Patrick too quiet on housing bubble 2.0?

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Patrick too quiet on housing bubble 2.0?

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2018 Nov 27, 10:54am 9,701 views 52 comments

by whitewater ➕follow (0) 💰tip ignore

I remeber the fever pitch on Patrick in 2006-2008.

I don’t see the fever pitch of emotions and debate and discussion for housing bubble 2.0.

Why? I offer possibilities:

1. It’s too early. Another 2-3 years before enough people wake up and then it will pop.

2. We are too busy making money.

3. We are too busy trying to survive from corporate layoffs and small business squeeze.

4. We are lethargic because we have seen this before and we don’t care as much. The novelty of calling it when no one else would admit it is gone.

5. It doesn’t exist. Housing is affordable and in line with personal income and there is no crisis looming.

What says Patrick?

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42 whitewater 2018 Dec 6, 11:17am

Seattle real estate drops average of $70k in 3 months.

https://www.seattletimes.com/business/real-estate/seattle-home-prices-drop-by-70000-in-three-months-as-market-cooldown-continues/

Who remembers if Seattle is the canary in the coal mine in housing bubble 1.0? I have a vague recollection it was.

43 anonymous 2018 Dec 6, 1:14pm

whitewater says

Who remembers if Seattle is the canary in the coal mine in housing bubble 1.0? I have a vague recollection it was.

I thought it was San Diego.

44 whitewater 2018 Dec 6, 7:44pm

Number of home flips craters.

https://www.marketwatch.com/amp/story/guid/B68CD870-F971-11E8-94F2-A5EC8A1C6583

B.A.C.A.H. 2018 Dec 7, 6:39am

What happened to my eyeballs was social media.

everything 2018 Dec 7, 11:29am

Well, the pump still needs extraction so we are not there yet. It sounds like flipping is getting over with, not where I live though. It's likely the flipping and HELOCS may come back to bite a few, and if they let people borrow until they are underwater some people will .. eventually walk.

Oh, we haven't had the job losses yet either. I think housing busts and recessions play out differently. Many mortgages are financed into low rates, many wised up to the last bust and got into a good play, settled down into something they could afford. Banks are not holding back either, with interest rates finally coming up, they are finally starting to bank.

It will take more time, fed is turning dovish, yet trying hard to put a soft landing to this thing.

JZ 2018 Dec 7, 7:58pm

Price/Rent > 30 looks like a bubble to me.
House is priced at double income under current rate. Jay Powell swears he will fight wage inflation and I believe him. So income is capped, rate isn’t dropping, price stays high, what happens? Nobody buys anything, and builder activity drops. If the rent seekers can NOT fleece the W2 buyers by appreciation, they will fleece them by raising rent. So price stagnate, buyers can NOT afford, rent keeps rising so that cap rate can justify the price. Rent rise causes inflation, and Powell need to raise harder. They kept cutting rate and ask “why there is NO inflation”, now they raise rate and they will get puzzled why raising rate causes rent t go up.
Bubble or NOT depends on sustainability. Currently, house price stays but rent keeps rising. Is this sustainable?

48 whitewater 2018 Dec 8, 8:07am

Seattle has peaked and is falling.