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> In many ways, today’s housing market is the polar opposite of the one that preceded the Great Recession. > Back then, reckless mortgage lending helped create
by jameslk 3y ago
> In many ways, today’s housing market is the polar opposite of the one that preceded the Great Recession.
> Back then, reckless mortgage lending helped create a situation where demand became artificially strong. Eventually, it collapsed and the market was left with way too many homes.
Yes, and now we have a situation where supply has become artificially weak[0] due to high mortgage rates preventing anyone from selling.
That could be corrected if the Fed has to suddenly lower interest rates to prop up some other too big to fail sector, such as commercial real estate or anything else that seems to be teetering as of late.
0. https://fred.stlouisfed.org/series/ACTLISCOUUS https://fred.stlouisfed.org/series/ACTLISCOUUS
- 8note 3y agoThis is a big strength of the Canadian system. You only lock in a certain rate for 5 years
- patrickthebold 3y ago> artificially weak due to high mortgage rates preventing anyone from selling I wonder how much that matters. I agree less people are moving, but typically homeowners who sell will also be buyers, so no net change in availability. I guess some people can afford a second home and they keep the old one and rent it out so they can keep the old mortgage, but that must be small compared to people staying put.
- firesteelrain 3y agoIn our system, housing has to cycle occasionally or you end up with no mobility.
- harambae 3y agoThis is how I think of it as well, the person who isn’t selling is probably one less buyer. What if we change the life necessity to another one — cars. During the pandemic I was thinking about upgrading my car, but I didn’t after prices went up. I’ve just chilled with the same car since 2010 now. So.. did I contribute to the auto shortage that’s on going? Feels kind of weird to look at it that way