[chassis]

Originally Posted by tgrundke

"The market can remain irrational far longer than you can remain solvent."

It was 5 years before the housing market began to recover after peaking in late 2007.

We're in a situation today where the vast majority of mortgage holders have rates under 4%, and the runup in values the last 5 years has been such that buyers cannot afford these prices and sellers aren't willing to take a loss.

Unless there's forced selling, expect this murky situation to continue longer than anyone cares to believe it can...

Agree. Supply tightness has little to do with interest rates. Underbuilding post-GFC combined with natural population growth has created tightness. This will take a long time to loosen, if it loosens.

It took 15 years to get here, 15 years to change it seems within the realm of the possible.

[Donatello.]

Originally Posted by tgrundke

"The market can remain irrational far longer than you can remain solvent."

It was 5 years before the housing market began to recover after peaking in late 2007.

We're in a situation today where the vast majority of mortgage holders have rates under 4%, and the runup in values the last 5 years has been such that buyers cannot afford these prices and sellers aren't willing to take a loss.

Unless there's forced selling, expect this murky situation to continue longer than anyone cares to believe it can...

Except those would be sellers would most likely make a profit so incorrect.

However, there is the other side of that coin...they sell & have to buy something else. They end up paying more for less than they had in a lot of cases. THAT is why they are not selling.

There will be forced defaults once these payments catch up with the people that keep overpaying

[Donatello.]

Originally Posted by chassis

Agree. Supply tightness has little to do with interest rates. Underbuilding post-GFC combined with natural population growth has created tightness. This will take a long time to loosen, if it loosens.

It took 15 years to get here, 15 years to change it seems within the realm of the possible.

Around here, the new home builders are still building like no tomorrow. ARe those homes quality or what some of us want? Not likely.

It did not take 15 years to get here, though. Using the 2008 bs as the timeline start is not the right call IMO.

We haven't even touched on the crazy cost of rent as well.

This entire COL bs we are in right now will not go on for 15 years. It can't. The 99% are being murdered...

[Donatello.]

Originally Posted by chassis

What is "this" and what is the reason it doesn't "go on" for another 10?

All of it. Wages not keeping up with this insane COL, housing, interest rates, cost of cars, etc.

The car market has already started to correct. You think housing etc won't? Stop ignoring history

[2000cs]

Originally Posted by Donatello.

Except those would be sellers would most likely make a profit so incorrect.

However, there is the other side of that coin...they sell & have to buy something else. They end up paying more for less than they had in a lot of cases. THAT is why they are not selling.

There will be forced defaults once these payments catch up with the people that keep overpaying

Tax rules also lead to selling delays - have to occupy 2 years out of the past 5 to roll gain into a new property or avoid a big tax bill. But that same rule makes trading down harder (more expensive). So it will be interesting to see how this plays out.

[other_evolved]

Originally Posted by Donatello.

All of it. Wages not keeping up with this insane COL, housing, interest rates, cost of cars, etc.

The car market has already started to correct. You think housing etc won't? Stop ignoring history

Eh, as soon as rates start to drop you'll see an influx of supply hit the market and lots of hungry buyers will follow. I don't think it'll be like 2021/2022 style but I don't think housing in most markets takes a huge hit in the next few years.

[440i6MT]

Originally Posted by Donatello.

All of it. Wages not keeping up with this insane COL, housing, interest rates, cost of cars, etc.

Good. Globalism means more equality across the globe.

The average person also doesn't know what they need. They will be happy with a little smart car, an apartment, a phone, and beyond meat.

[P1]

Originally Posted by BMW F22

So question: is now a good time to buy a house (or another house)? I’m in NorCal and it’s just so expensive that I’m hesitant because I don’t wanna be house poor.

If "house poor" even pops into head when thinking about buying, then don't do it. Stressing over money isn't fun, especially when sitting on an asset you can't move quickly. And why do you need a second house?

[Donatello.]

Originally Posted by 440i6MT

Good. Globalism means more equality across the globe.

The average person also doesn't know what they need. They will be happy with a little smart car, an apartment, a phone, and beyond meat.

You cannot be for real. smh...

[Donatello.]

Originally Posted by other_evolved

Eh, as soon as rates start to drop you'll see an influx of supply hit the market and lots of hungry buyers will follow. I don't think it'll be like 2021/2022 style but I don't think housing in most markets takes a huge hit in the next few years.

Of course. The question is when will rates drop & by how much. We don't know, it's a waiting game as always.

The problem is everything is manipulated by the wrong people.

[tgrundke]

Originally Posted by Donatello.

Of course. The question is when will rates drop & by how much. We don't know, it's a waiting game as always.

The problem is everything is manipulated by the wrong people.

Add to this insurance rates, both auto and homeowners: I just received my homeowners policy renewal for my Cleveland area home and the renewal went up from $1,200/year to $2,050/year.

I can only imagine the costs for those who have to carry any type of natural disaster coverage such as hurricane, flood, fire, etc.

[dmatre]

Originally Posted by Donatello.

Of course. The question is when will rates drop & by how much. We don't know, it's a waiting game as always.

The problem is everything is manipulated by the wrong people.

Given that rates are now very close to their historical average, what makes you think that rates are going to drop significantly in the future?

[ASAP]

Originally Posted by dmatre

Given that rates are now very close to their historical average, what makes you think that rates are going to drop significantly in the future?

I think they will just because we live in a time that is addicted to low rates to keep things going... since the great recession we haven't lived on high rates and I don't think we can in the future... unless we want a consistently contracted economy. I don't think anyone will allow that. I predict 5% within a year and expect that to be the new average. Below 5% is unlikely unless we hit a major recession... and rest assured, if that happens, this will be the first lever to be pulled.

[tgrundke]

Originally Posted by ASAP

I think they will just because we live in a time that is addicted to low rates to keep things going... since the great recession we haven't lived on high rates and I don't think we can in the future... unless we want a consistently contracted economy. I don't think anyone will allow that. I predict 5% within a year and expect that to be the new average. Below 5% is unlikely unless we hit a major recession... and rest assured, if that happens, this will be the first lever to be pulled.

I'll take the other end of this trade: I think that barring a major shock to the system, we're going to see inflation re-accelerate in Q2+Q3 this year. All it will take is a relatively small increase in commodity prices. Just because big consumer goods have dropped from their COVID highs doesn't mean consumers, especially in the lower 1/3rd, aren't feeling lots of pain right now.

Services inflation is still running wildly hot: medical, insurance, housing, rent, construction, utilities. Add to this some significant local tax increases, and I think we're going to see inflation jump around to different sectors quite a bit.

Again, outside of something major, they're going to have to keep rates where they are for quite some time to avoid re-acceleration. The problem is that we have some structural issues that are likely to add to inflationary pressure:

1. Boomer retirements accelerating
2. Re-shoring of manufacturing (Money spent on US based construction of factories has almost tripled in the last 2 years)
3. Accelerating manufacturing costs in Asian and Latin America
4. Green initiatives
5. Mindset shift in productivity for the 18 - 39 segment
6. Taxes will likely increase

These are major structural factors that are going to add fuel to inflation.

[ASAP]

Originally Posted by tgrundke

I'll take the other end of this trade: I think that barring a major shock to the system, we're going to see inflation re-accelerate in Q2+Q3 this year. All it will take is a relatively small increase in commodity prices. Just because big consumer goods have dropped from their COVID highs doesn't mean consumers, especially in the lower 1/3rd, aren't feeling lots of pain right now.

Services inflation is still running wildly hot: medical, insurance, housing, rent, construction, utilities. Add to this some significant local tax increases, and I think we're going to see inflation jump around to different sectors quite a bit.

Again, outside of something major, they're going to have to keep rates where they are for quite some time to avoid re-acceleration. The problem is that we have some structural issues that are likely to add to inflationary pressure:

1. Boomer retirements accelerating
2. Re-shoring of manufacturing (Money spent on US based construction of factories has almost tripled in the last 2 years)
3. Accelerating manufacturing costs in Asian and Latin America
4. Green initiatives
5. Mindset shift in productivity for the 18 - 39 segment
6. Taxes will likely increase

These are major structural factors that are going to add fuel to inflation.

You could be 100% right... I just hope for the sake of this country you are wrong... CPG goods are easy to control with interest rates (especially items that are dispensible), its far harder to do that with services and at times the reverse may happen... high rates = higher costs... we are headed towards some final nails in the coffin for the middle class. Jay powell isn't helping... when he had the chance to help years ago, he caved to political pressure.

[dmatre]

Originally Posted by ASAP

I think they will just because we live in a time that is addicted to low rates to keep things going... since the great recession we haven't lived on high rates and I don't think we can in the future... unless we want a consistently contracted economy. I don't think anyone will allow that. I predict 5% within a year and expect that to be the new average. Below 5% is unlikely unless we hit a major recession... and rest assured, if that happens, this will be the first lever to be pulled.

So productivity is up, profits are up, the market is up, unemployment is down.... and this is a contracted economy?

[Donatello.]

Originally Posted by tgrundke

Add to this insurance rates, both auto and homeowners: I just received my homeowners policy renewal for my Cleveland area home and the renewal went up from $1,200/year to $2,050/year.

I can only imagine the costs for those who have to carry any type of natural disaster coverage such as hurricane, flood, fire, etc.

Insurance is 100% a huge scam

[ASAP]

Originally Posted by dmatre

So productivity is up, profits are up, the market is up, unemployment is down.... and this is a contracted economy?

Perfect example of a false narrative driven by stock market gains...

productivity is up is only good for the corporation... it means less people are doing more work

unemployment is down because people are working numerous part time jobs... there are mass layoffs in higher paying positions... unemployment is up for all sectors outside of services that are low paying

housing demand is absolutely crushed which trickles back to all the suppliers as well

car demand is pretty much non existent right now after everyone overpurchased during covid

consumer debt is at an all time high

this a wealthy person's / asset owners economy... this won't drive the market as all sectors are seeing contracted demand... the only way this reverses is if the govt floods us all w more money again which in turn would drive inflation again

[Donatello.]

Originally Posted by dmatre

Given that rates are now very close to their historical average, what makes you think that rates are going to drop significantly in the future?

EVERYTHING is insanely high right now. Unsustainable for the 99%.

If a correction doesn't happen, a revolt of some sort won't surprise me and is a good thing if done right.

[Donatello.]

Originally Posted by ASAP

Perfect example of a false narrative driven by stock market gains...

productivity is up is only good for the corporation... it means less people are doing more work

unemployment is down because people are working numerous part time jobs... there are mass layoffs in higher paying positions... unemployment is up for all sectors outside of services that are low paying

housing demand is absolutely crushed which trickles back to all the suppliers as well

car demand is pretty much non existent right now after everyone overpurchased during covid

consumer debt is at an all time high

this a wealthy person's / asset owners economy... this won't drive the market as all sectors are seeing contracted demand... the only way this reverses is if the govt floods us all w more money again which in turn would drive inflation again

Driven by greed via the 1% per usual.

[chassis]

Didn’t see a gas price thread. Paid $3.69/gallon for top tier 93. Wow seems like gas prices are dropping.

[chassis]

Donatello. With markets in record territory do you recommend to sell everything and go all cash?