The Great Economic/ Financial Collapse: Housing (3/6)
ever since 2008 we have seen home prices rise. is this good or bad? i will tell you my opinion on housing and how it could crash.
right now we are seeing record home prices we have never seen. why is this? supply and demand. we have seen demand for homes reach record levels but little supply.... this causes prices to increase and price to build a home more expensive.
although market is booming right now i do think this should be a warning sign. the only thing keeping the housing market alive is low interest rates and supply and demand. right now interest rates are nearly at 0% but the fed does plan on raising them in march.
raising interest rates will slow down the growth of the economy which could slow down demand for homes since it will be harder for people to borrow money.
i do believe home prices will continue to clime for a few more months before they end up crashing. i still see prices going up 17% before they crash.
another thing we can look at is lumber. we need lumber to build homes and recently we say the price of lumber dump after a huge pump. this could be a warning since you can see lumber tops off people home prices drop. if you can see the chart you will see lumber topped off a few years before homes did which led to a housing crash. right now we have seen lumber prices top off but i dont think home prices have topped out just yet. i think once the economy slows down and other markets start crashing the housing will crash too. i dont think housing will crash just yet i think it will be one of the last markets to crash in this economic collapse.
another reason why i think housing will crash is the horrible wages in America. the average american wage is 51k a year and the median is 34k. with horrible wages in america and rising home prices it makes it harder and more expensive for the average american to buy a house. buying a home with these wages can lead to large amounts of debt as you can see here:
fingfx.thomsonreuter...534/Pasted Image.jpg
household debt to GDP is below previous high but the total household debt is past 2008 levels.
right now housing isn't looking bearish but i do think that will change in the upcoming years if the economic collapse does happen. foreclosure and bankrupts are at a record low but i do think they will spike once other markets start coming down.
fingfx.thomsonreuter...538/Pasted Image.jpg
i do think if markets crash it will cause a spike in unemployment which will lead to foreclosures and bankruptcies .
also with inflation on the rise and possible increase in inflation it will drop the demand for homes.
i think we are in a debt bubble as well. we have seen student debt, national debt, personal debt all reach record numbers. this will lead to market crashes since it will be harder for people to borrow money with rising interest rates. and if they can't pay off debts they will be forced to file bankruptcy which cold lead to foreclosures.
if home prices do end up dropping severely that will also create more debt for home owners/sellers. if prices drop below the price they bought at they will be selling for a loss which could lead to debt.
right now we are seeing record home prices we have never seen. why is this? supply and demand. we have seen demand for homes reach record levels but little supply.... this causes prices to increase and price to build a home more expensive.
although market is booming right now i do think this should be a warning sign. the only thing keeping the housing market alive is low interest rates and supply and demand. right now interest rates are nearly at 0% but the fed does plan on raising them in march.
raising interest rates will slow down the growth of the economy which could slow down demand for homes since it will be harder for people to borrow money.
i do believe home prices will continue to clime for a few more months before they end up crashing. i still see prices going up 17% before they crash.
another thing we can look at is lumber. we need lumber to build homes and recently we say the price of lumber dump after a huge pump. this could be a warning since you can see lumber tops off people home prices drop. if you can see the chart you will see lumber topped off a few years before homes did which led to a housing crash. right now we have seen lumber prices top off but i dont think home prices have topped out just yet. i think once the economy slows down and other markets start crashing the housing will crash too. i dont think housing will crash just yet i think it will be one of the last markets to crash in this economic collapse.
another reason why i think housing will crash is the horrible wages in America. the average american wage is 51k a year and the median is 34k. with horrible wages in america and rising home prices it makes it harder and more expensive for the average american to buy a house. buying a home with these wages can lead to large amounts of debt as you can see here:
fingfx.thomsonreuter...534/Pasted Image.jpg
household debt to GDP is below previous high but the total household debt is past 2008 levels.
right now housing isn't looking bearish but i do think that will change in the upcoming years if the economic collapse does happen. foreclosure and bankrupts are at a record low but i do think they will spike once other markets start coming down.
fingfx.thomsonreuter...538/Pasted Image.jpg
i do think if markets crash it will cause a spike in unemployment which will lead to foreclosures and bankruptcies .
also with inflation on the rise and possible increase in inflation it will drop the demand for homes.
i think we are in a debt bubble as well. we have seen student debt, national debt, personal debt all reach record numbers. this will lead to market crashes since it will be harder for people to borrow money with rising interest rates. and if they can't pay off debts they will be forced to file bankruptcy which cold lead to foreclosures.
if home prices do end up dropping severely that will also create more debt for home owners/sellers. if prices drop below the price they bought at they will be selling for a loss which could lead to debt.