5 ms·
It ends with a crash, like always. In 2008 home prices got cut in half. An REIT will overextend, miss loan payments and fail, flooding the market with homes,
by swamp40 5y ago
It ends with a crash, like always. In 2008 home prices got cut in half. An REIT will overextend, miss loan payments and fail, flooding the market with homes, which will drop the market prices. This will cascade, taking out more REITs.
- HPsquared 5y agoFailure would cause a house price crash you say? Sounds like "too big to fail".
- james-redwood 5y agoExactly. Marks said that a crash is often inaccurately thought to be caused by a valuation excess; except in reality, they're caused by credit excesses and a failure to meet obligations on said credit on a large scale.
- newsclues 5y agoIf the housing markets crash, won’t the investors just buy at a discount?
- tristor 5y agoThe Case-Schiller Index is already over 7.0 and it usually has an asset crash after it crosses 6.0, it was at 6.3 in 2008.
- YATA0 5y agoREITs don't cary loans that are leins against the house. If they "miss loan payments" they'll still keep the homes. They'll just get sold and transferred to another large REIT and the house will never hit the market. The housing market isn't going to crash. I foresee something like Australia happening: the prices just continue to go up, for decades.