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The current housing bubble could take 2 paths on this chart — both are nasty but one’s nastier

'We’re so accustomed to being surprised on the upside that we’ve forgotten we can be surprised on the downside, as well'

So, when’s the Fed going to start buying up millions of homes?

Assuming the answer is “it’s not,” Charles Hugh Smith of the Of Two Minds blog says prices are going to get hit hard across the country.

The latest data would hardly derail his gloomy outlook.

The S&P CoreLogic Case-Shiller 20-city index shows home price growth is screeching to a halt. The gauge rose 0.2% in December vs. November and 4.2% from year ago — the slowest pace of annual growth since 2014.

Smith said that bursting bubbles tend to follow a symmetrical reversal in terms of time durations and magnitudes of their initial rise.

“If the bubble took four years to inflate and rose by X, the retrace tends to take about the same length of time and tends to retrace much or all of X,” he wrote.

He used this chart of the Case-Shiller Housing Index as an example:



Smith explained that the Fed, by dropping interest rates to near-zero and buying mortgage-backed securities, didn’t allow the first bubble on the chart to run its course. This time around, however, there are “no more saves in the Fed’s locker,” he warned, adding that this decline will start this year and end around 2025.

But which path will it take?

Smith said the more realistic analysts out there would at least agree that some declines in prices is a possibility, and that it would look like the milder scenario.

That’s now how he sees it though.

“There is a good case for Scenario 2, in which price plummets below the 2012 lows and keeps on going, ultimately retracing the entire housing bubble gains from 2003,” he said, laying out several factors, such as massive student debt, insufficient income to support nosebleed prices, the exit of Chinese buyers, etc.

“The economy has changed, and the sacrifices required to buy a house in hot markets at today’s prices make no sense,” Smith concluded. “The only question of any real interest is how low prices will drop by 2025. We’re so accustomed to being surprised on the upside that we’ve forgotten we can surprised on the downside as well.”

https://www.marketwatch.com/story/the-current-bubble-could-take-two-paths-on-this-chart-one-is-nastier-than-the-other-2019-02-26

Still going up in ATL, but at a much slower rate.

Anybody have any information on Oregon? I have a friend who repo's houses for banks (ie shows up, throws you out, and changes the locks). Every time I talk to him, business seems to be booming.

Factors that I think will affect Oregon housing in the near future:

1. Oregon has passed the first in nation "Statewide Rent Control" - or it should be law in the coming few days.
2. The issue of the SALT tax deduction loss with the Trump plan. Something tells me that Oregon will be affected, considering we have a 9.9% state tax rate.
3. A statewide $15/hour minimum wage. Not as great a factor as 1 or 2, but still, I think it will factor in somehow.

There's been so many changes/laws enacted in the last year or so, I must say I am quite curious to see what happens. The thing is, I don't know exactly what. From an economics standpoint, overall, I think ALL 3 factors are negative. But again, I just don't know exactly what will happen.

Anybody have any input?

“IPO is one part of the equation” ... Rin loves hoes and Rin is rich therefore one should bang hoes to get rich.

It’s called magical thinking.

The number of IPO is causal in real estate? I don’t see it. The stock market is a completely managed and manipulated market these days anyways and has very little bearing on the economy aside from propping up pensions a little while longer.

Bullshit says

Anybody have any information on Oregon?

@Bullshit - try these for a start

https://www.zillow.com/or/home-values/

Scroll down thru this blog to get some perspectives on Oregon
https://www.sammamishmortgage.com/blog/

Next one has not updated yet for Oregon in 2019
https://www.housingpredictor.com/oregon-housing-market/

City by city market trends in Oregon - updated daily
https://www.movoto.com/or/market-trends/

Portland Real Estate Bubble – Housing Market Crash 2019
https://realestateagentpdx.com/portland-real-estate-bubble-housing-market-crash-2019/13382

2019 Portland Housing Market Forecast and Trends
https://www.pdxlisted.com/2019-portland-housing-market-forecast/

Washington vs. Oregon: An Updated Home-Price Outlook for 2019
https://www.sammamishmortgage.com/washington-vs-oregon-home-price-outlook/

Portland Real Estate Market Predictions for 2019, 2020 and 2021
https://www.pdxlisted.com/portland-real-estate-market-2019-2020-2021/

San Diego popped, almost on cue.

https://managecasa.com/articles/california-housing-market-report/

And no, we did not miss it. I called it last year when I saw the State of California starting their foreclosure bailout nonsense again, where Pedro can get up to $100,000 to save his home.

http://patrick.net/post/1312974/2018-01-09-did-we-just-pop-a-new-housing-bubble-http-keepyourhomecalifornia-org-programs-principal-reduction

whitewater says

Rin loves hoes and Rin is rich therefore one should bang hoes to get rich.

Stop inverting Rin Wah Law.

Rin Wah Law is to motivate one to become rich, so that one can regularly bonk hoes.

In that spectrum, there are the newbies who can only afford a realistic sex doll. That's step one because it saves a ton of money on dating. And then, one can work on step 2 and 3.

Then, there are the up and comers, who can see hoes but not so frequently. For these ppl, living near a Canadian border town, so that when one is away from work, one can make the drive for a boink more convenient. This is why I wanted a corporate HQ in Ann Arbor Michigan because Windsor Ontario is a stone's throw away.

Who Wins in a long-drawn-out gradual Housing Bust?

It always boils down to this: Regardless of how thin you cut a slice of bologna, there are always two sides to it. When home prices drop after a housing bubble, there are many losers. But here are the winners – including a whole generation (11 minutes).

www.EMcEF5hUJ1I