Housing Market: Just a simple Schmucks thoughts
This is just a quick look from a TA view. Housing is not supposed to be a "Sexy" Asset with huge returns. When housing reaches the "Danger Zone" major dislocations in the economy will begin to show( this can be a slow lagging process to reach the surface)
-The danger zone or higher, usually leads to the fed increasing interest rates to keep the economy in check.
- Mortgage rates rising with housing prices rising will inevitably lead to a free fall(keep reading).
- The Housing market will begin to see dangerous and volatile swings
- No one ever wants to accept a crash could be coming especially because the timing will never go the way it seems
- The Supply/Demand argument is led with a false narrative, with regards to housing its important to consider necessity vs. luxury
-WHY? Because we are currently in a roaring 20's type euphoric environment. The middle class is dwindling while while the distribution of wealth gap grows.
a lot of people over the last couple years have come into more money than they ever thought ( this is a result of over printing money). A lot of people have
made a lot of money in investing that don't understand the economy or the mechanics at play. these people assume housing prices will just keep going up, and
since they have so much extra money they will splurge on the home they buy or just out right over pay by outbidding everyone else. So? why does that matter
-Well that matters because the levers being initiated now by the Fed mean not only do you have to bid above asking for buying a home, if you plan on getting a
mortgage that will do some damage to your wallet.
-NOW TO MY SUPPLY/DEMAND Point: The market is well on its way to pricing most people out of it. People always say ,and I believe they are wrong, "everyone has to have a house its a necessity".
The problem is people don't need the housing they are chasing. They will drastically scale down or find an alternative that may not be very conventional, sharing homes, tiny homes, tree houses(jk ... well maybe), rentals, etc.
THE MAJOR CATALYST: Home builders are holding back on releasing homes to artificially manipulate supply and demand, with the intentions of increased prices.
Reality: Demand will vanish as everyone gets priced out, the Home builders will panic and flood the market with homes causing prices to tumble. Most importantly as inflation begins to heat up,
peoples income will not stay on pace, So people buying homes and renting them out wont work as people wont be able to afford rent.
-Crashes usually occur when the mechanisms in place to keep the economy in a safe range no longer work and become more detrimental as they cause a burden without the expected byproduct of bringing the economy back to reality.
-As prices increase so will property taxes, people will begin selling as well as that comes more and more into play as well.
-I did not expect to write this much and I could make a lot more points but I would rather have you leave a comment and weigh in.
Final thought: I am just some schmuck that is terrible with market timing. I could very easily be wrong, but while I did not speak much to history, just remember history always has a way of repeating itself (hint: I am not talking to the housing bubble in early 2000's, consider the Spanish flu (1918) through the roaring 20's and great depression)
Thanks for reading let me know what you think.
-The danger zone or higher, usually leads to the fed increasing interest rates to keep the economy in check.
- Mortgage rates rising with housing prices rising will inevitably lead to a free fall(keep reading).
- The Housing market will begin to see dangerous and volatile swings
- No one ever wants to accept a crash could be coming especially because the timing will never go the way it seems
- The Supply/Demand argument is led with a false narrative, with regards to housing its important to consider necessity vs. luxury
-WHY? Because we are currently in a roaring 20's type euphoric environment. The middle class is dwindling while while the distribution of wealth gap grows.
a lot of people over the last couple years have come into more money than they ever thought ( this is a result of over printing money). A lot of people have
made a lot of money in investing that don't understand the economy or the mechanics at play. these people assume housing prices will just keep going up, and
since they have so much extra money they will splurge on the home they buy or just out right over pay by outbidding everyone else. So? why does that matter
-Well that matters because the levers being initiated now by the Fed mean not only do you have to bid above asking for buying a home, if you plan on getting a
mortgage that will do some damage to your wallet.
-NOW TO MY SUPPLY/DEMAND Point: The market is well on its way to pricing most people out of it. People always say ,and I believe they are wrong, "everyone has to have a house its a necessity".
The problem is people don't need the housing they are chasing. They will drastically scale down or find an alternative that may not be very conventional, sharing homes, tiny homes, tree houses(jk ... well maybe), rentals, etc.
THE MAJOR CATALYST: Home builders are holding back on releasing homes to artificially manipulate supply and demand, with the intentions of increased prices.
Reality: Demand will vanish as everyone gets priced out, the Home builders will panic and flood the market with homes causing prices to tumble. Most importantly as inflation begins to heat up,
peoples income will not stay on pace, So people buying homes and renting them out wont work as people wont be able to afford rent.
-Crashes usually occur when the mechanisms in place to keep the economy in a safe range no longer work and become more detrimental as they cause a burden without the expected byproduct of bringing the economy back to reality.
-As prices increase so will property taxes, people will begin selling as well as that comes more and more into play as well.
-I did not expect to write this much and I could make a lot more points but I would rather have you leave a comment and weigh in.
Final thought: I am just some schmuck that is terrible with market timing. I could very easily be wrong, but while I did not speak much to history, just remember history always has a way of repeating itself (hint: I am not talking to the housing bubble in early 2000's, consider the Spanish flu (1918) through the roaring 20's and great depression)
Thanks for reading let me know what you think.