3 ms·

The term "bubble" gets misused a lot, to the point that they describe any asset appreciation that might be due for a 30% correction as a "bubble." Tulips were a

The term "bubble" gets misused a lot, to the point that they describe any asset appreciation that might be due for a 30% correction as a "bubble." Tulips were a bubble. Dot-coms were a bubble. Housing in 2021 wasn't because prices were driven by real market forces (asset appreciation elsewhere, low interest rates, increased demand for housing due to WFH), not just a speculative mania backed by hopes and dreams. I like that he's suggesting Bitcoin as an alternative, though /s

phkahler 4y ago
Housing in 2021 was driven by low interest rates. That is over.
- e-clinton 4y ago
  I bought a house because my wife and I couldn’t WFH from a 2 bedroom apartment. The low interest rate was just good timing. While interest rates are crazy high now, the inventory shortage on housing persists, at least in the range we bought. I’m glad I bought, even in a sellers market.
- nly 4y ago
  It's not over until the market reaches equilibrium. Modest 3 bedroom homes up to an hours commute outside central London are still up to 20-25x the average UK wage. Even with 2 average incomes you're looking at 10-12x. The math (based on shift in interest rates) says there should be a 30% correction, but the reality is nobody is predicting that. More like 10-15% over the next 2 years. Meanwhile rents are going in to the stratosphere as people abandon their home-owning aspirations. Higher rates are doing nothing but causing suffering. Inflation is expected to persist and official projections of it suddenly falling away seem contrived.
rcarr 4y ago
I thought the main difference this time is that it’s not just one bubble like tulips or tech but the fact that multiple important industries are all in bubbles creating in effect a super bubble that surpasses all others? https://www.gmo.com/americas/research-library/entering-the-superbubbles-final-act/ https://www.gmo.com/americas/research-library/entering-the-s...
- opportune 4y ago
  It’s just the credit cycle, not a bubble, simply the consequence of low cost of capital. It is deflating already and as the parent said it’ll likely be a correction rather than a true bubble pop, outside of maybe a few sectors like crypto or early stage public companies

phkahler 4y ago

Housing in 2021 was driven by low interest rates. That is over.

e-clinton 4y ago
I bought a house because my wife and I couldn’t WFH from a 2 bedroom apartment. The low interest rate was just good timing. While interest rates are crazy high now, the inventory shortage on housing persists, at least in the range we bought. I’m glad I bought, even in a sellers market.
nly 4y ago
It's not over until the market reaches equilibrium. Modest 3 bedroom homes up to an hours commute outside central London are still up to 20-25x the average UK wage. Even with 2 average incomes you're looking at 10-12x. The math (based on shift in interest rates) says there should be a 30% correction, but the reality is nobody is predicting that. More like 10-15% over the next 2 years. Meanwhile rents are going in to the stratosphere as people abandon their home-owning aspirations. Higher rates are doing nothing but causing suffering. Inflation is expected to persist and official projections of it suddenly falling away seem contrived.

rcarr 4y ago

I thought the main difference this time is that it’s not just one bubble like tulips or tech but the fact that multiple important industries are all in bubbles creating in effect a super bubble that surpasses all others? https://www.gmo.com/americas/research-library/entering-the-superbubbles-final-act/ https://www.gmo.com/americas/research-library/entering-the-s...

opportune 4y ago
It’s just the credit cycle, not a bubble, simply the consequence of low cost of capital. It is deflating already and as the parent said it’ll likely be a correction rather than a true bubble pop, outside of maybe a few sectors like crypto or early stage public companies