3 ms·
Sounds like a lot of FUD, the politicians won’t do anything like that because free stuff very easily causes divisive policies. What will happen, and is happenin
by cellis 4y ago
Sounds like a lot of FUD, the politicians won’t do anything like that because free stuff very easily causes divisive policies. What will happen, and is happening, is that more luxury housing is being built and less code ( regulations ) implemented. So the result is more inventory, which puts pressure on housing. Also there’s a LOT of vacant homes which have high carrying costs; eventually those owners will get margin called and have to either rent them out or sell them, which will put even more pressure. So I agree with the ends of your thesis, but not the means.
- ceeplusplus 4y agoThe entire reason that leveraging up real estate 5x is a widely accepted practice is that you can't get margin called as long as you keep making payments. Reg T margin will margin call you if you go under 25-50% equity, but mortgages will never margin call you.
- cellis 4y agoI meant "margin called" figuratively, not literally. Essentially investors will start seeing negative cap rates and either demand redemptions or will start liquidating their RE portfolios, which isn't a real margin call, but "margin call" is a convenient term for what's happening. Also, carrying costs of vacant properties are high. I'm predicting large writedowns of RE, and especially commercial RE in the coming 5 years.