7 ms·

78% of community bank executives expect the housing market to crash by 2026

50 points by harambae 5y ago

ostenning 5y ago
Can anyone give their thoughts about the German housing market in comparison?
- lucky1759 5y ago
  My 2 cents, the German housing market has way stronger fundamentals and the income-to-price ratio is more reasonable. Key factors in my opinion are: - More people live in appartments their whole lives - A lot of people have low salaries so they choose to live in or buy an appartment instead of a home - Financially insecure people can't help bid up prices with ridiculous mortgages as happens in the US/Canada. - I also think there is much less foreign money here. - A lot of people inherit here as well, so they don't have to buy a new home - Population dynamics mean less demand, versus massive immigration in North America (which is focused on key cities) I think the German market has less "upside" if you are an investor but also less risk. If you are looking for a home for your family, Germany is a large decentralized country. There are tons of nice places to live for a reasonable price near cities where you can get good jobs. Düsseldorf, Berlin, Köln, Frankfurt, Mannheim, Stuttgart, Hamburg etc. This diversity takes pressure off of a few economically dominant cities i.e. Toronto, New York, bay area. Of course, I wouldn't base my decision to live in Germany based on economics, unless you are a German. The housing market, is probably the least important difference I would consider between Anglosphere and Germany.
GaryTang 5y ago
I don’t see it happening under the Democrats. They will influence the fed to keep rates low while Biden is in and continue to try and push more stimulus.
- addicted 5y ago
  And why do you think it would happen under Republicans whose last President was loudly and publicly pressuring the Fed to keep interest rates low? Something no Democratic President (or other Republican President, for that matter) has ever done.
  - GaryTang 5y ago
    For that reason exactly — Trump had to scream and pout publicly in order to keep rates down. Meanwhile, Democrats operate with much more tact & better PR.
    - legolas2412 5y ago
      Yeah, I am no trump supporter but found this whole affair hilarious. Federal reserve kept the interest rate near zero from 2008-2015, and only started raising them rapidly in 2016. To a neutral observer, it felt political that they didn't start raising rates in 2012, and instead started QE3 which was as big as QE1 and QE2 combined!
  - pclmulqdq 5y ago
    Fed chairs have always received a lot of political pressure from the ruling party. Most administrations do it quietly. Yellen was particularly cozy with the white house in her day as fed chair, which is why she is now treasury secretary. The past three presidents haven't understood the danger of keeping rates low, but so far it has paid off for them.
    - LatteLazy 5y ago
      If something slightly helps you but completely wrecks the whole economy after you've left office, you do it. That's the joy of anglo-style democracy...
      - evgen 5y ago
        Yes unlike to all of those other political systems that are perfectly happy to crash the system now when it hurts less, like..... I am sure we can come up with examples... any day now....
- JustAnother2234 5y ago
  Why the hell is this downvoted? It is a fair opinion. If you disagree with it, then fine, say why and give reasons in the comments (like some have done). Downvoting is for comments that detract from the conversation, not to hide a comment you disagree with. Downvoting because you disagree causes shitty Reddit like groupthink that doesn't belong here.
youeseh 5y ago
So, between 2021 and 2026, it'll inflate. Then it'll "crash" down to 2023 levels, yah?
- harambae 5y ago
  If you believe the premise that anyone can predict accurately that far in advance (or that the people saying it have enough influence to make it a self-fulfilling prophecy) then sure, it might still crash to levels above today.
automatwon 5y ago
I’ll believe it when Wall Street liquidates their real estate positions. Have these executives shorted the housing market?
- atatatat 5y ago
  Did they in 2008?
  - protoax 5y ago
    Yes they did - all the large investment banks were purchasing huge amounts of CDS's as they were continuing to sell bad subprime.
    - atatatat 5y ago
      Yes, toward the end.
LatteLazy 5y ago
I've expected a stock crash every year for the last 10. But not trying to time the market has meant I've enjoyed 10 years of unexpected boom. We all know a crash is coming but unless you know (not think, know) when, it's not really useful information.
spinchange 5y ago
The conditions in the residential real estate and mortgage markets are so much different now vs the late aughts. Lending is more conservative, appraisals are more conservative, borrowers are stronger, and there's not a glut/oversupply of new housing.
- quickthrowman 5y ago
  The interest rate risk is higher than it has ever been. If the long end of the yield curve climbs, mortgage rates will go up and housing values will go down, 100 bps increase could reduce prices by 20%
  - Flatcircle 5y ago
    Rising Interest rates would absolutely destroy the housing market. Simple as that
    - phreeza 5y ago
      Out of curiosity, what proportion of monthly costs do interest payments typically make up for a mortgage holder in the US? In Switzerland they current make up 25-30% if you are in the affordability range that banks suggest, with the rest going to taxes, upkeep etc. And renting a comparable property is 50% or so more experience. So I feel like there is some slack until it starts heavily affecting the decision whether to buy or rent.
  - phreeza 5y ago
    Here in Switzerland the calculation on whether you can afford a mortgage is made based on a fictional increase of interest rates to 5%, so probably the same people could still afford the same mortgages for quite a while. Prices are still insane.
    - mvc 5y ago
      5%! Pfft you kids have got it easy. My first mortgage was 7.8
mFixman 5y ago
I know nothing about economics, so please correct me if I'm saying something dumb. Am I right in believing that a big housing market crash is unlikely unless there's an accompanying big stock market crash? House prices have been rising since the 2008 crisis, and any significant downturn in housing prices will be responded with people selling other assets to buy new and now-cheaper properties, thus raising house prices again. Here in London house prices went down majorly during the first months of the 2020 pandemic, but they quickly went back up and kept raising as people tried to get discounted property.
- thoughtstheseus 5y ago
  Widespread asset devaluation is unlikely because central banks will inject cash to prevent declining asset prices.
  - arthurcolle 5y ago
    Transitory inflation with transitory being the interval described by (T_0 aka now, T_inf aka heat death of universe]
theshadowknows 5y ago
I don’t really understand the economy. Here’s why: it’s entirely artificial. We, humans, make the rules. We control the input and if we don’t like the output we can just change that too. The market doesn’t actually exist. It’s just pieces of paper and bits on computers. A car can malfunction because it wasn’t built properly or because something breaks. A human can get sick because it gets damaged somehow. But the economy is a concept. So if we think houses are going to suddenly become worthless it’s because we think we’re going to, as a society, stop seeing value in houses…it’s not like something about houses makes them less valuable. They don’t have value in the first place except because we want them to. So…is it because banks have extracted all of the value out of other things? Banks want more money, so they suddenly say houses have no value and because of that they can beg for and receive money from the government? None of it is real…it can’t actually stop working.
- smell-my-bacon 5y ago
  It's not really fake, it's just mass gambling. Capitalism by speculation isn't good for society, but it's good for those who can afford to take risky bets and always come out ahead in the long run. We have an economy that values speculation above labor or property. It's not fake, it's just evil.
  - mewpmewp2 5y ago
    How would you construct a better society? As an alternative to capitalism?
    - smell-my-bacon 5y ago
      Tweak it so that power and wealth are continuously redistributed to the masses to a large but not huge degree, such that the difference between the haves and have nots are a factor of 10x to 100x, not billions. Educate the hell out of everyone and reform democracy with proportional representation, more direct oversight (populism, referenda,etc.) and less monied influence (campaign finance) and lifetime appts. Embrace democratic collectivism as a healthier alternative to either militant nationalism or wild west individualism. I don't think you can ever really get rid of capitalism because you can't ever really get rid of greed. But you can certainly can make societal rules that make hoarding shameful and illegal, not celebrated. And capitalism doesn't have to be exorbitantly speculative the way the American system is. It just has to be strongly fettered and subservient to democratic controls, not own the government.

50 points by harambae 5y ago

ostenning 5y ago

Can anyone give their thoughts about the German housing market in comparison?

lucky1759 5y ago
My 2 cents, the German housing market has way stronger fundamentals and the income-to-price ratio is more reasonable. Key factors in my opinion are: - More people live in appartments their whole lives - A lot of people have low salaries so they choose to live in or buy an appartment instead of a home - Financially insecure people can't help bid up prices with ridiculous mortgages as happens in the US/Canada. - I also think there is much less foreign money here. - A lot of people inherit here as well, so they don't have to buy a new home - Population dynamics mean less demand, versus massive immigration in North America (which is focused on key cities) I think the German market has less "upside" if you are an investor but also less risk. If you are looking for a home for your family, Germany is a large decentralized country. There are tons of nice places to live for a reasonable price near cities where you can get good jobs. Düsseldorf, Berlin, Köln, Frankfurt, Mannheim, Stuttgart, Hamburg etc. This diversity takes pressure off of a few economically dominant cities i.e. Toronto, New York, bay area. Of course, I wouldn't base my decision to live in Germany based on economics, unless you are a German. The housing market, is probably the least important difference I would consider between Anglosphere and Germany.

GaryTang 5y ago

I don’t see it happening under the Democrats. They will influence the fed to keep rates low while Biden is in and continue to try and push more stimulus.

addicted 5y ago
And why do you think it would happen under Republicans whose last President was loudly and publicly pressuring the Fed to keep interest rates low? Something no Democratic President (or other Republican President, for that matter) has ever done.
- GaryTang 5y ago
  For that reason exactly — Trump had to scream and pout publicly in order to keep rates down. Meanwhile, Democrats operate with much more tact & better PR.
  - legolas2412 5y ago
    Yeah, I am no trump supporter but found this whole affair hilarious. Federal reserve kept the interest rate near zero from 2008-2015, and only started raising them rapidly in 2016. To a neutral observer, it felt political that they didn't start raising rates in 2012, and instead started QE3 which was as big as QE1 and QE2 combined!
- pclmulqdq 5y ago
  Fed chairs have always received a lot of political pressure from the ruling party. Most administrations do it quietly. Yellen was particularly cozy with the white house in her day as fed chair, which is why she is now treasury secretary. The past three presidents haven't understood the danger of keeping rates low, but so far it has paid off for them.
  - LatteLazy 5y ago
    If something slightly helps you but completely wrecks the whole economy after you've left office, you do it. That's the joy of anglo-style democracy...
    - evgen 5y ago
      Yes unlike to all of those other political systems that are perfectly happy to crash the system now when it hurts less, like..... I am sure we can come up with examples... any day now....
JustAnother2234 5y ago
Why the hell is this downvoted? It is a fair opinion. If you disagree with it, then fine, say why and give reasons in the comments (like some have done). Downvoting is for comments that detract from the conversation, not to hide a comment you disagree with. Downvoting because you disagree causes shitty Reddit like groupthink that doesn't belong here.

youeseh 5y ago

So, between 2021 and 2026, it'll inflate. Then it'll "crash" down to 2023 levels, yah?

harambae 5y ago
If you believe the premise that anyone can predict accurately that far in advance (or that the people saying it have enough influence to make it a self-fulfilling prophecy) then sure, it might still crash to levels above today.

automatwon 5y ago

I’ll believe it when Wall Street liquidates their real estate positions. Have these executives shorted the housing market?

atatatat 5y ago
Did they in 2008?
- protoax 5y ago
  Yes they did - all the large investment banks were purchasing huge amounts of CDS's as they were continuing to sell bad subprime.
  - atatatat 5y ago
    Yes, toward the end.

LatteLazy 5y ago

I've expected a stock crash every year for the last 10. But not trying to time the market has meant I've enjoyed 10 years of unexpected boom. We all know a crash is coming but unless you know (not think, know) when, it's not really useful information.

spinchange 5y ago

The conditions in the residential real estate and mortgage markets are so much different now vs the late aughts. Lending is more conservative, appraisals are more conservative, borrowers are stronger, and there's not a glut/oversupply of new housing.

quickthrowman 5y ago
The interest rate risk is higher than it has ever been. If the long end of the yield curve climbs, mortgage rates will go up and housing values will go down, 100 bps increase could reduce prices by 20%
- Flatcircle 5y ago
  Rising Interest rates would absolutely destroy the housing market. Simple as that
  - phreeza 5y ago
    Out of curiosity, what proportion of monthly costs do interest payments typically make up for a mortgage holder in the US? In Switzerland they current make up 25-30% if you are in the affordability range that banks suggest, with the rest going to taxes, upkeep etc. And renting a comparable property is 50% or so more experience. So I feel like there is some slack until it starts heavily affecting the decision whether to buy or rent.
- phreeza 5y ago
  Here in Switzerland the calculation on whether you can afford a mortgage is made based on a fictional increase of interest rates to 5%, so probably the same people could still afford the same mortgages for quite a while. Prices are still insane.
  - mvc 5y ago
    5%! Pfft you kids have got it easy. My first mortgage was 7.8

mFixman 5y ago

I know nothing about economics, so please correct me if I'm saying something dumb. Am I right in believing that a big housing market crash is unlikely unless there's an accompanying big stock market crash? House prices have been rising since the 2008 crisis, and any significant downturn in housing prices will be responded with people selling other assets to buy new and now-cheaper properties, thus raising house prices again. Here in London house prices went down majorly during the first months of the 2020 pandemic, but they quickly went back up and kept raising as people tried to get discounted property.

thoughtstheseus 5y ago
Widespread asset devaluation is unlikely because central banks will inject cash to prevent declining asset prices.
- arthurcolle 5y ago
  Transitory inflation with transitory being the interval described by (T_0 aka now, T_inf aka heat death of universe]

theshadowknows 5y ago

I don’t really understand the economy. Here’s why: it’s entirely artificial. We, humans, make the rules. We control the input and if we don’t like the output we can just change that too. The market doesn’t actually exist. It’s just pieces of paper and bits on computers. A car can malfunction because it wasn’t built properly or because something breaks. A human can get sick because it gets damaged somehow. But the economy is a concept. So if we think houses are going to suddenly become worthless it’s because we think we’re going to, as a society, stop seeing value in houses…it’s not like something about houses makes them less valuable. They don’t have value in the first place except because we want them to. So…is it because banks have extracted all of the value out of other things? Banks want more money, so they suddenly say houses have no value and because of that they can beg for and receive money from the government? None of it is real…it can’t actually stop working.

smell-my-bacon 5y ago
It's not really fake, it's just mass gambling. Capitalism by speculation isn't good for society, but it's good for those who can afford to take risky bets and always come out ahead in the long run. We have an economy that values speculation above labor or property. It's not fake, it's just evil.
- mewpmewp2 5y ago
  How would you construct a better society? As an alternative to capitalism?
  - smell-my-bacon 5y ago
    Tweak it so that power and wealth are continuously redistributed to the masses to a large but not huge degree, such that the difference between the haves and have nots are a factor of 10x to 100x, not billions. Educate the hell out of everyone and reform democracy with proportional representation, more direct oversight (populism, referenda,etc.) and less monied influence (campaign finance) and lifetime appts. Embrace democratic collectivism as a healthier alternative to either militant nationalism or wild west individualism. I don't think you can ever really get rid of capitalism because you can't ever really get rid of greed. But you can certainly can make societal rules that make hoarding shameful and illegal, not celebrated. And capitalism doesn't have to be exorbitantly speculative the way the American system is. It just has to be strongly fettered and subservient to democratic controls, not own the government.