Real Estate And Housing News - Tuesday, Oct. 3
We catch up on two weeks of Housing Data in this market video, and touch on the Trump Tax Plan and some initial thoughts by the industry regarding its effects.
Lack of available inventory, high prices, and rising interest rates spell inevitable housing correction! I imagine the debt & credit bubble, financial market bubbles globally, government and central bank poor policy making all contribute to a significant housing market correction in the future. Add to this mix poor positioning and excessive risk taking and overall leverage in the economic system and this time it will take probably a good decade to work through and begin the rebuilding process. In short, this is going to be one of the nastiest multi-asset bubble crashes in the history of human civilization!
Video Length: 00:12:16
Disclosure: None.
The real correction happens when housing prices fall. What needs to happen is corporations realizing buying up housing and renting it out at astronomic prices isn't working anymore, borrowing more than you can afford and hoping housing prices rise faster so you can refinance your way out of the situation doesn't work anymore, and buying housing and sitting on it as people go homeless for capital gains as you gamble prices will rise from your activity doesn't work anymore. In order for this to happen generally interest rates move up and demand drops giving mass accumulators drops in revenue and asset prices at the same time. A double whammy and a triple if they must pay higher interest rates to boot.
This is a normal cycle and one reason why you don't want rates too low for too long. If you think stocks are overvalued you should be worried about your real estate holdings more. Because rates have been too low for too long and have been that way so long the pain from them rising will be extreme and the benefits for low rates have already been used making the economy rather dead and lifeless just like what happened to Japan for decades after they embraced low rates and QE. It makes more problems than it solves because it undermines capitalist signaling in hope to cure the business cycle. The cycle is one and the same as capitalism. A economy without a cycle is a socialized mess or in the process of becoming one.