Economist raises alarm over 'inevitable collapse' in US home prices

We'd alright been contemplating, for a couple of years, the possibly of selling and moving into a senior community.

It's going to be awful hard for us to let go of this home. I designed and built it in 1987. It's feels like a member of the family.

 

If that's the price in a bubble, man we're getting screwed up here in Canada.

 

Did you also price hurricane insurance in Florida when you were looking? That can be insane, depending on location.

 

Poor Guy!! Lol.

 

I live near ground zero of the housing bubble foreclosure fiasco. 5 Auto plants in one 25 sq mile city. Another 4 plants within 5 miles of those. Add all the small suppliers. The Market was flooded with foreclosures, due to massive layoffs in Manufacturing, and the effect it had on the other Businesses. It’s always feast or famine, but nothing like 09,-12. Now it’s just the opposite. Building every empty lot that’s left, it seems. Big houses, too big for the neighborhood, for $350-$390k. $180k house in 07 became a 75k foreclosure house in 09, 10, 11, now the same house improved is $240k. I bought mine in 2012, right after the market bottomed out, and quickly turned around for $112k. Lost 7 bids, prior on other foreclosures. I was bidding 13% above asking price on average. It was a buying frenzy. This deal fell apart, and We bid $100 over asking price. Paid $112.100.00. A few months earlier, would have been $80k. Similar houses were selling for 190k before Covid, now they’re as high as $240k. The forecast was it would take 10 yrs to recover to the inflated prices in 07,’08, before the big crash. Pretty much what happened. Can’t get more Blue Collar Middle Class that this area. All the trappings. Campers, Boats, Hotrods, Harleys, and swimming pools. Everyone’s garages and basements are full of stuff, stuff, and more stuff. Overall not much will ever change. Prices should stay decent, simply from normal expansion. It never ends, goes in cycles. 7-10 yrs usually. A 20% drop in prices, won’t crash the market. I think this whole Covid deal may just result in a soft Landing. Kind of what happened in Louisiana, because of Katrina, they weren’t affected at all by the housing crash in ‘08,’09. Just a thought. A hopeful one.

 

I lived in Miami when the real estate bubble burst. One out of every five homes was foreclosed on. The situation we have now is actually worse in many ways than in 2008.

In 2008 there was 67.7 cents of government debt for every dollar in the economy. In 2020 there was $1.35 of government debt for every dollar in the economy. It's a giant Ponzi scheme that simply can't continue. At some point in this decade, people will stop taking dollars for payment because they realize they are backed by nothing and totally worthless. When that happens, you will have a biblical level event. All those people planning on Social Security as their sole retirement money will go hungry. People collecting disability to stay home and not work will miraculously find that they aren't so disabled that they can't riot and steal from their neighbors. Desperate people do desperate things.

Whichever way the bubble actually bursts, it's hard to imagine a situation in where that landing is soft.

 

It is coming. No matter what economic factors you look at, and all the excuses of 2008, there is one sign tried and true. When you run out of affordable housing for low and moderate income workers, the bubble bursts.