every day I read about the housing market and spend about an hour searching to see if an new houses came up that I haven't already seen, because opportunities are so rare and go so fast that I can't afford to miss anything.

Like I said at the beginning of this thread... there's' nothing I'd like more than a housing crash. But I know from all the competition I've faced, there's tons of people just like me wanting the same thing.... and that's why there won't be one (at least not anytime soon). When unemployment starts to go up, we'll see.

 

[MeatheadMike]

How do you stop spending money on gas or food?
Let's say you own a suv and a lot of people do along with trucks. How do you sell them when the price of fuel is so high?
Not going to the office or not traveling for vacations leads to what? Service areas of the economy will see a decline in customers. That leads to what? More job losses.
Think about what working from home is doing to restaurants. No lunches right?
Like I said, it's all a domino affect. This all plays a role in housing. But don't worry they're building apartments everywhere.

Gas and food are inelastic but that doesn't mean that they are completely immune from demand destruction.

Record high oil prices in the 70s, caused demand destruction which led to the oil glut in the 80s.

Yes it can all lead to job loss down the line, but we aren't there yet. Its the opposite right now... there's a labor shortage, and unemployment numbers are at record lows.

 

[heloder]

Record high oil prices in the 70s, caused demand destruction which led to the oil glut in the 80s.

One advantage we have now is that there are many jobs that can be done from home, which I imagine companies will take advantage of if they can. That alone will drop demand.

 

[shockaholic12]

Sure, I bought a condo in 2010 when I was still single.

Now I'm married, have a daughter who was born in 2019 , and have been looking to move out of the condo and buy a house ever since late 2019. Trying to buy a home during this time period has been the single most unpleasant experience of my life. Anyone who already owns a house has no clue what a nightmare this is, and will never understand the singular misery buyers are facing. Every day I read about the housing market and spend about an hour searching to see if an new houses came up that I haven't already seen, because opportunities are so rare and go so fast that I can't afford to miss anything.

Like I said at the beginning of this thread... there's' nothing I'd like more than a housing crash. But I know from all the competition I've faced, there's tons of people just like me wanting the same thing.... and that's why there won't be one (at least not anytime soon). When unemployment starts to go up, we'll see.

Sorry dude, know it’s really rough. Went through something similar in LA and only was able to score a house through stroke of luck because the previous owner was desperate to get a squatter out ASAP and the bid that had beat us fell through.

Basically takes a few miracles that are completely out your control to beat the competition.

 

[deadon]

Gas and food are inelastic but that doesn't mean that they are completely immune from demand destruction.

Record high oil prices in the 70s, caused demand destruction which led to the oil glut in the 80s.

Yes it can all lead to job loss down the line, but we aren't there yet. Its the opposite right now... there's a labor shortage, and unemployment numbers are at record lows.

We're watching everyone say we're in or very close to a recession right now today on the news. They're speaking to hedge fund managers.
We're starting to see layoffs. Again, I'm cool with just coming back to this topic.

Yes I know what's it's like to try and buy in this market. I wanted to take advantage to our 750k in equity and it wasn't worth trying in the end.

What the market was weeks ago isn't the same as it is today.

 

[deadon]

How these people going to buy a home at high prices and high rates?

 

[MeatheadMike]

We're watching everyone say we're in or very close to a recession right now today on the news. They're speaking to hedge fund managers.
We're starting to see layoffs. Again, I'm cool with just coming back to this topic.

Yes I know what's it's like to try and buy in this market. I wanted to take advantage to our 750k in equity and it wasn't worth trying in the end.

What the market was weeks ago isn't the same as it is today.

I think the official definition of recession is 2 consecutive quarters of negative GDP growth... we already had one quarter, so that is very likely to happen by end of June. But the unemployment numbers are what matter more IMO.

Was going to ask you if you sold your house to take the profit.... yea I wouldn't have sold either, because if you did you'd have to buy something else to live in during this current mess, definitely not worth it. BTW that's another factor keeping inventory low. Its going to be a slow process for the housing market to come back to something that looks normal imo, not likely to happen in 2022.

 

[deadon]

I think the official definition of recession is 2 consecutive quarters of negative GDP growth... we already had one quarter, so that is very likely to happen by end of June. But the unemployment numbers are what matter more IMO.

Was going to ask you if you sold your house to take the profit.... yea I wouldn't have sold either, because if you did you'd have to buy something else to live in during this current mess, definitely not worth it. BTW that's another factor keeping inventory low. Its going to be a slow process for the housing market to come back to something that looks normal imo, not likely to happen in 2022.

Yeah there was no point. We looked at the Midwest and prices were way to high for the risks involved.

We're set to see two neg GDP numbers. This will be a fun topic anyway. Should get interesting.

 

[Dalarna3]

Do you have any stats on people that couldn't afford their mortage because they lost their job vs their payment ballooned?

I’m sure losing one’s job presents a bigger risk than having an interest rate increase. But rates were low in 2009.

 

[560ti]

How these people going to buy a home at high prices and high rates?

If your living paycheck to paycheck then you where never in the running for a house even a year ago before shit got crazy. In my area nobody even looks at an offer that doesn't have at least 10% down and if the neighborhood is desireable they aim for at least 20% if not 100% straight cash.

In the era of "multiple offers" someone who lives paycheck to paycheck will never make a competive offer anyways.

Even pre-covid (2019) houses where rising above appriased values so banks in my area wanted at least 5-10% down to offset the difference (which once again, someone whose paycheck to paycheck never had that much cash on hand so they where weren't in the market for a home purchase pre-covid let alone now)

There are plenty of investors sitting on cash waiting for individual demand to cool off.

Especially in the popular $300-500k market range.

Like you said we'll never see a crash because the moment houses in those range dip even 10% the investors will swoop back in and buy them all up.

 

[deadon]

If your living paycheck to paycheck then you where never in the running for a house even a year ago before shit got crazy. In my area nobody even looks at an offer that doesn't have at least 10% down and if the neighborhood is desireable they aim for at least 20% if not 100% straight cash.

In the era of "multiple offers" someone who lives paycheck to paycheck will never make a competive offer anyways.

Even pre-covid (2019) houses where rising above appriased values so banks in my area wanted at least 5-10% down to offset the difference (which once again, someone whose paycheck to paycheck never had that much cash on hand so they where weren't in the market for a home purchase pre-covid let alone now)

Especially in the popular $300-500k market range.

Like you said we'll never see a crash because the moment houses in those range dip even 10% the investors will swoop back in and buy them all up.

Don't worry, if you keep your job you'll own soon enough.

 

[boingyman]

What we're going to likely see now is a cool off period. What happens after that nobody knows. If the housing market does drop I could see it dropping 10-20% depending on supply.

 

[deadon]

Hmm it's coming.
https://www.forbes.com/sites/jonath...when-reset-could-cool-prices/?sh=4072f92d3a9e

 

[MMA Time Soldier]

White Privilege Joe Biden wrecking the country with his policies and funding his crackhead son's war in Ukraine.

 

[ElKarlo]

Just bumping this with the Dow below 30k today.

Oh, while rumors now stirring that the housing market is about to be rocked. And just watch, it is going to start with the market cooling, and then as people cannot pay their mortages, the foreclosures will follow. This all just getting started

I was posting that. People are running out of money to spend on things. Add in 6% mortgage and you’ll see things freeze up. Same with autos. It stakes tons of inputs to make a house and you’ll see a lot of this industries hurt by that

 

[ElKarlo]

What we're going to likely see now is a cool off period. What happens after that nobody knows. If the housing market does drop I could see it dropping 10-20% depending on supply.

What’s been said is that unlike 08, this isn’t an over supply for the under qualified. This is about affordability mixed with supply.
Hopefully it bounces back faster than 08, but that depends on the job market as well. No jobs and high rates and you won’t see anyone buy

 

[Pride23]

To me I don't even believe it to be a question that prices will continue to fall.

I think I read that percentage of income going towards home payments was at its highest. That trend cannot continue in a rising interest rate environment.

People are already cutting back consumption. The one's that lose jobs will be in big trouble in a slowing economy and the ones looking to buy still will be vastly cut by the higher interest rate and less people looking to sell as prices fall more and more will have their mortgage under water.

The Fed is literally sucking all of the liquidity out of the market. The real estate market is the most illiquid and slowest to react. Equities and Crypto have already tanked and are going down further.

 

[mjfan23]

White Privilege Joe Biden wrecking the country with his policies and funding his crackhead son's war in Ukraine.

Serious question: his son likely didn’t want this war he was in bed with both Ukrainians and Russians