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What really makes me concerned is what the after effects are going to look like. What happens to housing prices after this is all over? When people realize thei

What really makes me concerned is what the after effects are going to look like. What happens to housing prices after this is all over? When people realize their impulsive buys were a mistake. When foreclosures and evictions sweep the country. We are in this strange period where people are not yet feeling the extent of the potential economic impact, and I fear for what will happen in two or three years.

aaomidi 6y ago
I'll finally afford to buy a house
- tonyedgecombe 6y ago
  If you've still got a job.
ramraj07 6y ago
Why is it an absolute given that the economy is definitely going to flop? As the days pass I'm convinced more and more that the general economy (and the 1 or 2% of people who are directly benefited by it) will do just fine, even though the majority of the population is jobless and moneyless. This will finally lay bare that the contribution from the majority of the working population is quite optional for the GDP or any measure of economic productivity, and push comes to shove, the institutions (factories, offices) will start realising they can maintain or even increase productivity without involving the majority of the population in the process. Hence the people who have the money now (and are hence in positions that don't necessarily get lost in this process) are likely to continue prospering, while the people who are losing jobs and houses are never going to get them replaced.
- cheschire 6y ago
  I've been thinking along those same lines. Basically feels like we're returning to a form of feudalism, with a rather established aristocracy and nobility already in place. I'm just waiting for the financially ailing counties to start selling themselves in their totality to corporations and those corporations begin providing employment in exchange for literal cradle-to-grave services.
  - eindiran 6y ago
    The seignorialism aspect of feudalism is now absent though: the lord needed peasants to work his lands. This new ruling class doesn't need the labor of the growing unemployed and forgotten class - only their consumption.
    - bottled_poe 6y ago
      It needs their attention more than their consumption I suspect.
    - Cthulhu_ 6y ago
      The lords need some work done, but they're making sure people earn as little as possible, have zero ties, and no transferable skills. I'm thinking of McJobs; zero-hour contracts, contractors, gig economy work, that kinda thing.
      - bamboozled 6y ago
        This is IMO more what I see, we're all working harder, for less, but we're all still working.
        AnthonyMouse 6y ago
        That's the way of it, because automation makes things cost less, but only the things that get automated. But if things cost less then you can pay people less. So what happens is that all the money goes to the places with artificial scarcity. We don't have meaningful scarcity anymore, not for the essentials anyway. There is a finite amount of land but not a finite amount of housing units, because you can build arbitrarily many of them on top of each other. We can produce more food than people have any need to eat and producers then spend rather a lot of money convincing them to buy more than that. Medicine is only genuinely scarce to the extent that it's limited by labor availability, which means labor should move there and drive down the price unless something is constraining it. But if you can make something like housing or medicine artificially scarce, you can suck all the surplus out of everybody's paycheck. And that's the problem.
- koonsolo 6y ago
  It's not all about productivity. Who is going to buy the new iPhone, or the new car, or an XBox?
  - bottled_poe 6y ago
    That’s easy - the ones with the money. If the wealth divides, so will the product offferings from those companies. A bit of an inconvenient truth for many of us.
    - koonsolo 6y ago
      So that implies that when companies keep the same revenue, their offering will become more expensive (Nobody needs 5 iPhones). This also implies that the ones that are able to buy an iPhone, will pay significantly more for it. Which will make the ones that can afford it even more narrow. There is something wrong with the reasoning that losing a big part of the market has no influence on companies and consumers that are still able to afford things. This impacts everyone, there is no question about that. Maybe some more than others, but everyone will feel it.
    - ClumsyPilot 6y ago
      That makes no sence, many demands are not elastic. You are bot going to buy 10x mor macbooks, shoes, and baking powder if you are 10x wealthier.
      - brewdad 6y ago
        No, but you might buy that $1200 iPhone instead of the $400 model.
        ClumsyPilot 6y ago
        Okay, how large % of your total expenditure is iPhones? do you buy them weekly?
  - Cthulhu_ 6y ago
- dicomdan 6y ago
  > though the majority of the population is jobless and moneyless This doesn’t match the actual unemployment numbers.
  - ClumsyPilot 6y ago
    You could categorise lots of zero hour contracts and self employed folks as jobless and moneyless. I would say that most people living from paycheck to paychek are moneyless.
- ForHackernews 6y ago
  I think this was already the case. This piece is from 2016: https://morecrows.wordpress.com/2016/05/10/unnecessariat/ https://morecrows.wordpress.com/2016/05/10/unnecessariat/ > Here’s the thing: from where I live, the world has drifted away. We aren’t precarious, we’re unnecessary. The money has gone to the top. The wages have gone to the top. The recovery has gone to the top. And what’s worst of all, everybody who matters seems basically pretty okay with that. The new bright sparks, cheerfully referred to as “Young Gods” believe themselves to be the honest winners in a new invent-or-die economy, and are busily planning to escape into space or acquire superpowers, and instead of worrying about this, the talking heads on TV tell you its all a good thing- don’t worry, the recession’s over and everything’s better now, and technology is TOTES AMAZEBALLS!
- Cthulhu_ 6y ago
  The economy as a whole? Probably not, because it's more measured according to the country's whole GDP and stock market instead of personal tragedies like getting evicted or bankrupted. (disclaimer: not an economist, just a dude in an armchair with an Opinion)
  - jacobkania 6y ago
    But if ‘personal tragedies’ make up a quarter of your country’s population, it starts to look more like a whole-economy issue, right?
- bamboozled 6y ago
  No, the robots haven't taken over, at all. The reason Apple's share price is booming is because "consumers" are buying their products so their earnings were great. Many of them probably spending printed stimulus money. Same for Amazon. There is really no magic here except the illusion of unlimited money through quantitative easing. The QE is the only thing holding things together, if that stops, everyone is going down the same drain to poop town. Edit: I should also mention many investors are probably putting a lot of money into Apple as it's seen as a safe haven for equities right now.
  - bsaul 6y ago
    side question , but do you happen to have any resources explaining what could be the limit to unlimited QE and what precise series of event will be triggered when that limit is reached ( knowing that everyone is doing the same at the moment, from us to eu to cn).
    - ric2b 6y ago
      I'm not sure there's a limit, it's just perpetual shifting of value from people with savings to the government and financial institutions.
    - oblio 6y ago
      That's the thing, nobody knows. QE is just the end state for Keynesian economics, at least as far as I can tell. I'd be amazed if it ends well, we haven't invented a perpetuum mobile yet...
    - bamboozled 6y ago
      Like the other poster mentioned, we don't really know. I'm not an economist, just an interested investor and from my understanding, using QE on this scale is just an easy short term solution to a longer term, hard problem. Printing money like this has never really been done before on this scale, but the fear is that "printing money" like this will potentially lead to very bad debt and hyperinflation inflation crisis (maybe already started). The limitations of QE aren't entirely known, but will be known as more money is printed and money becomes more worthless. Will having a lot of "monopoly money" in circulation be a problem? Time will tell; however there have been many examples where hyper inflation has caused economies to fail, such as Venezuela recently and the Roman Empire in the past. The US Federal Reserve should probably be careful with their actions because they wouldn't be the first country to run into dire issues doing this. What I fear is, the people at the top of the US are blinded by greed and the desire to be reelected and aren't concerned about the lessons of history.
- vorpalhex 6y ago
  > even though the majority of the population is jobless and moneyless Unemployment is high, but much lower than the initial surge from coronavirus. It's likely we're still seeing significant hour/shift reduction, but as lockdown measures relax that will mostly let up or those workers will shift to different fields. We are seeing things shift away from brick and mortars, but that isn't new just accelerated. It seems like ecommerce is eating everyones lunch now.
polotics 6y ago
Well the question is also where would you best put your money? As possibly devalued currency or bubble-territory index fund?Building a house requires resources whose price may rise up precipitously in the future, eg. energy, the oil major stopped looking and renewables are not there yet for a long while at our consumption levels...
- nemo44x 6y ago
  Difficult to know. Diversifying won’t get max returns but also won’t get max losses. A range of ETF’s (Global markets and bonds), real estate, bitcoin, and cash might be a starting point.
onlyrealcuzzo 6y ago
We'll probably just get one or more round(s) of $2T+ stimulus, I imagine.
JacKTrocinskI 6y ago
In April Credit Suisse released their outlook on the real estate market in Switzerland, I think their views can be broadly applied to the US as well though. "Low mortgage interest rates mean that home ownership is currently cheaper than renting...and would rule out the prospect of a significant increase in defaults... This is due to the low mortgage interest burden seen in recent years, as well as the fact that financing requirements have been tightened on several occasions. Specifically, this means a majority of home owners are unlikely to have any difficulty servicing their mortgage debt in the event of a temporary reduction in their income" (https://www.credit-suisse.com/ch/en/articles/private-banking/corona-zwingt-den-schweizer-immobilienmarkt-nicht-in-die-knie-202004.html https://www.credit-suisse.com/ch/en/articles/private-banking...). I think the thesis still holds up for owner-occupied homes. Residential, luxury, and commercial property market is a different story, although it seems that residential has bounced back, not sure about luxury, and commercial has gotten destroyed and is why Amazon is buying it up for cheap.
znt 6y ago
This may be a good read for you then: https://www.progress.org/articles/the-depression-of-2026 https://www.progress.org/articles/the-depression-of-2026
ghaff 6y ago
What makes you think these are impulsive buys? As people get older and, especially as they have families, there's always been a tendency to move to the suburbs/exurbs if they weren't there already. The main difference today is that big cities have tended to be attractive to young professionals to a degree that they really weren't 25 years ago. The pandemic has probably accelerated a migration that would have happened anyway--but arguably slowed down the new grads moving into cities to replace them.
- chiefalchemist 6y ago
  Right. So where suburban homes are ticking up, urban living spaces are going to contract. Then does the contraction (i.e., lower prices and more choice) trigger people to not leave urban areas?
  - ghaff 6y ago
    >trigger people to not leave urban areas A lot of different factors come into play which I certainly don't claim to be able to predict--and will likely vary by city. On the one hand, lower prices make urban areas/city cores relatively more attractive for those who want to live there. (I doubt living in the cores of top cities is ever going to be cheap; it wasn't in Manhattan in the 1980s.) On the other hand, there may well be less need to be in a city for certain jobs. Furthermore, if city services are a mess, crime is up, and a lot of the restaurants and small businesses are closed, urban living may be less attractive.
thrownaway954 6y ago
jesus... that is such a negative way of looking at things. i'm glad that prices and interest rates are finally at a level that people can purchase a home. now hopefully these people have learned from others mistakes in 2007 and only buy a house that they can afford which usually means that your whole MIT payment (mortage + taxes + insursure) never goes above 25% of your monthly net income. things got crazy in 2007 when people were committing 50% or more of the monthly net income to their home payment in hopes that they could flip it in a year or so for a big profit. while this is fine for an investment property that you don't care about getting foreclosed, you never have that mindset with your primary residence.
- kazinator 6y ago
  > while this is fine for an investment property that you don't care about getting foreclosed No, getting into a risky, speculative, highly leveraged position that takes more than half your monthly income just to service the interest is not a good idea, period. This was not simply a case of people being otherwise shrewd investors, making only the small mistake of making the object of their speculation their residence.
bjo590 6y ago
> When people realize their impulsive buys were a mistake. I think it's unfair to assume people are panic buying houses. The people I know that have purchased a house in the last six months would have purchased a home regardless of the pandemic. In addition, the threat of inflation is real and having a stable housing cost can help with inflation.
jeffbee 6y ago
Crashing housing prices is the best thing that could happen to the American future.

aaomidi 6y ago

I'll finally afford to buy a house

tonyedgecombe 6y ago
If you've still got a job.

ramraj07 6y ago

Why is it an absolute given that the economy is definitely going to flop? As the days pass I'm convinced more and more that the general economy (and the 1 or 2% of people who are directly benefited by it) will do just fine, even though the majority of the population is jobless and moneyless. This will finally lay bare that the contribution from the majority of the working population is quite optional for the GDP or any measure of economic productivity, and push comes to shove, the institutions (factories, offices) will start realising they can maintain or even increase productivity without involving the majority of the population in the process. Hence the people who have the money now (and are hence in positions that don't necessarily get lost in this process) are likely to continue prospering, while the people who are losing jobs and houses are never going to get them replaced.

cheschire 6y ago
I've been thinking along those same lines. Basically feels like we're returning to a form of feudalism, with a rather established aristocracy and nobility already in place. I'm just waiting for the financially ailing counties to start selling themselves in their totality to corporations and those corporations begin providing employment in exchange for literal cradle-to-grave services.
- eindiran 6y ago
  The seignorialism aspect of feudalism is now absent though: the lord needed peasants to work his lands. This new ruling class doesn't need the labor of the growing unemployed and forgotten class - only their consumption.
  - bottled_poe 6y ago
    It needs their attention more than their consumption I suspect.
  - Cthulhu_ 6y ago
    The lords need some work done, but they're making sure people earn as little as possible, have zero ties, and no transferable skills. I'm thinking of McJobs; zero-hour contracts, contractors, gig economy work, that kinda thing.
    - bamboozled 6y ago
      This is IMO more what I see, we're all working harder, for less, but we're all still working.
      - AnthonyMouse 6y ago
        That's the way of it, because automation makes things cost less, but only the things that get automated. But if things cost less then you can pay people less. So what happens is that all the money goes to the places with artificial scarcity. We don't have meaningful scarcity anymore, not for the essentials anyway. There is a finite amount of land but not a finite amount of housing units, because you can build arbitrarily many of them on top of each other. We can produce more food than people have any need to eat and producers then spend rather a lot of money convincing them to buy more than that. Medicine is only genuinely scarce to the extent that it's limited by labor availability, which means labor should move there and drive down the price unless something is constraining it. But if you can make something like housing or medicine artificially scarce, you can suck all the surplus out of everybody's paycheck. And that's the problem.
koonsolo 6y ago
It's not all about productivity. Who is going to buy the new iPhone, or the new car, or an XBox?
- bottled_poe 6y ago
  That’s easy - the ones with the money. If the wealth divides, so will the product offferings from those companies. A bit of an inconvenient truth for many of us.
  - koonsolo 6y ago
    So that implies that when companies keep the same revenue, their offering will become more expensive (Nobody needs 5 iPhones). This also implies that the ones that are able to buy an iPhone, will pay significantly more for it. Which will make the ones that can afford it even more narrow. There is something wrong with the reasoning that losing a big part of the market has no influence on companies and consumers that are still able to afford things. This impacts everyone, there is no question about that. Maybe some more than others, but everyone will feel it.
  - ClumsyPilot 6y ago
    That makes no sence, many demands are not elastic. You are bot going to buy 10x mor macbooks, shoes, and baking powder if you are 10x wealthier.
    - brewdad 6y ago
      No, but you might buy that $1200 iPhone instead of the $400 model.
      - ClumsyPilot 6y ago
        Okay, how large % of your total expenditure is iPhones? do you buy them weekly?
- Cthulhu_ 6y ago
dicomdan 6y ago
> though the majority of the population is jobless and moneyless This doesn’t match the actual unemployment numbers.
- ClumsyPilot 6y ago
  You could categorise lots of zero hour contracts and self employed folks as jobless and moneyless. I would say that most people living from paycheck to paychek are moneyless.
ForHackernews 6y ago
I think this was already the case. This piece is from 2016: https://morecrows.wordpress.com/2016/05/10/unnecessariat/ https://morecrows.wordpress.com/2016/05/10/unnecessariat/ > Here’s the thing: from where I live, the world has drifted away. We aren’t precarious, we’re unnecessary. The money has gone to the top. The wages have gone to the top. The recovery has gone to the top. And what’s worst of all, everybody who matters seems basically pretty okay with that. The new bright sparks, cheerfully referred to as “Young Gods” believe themselves to be the honest winners in a new invent-or-die economy, and are busily planning to escape into space or acquire superpowers, and instead of worrying about this, the talking heads on TV tell you its all a good thing- don’t worry, the recession’s over and everything’s better now, and technology is TOTES AMAZEBALLS!
Cthulhu_ 6y ago
The economy as a whole? Probably not, because it's more measured according to the country's whole GDP and stock market instead of personal tragedies like getting evicted or bankrupted. (disclaimer: not an economist, just a dude in an armchair with an Opinion)
- jacobkania 6y ago
  But if ‘personal tragedies’ make up a quarter of your country’s population, it starts to look more like a whole-economy issue, right?
bamboozled 6y ago
No, the robots haven't taken over, at all. The reason Apple's share price is booming is because "consumers" are buying their products so their earnings were great. Many of them probably spending printed stimulus money. Same for Amazon. There is really no magic here except the illusion of unlimited money through quantitative easing. The QE is the only thing holding things together, if that stops, everyone is going down the same drain to poop town. Edit: I should also mention many investors are probably putting a lot of money into Apple as it's seen as a safe haven for equities right now.
- bsaul 6y ago
  side question , but do you happen to have any resources explaining what could be the limit to unlimited QE and what precise series of event will be triggered when that limit is reached ( knowing that everyone is doing the same at the moment, from us to eu to cn).
  - ric2b 6y ago
    I'm not sure there's a limit, it's just perpetual shifting of value from people with savings to the government and financial institutions.
  - oblio 6y ago
    That's the thing, nobody knows. QE is just the end state for Keynesian economics, at least as far as I can tell. I'd be amazed if it ends well, we haven't invented a perpetuum mobile yet...
  - bamboozled 6y ago
    Like the other poster mentioned, we don't really know. I'm not an economist, just an interested investor and from my understanding, using QE on this scale is just an easy short term solution to a longer term, hard problem. Printing money like this has never really been done before on this scale, but the fear is that "printing money" like this will potentially lead to very bad debt and hyperinflation inflation crisis (maybe already started). The limitations of QE aren't entirely known, but will be known as more money is printed and money becomes more worthless. Will having a lot of "monopoly money" in circulation be a problem? Time will tell; however there have been many examples where hyper inflation has caused economies to fail, such as Venezuela recently and the Roman Empire in the past. The US Federal Reserve should probably be careful with their actions because they wouldn't be the first country to run into dire issues doing this. What I fear is, the people at the top of the US are blinded by greed and the desire to be reelected and aren't concerned about the lessons of history.
vorpalhex 6y ago
> even though the majority of the population is jobless and moneyless Unemployment is high, but much lower than the initial surge from coronavirus. It's likely we're still seeing significant hour/shift reduction, but as lockdown measures relax that will mostly let up or those workers will shift to different fields. We are seeing things shift away from brick and mortars, but that isn't new just accelerated. It seems like ecommerce is eating everyones lunch now.

polotics 6y ago

Well the question is also where would you best put your money? As possibly devalued currency or bubble-territory index fund?Building a house requires resources whose price may rise up precipitously in the future, eg. energy, the oil major stopped looking and renewables are not there yet for a long while at our consumption levels...

nemo44x 6y ago
Difficult to know. Diversifying won’t get max returns but also won’t get max losses. A range of ETF’s (Global markets and bonds), real estate, bitcoin, and cash might be a starting point.

onlyrealcuzzo 6y ago

We'll probably just get one or more round(s) of $2T+ stimulus, I imagine.

JacKTrocinskI 6y ago

In April Credit Suisse released their outlook on the real estate market in Switzerland, I think their views can be broadly applied to the US as well though. "Low mortgage interest rates mean that home ownership is currently cheaper than renting...and would rule out the prospect of a significant increase in defaults... This is due to the low mortgage interest burden seen in recent years, as well as the fact that financing requirements have been tightened on several occasions. Specifically, this means a majority of home owners are unlikely to have any difficulty servicing their mortgage debt in the event of a temporary reduction in their income" (https://www.credit-suisse.com/ch/en/articles/private-banking/corona-zwingt-den-schweizer-immobilienmarkt-nicht-in-die-knie-202004.html https://www.credit-suisse.com/ch/en/articles/private-banking...). I think the thesis still holds up for owner-occupied homes. Residential, luxury, and commercial property market is a different story, although it seems that residential has bounced back, not sure about luxury, and commercial has gotten destroyed and is why Amazon is buying it up for cheap.

znt 6y ago

This may be a good read for you then: https://www.progress.org/articles/the-depression-of-2026 https://www.progress.org/articles/the-depression-of-2026

ghaff 6y ago

What makes you think these are impulsive buys? As people get older and, especially as they have families, there's always been a tendency to move to the suburbs/exurbs if they weren't there already. The main difference today is that big cities have tended to be attractive to young professionals to a degree that they really weren't 25 years ago. The pandemic has probably accelerated a migration that would have happened anyway--but arguably slowed down the new grads moving into cities to replace them.

chiefalchemist 6y ago
Right. So where suburban homes are ticking up, urban living spaces are going to contract. Then does the contraction (i.e., lower prices and more choice) trigger people to not leave urban areas?
- ghaff 6y ago
  >trigger people to not leave urban areas A lot of different factors come into play which I certainly don't claim to be able to predict--and will likely vary by city. On the one hand, lower prices make urban areas/city cores relatively more attractive for those who want to live there. (I doubt living in the cores of top cities is ever going to be cheap; it wasn't in Manhattan in the 1980s.) On the other hand, there may well be less need to be in a city for certain jobs. Furthermore, if city services are a mess, crime is up, and a lot of the restaurants and small businesses are closed, urban living may be less attractive.

thrownaway954 6y ago

jesus... that is such a negative way of looking at things. i'm glad that prices and interest rates are finally at a level that people can purchase a home. now hopefully these people have learned from others mistakes in 2007 and only buy a house that they can afford which usually means that your whole MIT payment (mortage + taxes + insursure) never goes above 25% of your monthly net income. things got crazy in 2007 when people were committing 50% or more of the monthly net income to their home payment in hopes that they could flip it in a year or so for a big profit. while this is fine for an investment property that you don't care about getting foreclosed, you never have that mindset with your primary residence.

kazinator 6y ago
> while this is fine for an investment property that you don't care about getting foreclosed No, getting into a risky, speculative, highly leveraged position that takes more than half your monthly income just to service the interest is not a good idea, period. This was not simply a case of people being otherwise shrewd investors, making only the small mistake of making the object of their speculation their residence.

bjo590 6y ago

> When people realize their impulsive buys were a mistake. I think it's unfair to assume people are panic buying houses. The people I know that have purchased a house in the last six months would have purchased a home regardless of the pandemic. In addition, the threat of inflation is real and having a stable housing cost can help with inflation.

jeffbee 6y ago

Crashing housing prices is the best thing that could happen to the American future.