You have 6 months to liquidate your assets
I’ve been doing a lot of research lately and I wanted to share with you guys what I have found about the correlation between unemployment, delinquencies and housing prices. During the 2008 housing crisis the housing market bottomed about 2 years after the peak in delinquencies. Note that delinquencies are very much so correlated with unemployment rates (see graph on link below). Unemployment is already about twice the peak in 2008 so it is very likely that delinquencies will follow, which will lead to increased supply of housing.
See data here, gathered by stanford researches: https://web.stanford.edu/~pavelkr/jmp_slides.pdf
Conclusion: You have about 6 months to sell off your assets until the market will be flooded with fire sales and forclosures.
Originally posted by @James Hamling:@Thor Sveinbjoernsson what you have put out is the single worst, most incorrect over-simplification of the " 08/09 Housing Collapse", written with complete and total ignorance of every financial and investment market mechanism involved INCLUDING the actual housing market data and factors involved. And the fact that your calling yourself an accountant! I am totally blown away and terrified for business persons who may be looking to you for sound business advice that they would catalyze into actual actions.
First off, the housing collapse was (in a simplified manner) 2 MAIN actions: a housing SURPLUS (and a massive one at that) AND a significant monetary contraction. Thats it, NOTHING like today, nothing at all.
The monetary contraction was a ticking time bomb, it's was destined to happen by the sheer design of it and as you were oblivious to all of this I will not attempt to get into the finer detail of mortgage-backed securities and the layering of tranches. Short story, the securities were destined to fail AND those securities had factors of x20/x40.x50+ of funds gambled upon them so each security that went down took a grossly disproportionate amount of capital down with it.
At this point you may be asking "this guy seems to know a bit more than average on this", yeah, because I was actually there, and I spent a time as a Mortgage Banker to boot. The housing collapse was a monster sized freight train that many fo us saw coming miles away, not to the full extent of what it was BUT many of us in the business knew a correction was coming, knew lending was hugely inflating the market, knew the math of over-supply and on and on all meant correction was coming, we just didn't know when and how bad.
Today, we are in a housing SHORTAGE. We do NOT have the same crazy system on mortgage-backed securities we had in 08/09, or to be more accurate the Jenga stack of gambles is not built in a way as it was.
There is so much distortion in your post and promotion that it verges on criminal. For example, saying everyone better hurry and sell in next 6 months "or else" there will be mass flooding of market with sales, your telling people to flood the market genius. Thats inciting a run on the market. Your inciting fear and panic.
Your correlating unemployment with housing market collapse, well guess what, pre 08/09 collapse unemployment was under 4%. So by your logic low unemployment = housing collapse, because thats what it was. It was the housing collapse that made unemployment rise, not the other way around.
i gotta stop, because I could literally write pages of false information and false premise in your doom pandering, with matching pages of actual economic and financial reality, basically all those things actual accountants learn in a university which is why I am confused by your stated position and statements, they don't match at all.
Will unemployment effect mortgage defaults and the economy, absolutely, and not in the manner stated because we DON'T have a declining market we have a restricted market from regulation suspension. What the difference, well a declining market is one where the whole is reducing from fundamental factors, a restricted one, which we are in, is where desired economic activity is restricted and with that it builds tension, like a spring, and as restriction are removed that tension is expressed by massive economic boom. Don't believe me, just look everywhere that is opening and removing restrictions.
Look, I'm not an economist, but I did study economics, and all this I am saying is a combination of life business experience and that economics study and basic principles, all of which are and have proved true over and over again. There is NO collapse coming like this ya-hoo is trying to incite.
So I already gave Thor a hard time about overfitting the data and assuming a collapse is coming... But you seem to be overfitting in the opposite direction and assuming there is no collapse coming.
Here's the fact of the matter: We DON'T KNOW if a collapse is coming... Unless maybe you are from the future... In that case please PM me, I want to know which stocks to pick.
All we know are the risks that are out there, and we should be prepared to weather whatever storm may come. Personally, I am sitting on a pile of cash, but I am not liquidating all my assets. If you are leveraged beyond your means already, then liquidating may be a good idea, even if a collapse doesn't come.
Originally posted by @Thor Sveinbjoernsson:I’ve been doing a lot of research lately and I wanted to share with you guys what I have found about the correlation between unemployment, delinquencies and housing prices. During the 2008 housing crisis the housing market bottomed about 2 years after the peak in delinquencies. Note that delinquencies are very much so correlated with unemployment rates (see graph on link below). Unemployment is already about twice the peak in 2008 so it is very likely that delinquencies will follow, which will lead to increased supply of housing.
See data here, gathered by stanford researches: https://web.stanford.edu/~pavelkr/jmp_slides.pdf
Conclusion: You have about 6 months to sell off your assets until the market will be flooded with fire sales and forclosures.
Dang dude you figured it out. This whole time I thought the economy was complicated n stuff. Now I can just track the unemployment rate, short the housing market, and get filthy rich. Thanks man.
FYI from the data you provided in your slides... Unemployment was a lagging indicator in 2008 economic downturn. Delinquencies led unemployment... That is from your own data.
Originally posted by @Sue K.:Originally posted by @James Hamling:Originally posted by @Vince Ivanov:People keep saying that this time it’s different because people have a lot more equity in their houses. This is not entirely true. Many people who bought in 2019 and early 2020 are potentially under water.
We keep saying this is different from 08/09 crash because it IS different, in every conceivable way possible, every, nothing is the same.
08/09 was a collapse of a financial system that effected the entire global economy due to the particulars of it, which created a recession.
This is different, plain and simple. Economy was humming along like a jet plane. Think about it, the economy was performing awesome despite trade wars ongoing, despite political turmoil, thats a beast of a strong economy.
Then covid, and government restrictions. There is literally nothing the same between these two incident, different catalyst, different mitigating factors, different starting, different players, different responses, different governmental level of primary response, just all around different.
It doesn't matter why prices tank to the people who lose equity, though, does it? An economy crash is an economy crash. A crash equals lower home prices and usually lower rent prices, tightening lending by banks. It also doesn't matter at all what the economy was like prior to a crash. It's just the crash that matters.
Arguing whether or not this crash is created in a different way than other crashes in history doesn't change the result. If a fire is caused by an electrical malfunction or a propane tank or a forest fire, does the house burn differently? Does it matter, if the result is ashes either way?
My point was to argue with your assumption that if someone has equity prior to a crash caused by a pandemic, that their equity won't be hurt. That's simply not logical. You're assuming that the value of their property won't go down. I hope you're right, but in my opinion, that's just really simply not logical.
I'm old enough that I've witnessed several crashes. The result on the real estate market was always the same.
You too are overfitting the data. Just because you've seen a million crashes doesn't mean the next one will be like the last.
https://en.wikipedia.org/wiki/Overfitting
We don't know whats going to happen. In your analogy, the house always burns down. But this house is built differently from the last house. Could be fireproof. Fed Money printer goes BRRRR.
@Trevor Imlay
Although each bank handles differently. Most I’ve heard of simply tack on the extra payments at the end of the loan. So if you are 5 years into a 30 year loan and go on forebearance for 1 year. The pause button is essentially pressed, or in more technical terms (as interest was likely accruing and tax and insurance still being paid out of escrow, the quickest impact will likely a slight increase to escrow) but other than that your payment stays the same for years 7-30 and then the 6th year (when you didn’t make payments) gets added on in year 31.
I’m from Canada and bought some rentals in Florida starting in 2009. I don’t have an in-depth knowledge of the US financial system but I would consider it a baseline understanding. Is it possible that the value of housing or anything for that matter boils down to two things.... demand and scarcity?You need both to have high value. One without the other won’t provide it. I saw this in my province. The unemployment is low , jobs are paid well and the financial system is solid but the builders were greedy and overbuilt. This resulted in housing values declining in the last several years. Too much competition when selling and too many empty homes. No more scarcity. The demand for homes will always be there that’s why we invest in a basic need. The bigger issue in my opinion with housing is always scarcity. There was and is a housing shortage in the US according to everything I’ve read.That shouldn’t go away in the next few years and the cost to build doesn’t seem to decrease which only helps existing homes maintain their value. If people have to default on mass and foreclosures skyrocket... Where are all these people going to live when there’s no vacant homes? Will there be a mass migration to Mexico or my country which by the way have also been hit by covid like every other country in the world. Sleep under the trees in the park? Move in with family ? I think a lot of families would prefer to help out financially If possible rather than have kids/ siblings move in with them especially if there will be many more working from home now. Imagine having multiple family members having to live and work together in the same home!! I definitely don’t know what’s going to happen. I think expensive high end properties in high density areas may take some kind of a hit as there may be a shift to lower density cities/ areas. At the end of the day we all need a roof over our heads and if there’s a shortage prices may be ok. Some of the wants may not happen but the needs will and somehow there always seems to be money for that in first world countries either by the owners/ renters themselves or with the help of the government
Agreed. If we cant get it fast, with no pain, we don't want it. We will tax the rich to get what we want, and we can lay on the couch. I've been thinking about this recently. When was the last time America as a whole really sacrificed? As near as I can tell, imo, WWII. Rationing, war bonds, Rosie the riveter, being a soldier....now, it's easy. Why work through school? We have loans! Pandemic? We will print trillions! As a thought experiment, if we got to vote on it, and we knew for sure we can stop corona in 1 month if we either a) printed trillions we don't have, or b) give up our cell phones for 1 month....what would the final tally be?
Originally posted by @James Hamling:Originally posted by @Tony Blasioli:Originally posted by @Shane Ussery:@James Hamling me and a buddy had it out the other day over communism Socialism the other day. I finally got so mad I told him if u want to be a communist go live their. Then I told him I was going to take his property and he would be executed he looked at me strange then I said that’s what they did in China when the communist took over. Point being people please know what your voting for.
How can anyone be so dense as to look at the many times socialism has been tried.... and failed EVERY time? Yet, there they are, still blind as bats, running about screaming the virtues of socialism. Book a vacay to Venezuela. Let us know how it works out. It's a swell place for anyone trying to lose weight.
I have discussed this with friends and associates from Eastern Europe, those who experienced socialism first hand.
First, socialism has a good sales pitch, it really does. Everyone will have all the "necessities" of life taken care of, all you gotta worry about is living your life, everyone gets along, ohhh all your problems are those big bad billionaires and we'll get them it's all there fault. It's a sales tactic that has worked well over the decades, give people a scape goat then sell the cure and the cure is always "just give us all the power and control, don't worry we are good guys, we only want to take care of you". It gives lazy minds a lazy solution.
Second, we have bread a lazy self-righteous entitled American society, we did it from a place of love wanting our kids to have things better and not to go through the sacrifices we suffered or those we grew up hearing but we actually made them spoiled litter temper tantrum monsters. Is it any surprise how they stomp there feet yelling "but I want it". They are arrogant and ignorant, the most dangerous deadly combination.
Put those 2 together, and here we are.
*For those of you who are thinking "f this guy, socialism is..." just do me this 1 favor before replying. Take a moment to think this math thru; socialism says everyone will be equal, sounds good right, but how, just stop and think on that for a moment how would you make everyone equal because there is only 1 way. You can't force people to be smarter, or to work harder, to put more focus and desire then they want, so you will never elevate lower people up to higher ones, logical impossibility. So, the only 1 way is to, lower everyone else to the level of the lowest common denominator. That is the truth and reality of socialism, surf's and royals. That is parasitic, the fundamental goal and bedrock of socialism is parasitic.
Another good example of folks with the mindset max as many mortgages as possible on properties tell the bank says no more.Sh..hits the fan BAM Houston we have a problem . Some folks are forced to sell S.F.H rentals that means a shortage of decent S.F.H on the market! The houses that are for sale are sold quick!
Not sure what is going on in the other parts are like I had A S.F.H’s rented in 1.5 hours, the other house took a whopping 24 hours in metro KC market A-B area, I raised the rent up a tad too. The houses that are for sale are sold quick!
I have stepped to the side and went on buying binge in the stock market made some decent returns so far. Now the market is fully valued expect some toxic sectors Let’s see if the market retests some lows, I am long so I ride it out.
I am still of the mindset of S.F.H is the money maker in my area.
Billy,
Especially if you employ a long term, 10 - 30 year, 1031 Exchange Strategy.
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Originally posted by @Joseph Hennis:Originally posted by @James Hamling:@Thor Sveinbjoernsson what you have put out is the single worst, most incorrect over-simplification of the " 08/09 Housing Collapse", written with complete and total ignorance of every financial and investment market mechanism involved INCLUDING the actual housing market data and factors involved. And the fact that your calling yourself an accountant! I am totally blown away and terrified for business persons who may be looking to you for sound business advice that they would catalyze into actual actions.
First off, the housing collapse was (in a simplified manner) 2 MAIN actions: a housing SURPLUS (and a massive one at that) AND a significant monetary contraction. Thats it, NOTHING like today, nothing at all.
The monetary contraction was a ticking time bomb, it's was destined to happen by the sheer design of it and as you were oblivious to all of this I will not attempt to get into the finer detail of mortgage-backed securities and the layering of tranches. Short story, the securities were destined to fail AND those securities had factors of x20/x40.x50+ of funds gambled upon them so each security that went down took a grossly disproportionate amount of capital down with it.
At this point you may be asking "this guy seems to know a bit more than average on this", yeah, because I was actually there, and I spent a time as a Mortgage Banker to boot. The housing collapse was a monster sized freight train that many fo us saw coming miles away, not to the full extent of what it was BUT many of us in the business knew a correction was coming, knew lending was hugely inflating the market, knew the math of over-supply and on and on all meant correction was coming, we just didn't know when and how bad.
Today, we are in a housing SHORTAGE. We do NOT have the same crazy system on mortgage-backed securities we had in 08/09, or to be more accurate the Jenga stack of gambles is not built in a way as it was.
There is so much distortion in your post and promotion that it verges on criminal. For example, saying everyone better hurry and sell in next 6 months "or else" there will be mass flooding of market with sales, your telling people to flood the market genius. Thats inciting a run on the market. Your inciting fear and panic.
Your correlating unemployment with housing market collapse, well guess what, pre 08/09 collapse unemployment was under 4%. So by your logic low unemployment = housing collapse, because thats what it was. It was the housing collapse that made unemployment rise, not the other way around.
i gotta stop, because I could literally write pages of false information and false premise in your doom pandering, with matching pages of actual economic and financial reality, basically all those things actual accountants learn in a university which is why I am confused by your stated position and statements, they don't match at all.
Will unemployment effect mortgage defaults and the economy, absolutely, and not in the manner stated because we DON'T have a declining market we have a restricted market from regulation suspension. What the difference, well a declining market is one where the whole is reducing from fundamental factors, a restricted one, which we are in, is where desired economic activity is restricted and with that it builds tension, like a spring, and as restriction are removed that tension is expressed by massive economic boom. Don't believe me, just look everywhere that is opening and removing restrictions.
Look, I'm not an economist, but I did study economics, and all this I am saying is a combination of life business experience and that economics study and basic principles, all of which are and have proved true over and over again. There is NO collapse coming like this ya-hoo is trying to incite.
So I already gave Thor a hard time about overfitting the data and assuming a collapse is coming... But you seem to be overfitting in the opposite direction and assuming there is no collapse coming.
Here's the fact of the matter: We DON'T KNOW if a collapse is coming... Unless maybe you are from the future... In that case please PM me, I want to know which stocks to pick.
All we know are the risks that are out there, and we should be prepared to weather whatever storm may come. Personally, I am sitting on a pile of cash, but I am not liquidating all my assets. If you are leveraged beyond your means already, then liquidating may be a good idea, even if a collapse doesn't come.
I have laid out a considerable list of facts, data, economic theory and mechanics, countless times spelling out in detail exactly how economics actually work especially as it pertains to the housing industry, which clearly is stating THERE IS NO COLLAPSE, NOT NOW, NOT SOON, NOT COMING, NOT AT ALL. Your argument is -ignorant of facts -unsupported, plain and simple. If you'd like to actually attempt to counter the facts I have laid out please, feel free, but I laid out the math and data and that is what I am reading which DOES tell the future.
@Paul Shannon The Fed’s balance sheet is $7 trillion, not $27 trillion.
https://www.federalreserve.gov/releases/h41/current/h41.htm?mod=article_inline
Originally posted by @James Hamling:Originally posted by @Tony Blasioli:Originally posted by @Shane Ussery:@James Hamling me and a buddy had it out the other day over communism Socialism the other day. I finally got so mad I told him if u want to be a communist go live their. Then I told him I was going to take his property and he would be executed he looked at me strange then I said that’s what they did in China when the communist took over. Point being people please know what your voting for.
How can anyone be so dense as to look at the many times socialism has been tried.... and failed EVERY time? Yet, there they are, still blind as bats, running about screaming the virtues of socialism. Book a vacay to Venezuela. Let us know how it works out. It's a swell place for anyone trying to lose weight.
I have discussed this with friends and associates from Eastern Europe, those who experienced socialism first hand.
First, socialism has a good sales pitch, it really does. Everyone will have all the "necessities" of life taken care of, all you gotta worry about is living your life, everyone gets along, ohhh all your problems are those big bad billionaires and we'll get them it's all there fault. It's a sales tactic that has worked well over the decades, give people a scape goat then sell the cure and the cure is always "just give us all the power and control, don't worry we are good guys, we only want to take care of you". It gives lazy minds a lazy solution.
Second, we have bread a lazy self-righteous entitled American society, we did it from a place of love wanting our kids to have things better and not to go through the sacrifices we suffered or those we grew up hearing but we actually made them spoiled litter temper tantrum monsters. Is it any surprise how they stomp there feet yelling "but I want it". They are arrogant and ignorant, the most dangerous deadly combination.
Put those 2 together, and here we are.
*For those of you who are thinking "f this guy, socialism is..." just do me this 1 favor before replying. Take a moment to think this math thru; socialism says everyone will be equal, sounds good right, but how, just stop and think on that for a moment how would you make everyone equal because there is only 1 way. You can't force people to be smarter, or to work harder, to put more focus and desire then they want, so you will never elevate lower people up to higher ones, logical impossibility. So, the only 1 way is to, lower everyone else to the level of the lowest common denominator. That is the truth and reality of socialism, surf's and royals. That is parasitic, the fundamental goal and bedrock of socialism is parasitic.
All true. America was begun as a communist experiment by the Pilgrims. Upon landing at Plymouth Rock, they set up a government whereby everyone was given a particular job to perform, farming primarily, on the communal land, and the harvest was to be shared by all equally. The problem was the lazy would goof off and the industrious were getting tired of doing all of the work, so they too slacked. As a result, the Pilgrims nearly starved to death that first winter, and would have if not for the help of their Indian friends who fed them through the winter. The following year, the Pilgrims decided to try something different, capitalism, giving each family a plot of land to farm on their own to feed themselves. It was a huge success. The lazy produced just enough to feed themselves, but the hardworking types had food to spare, which they used to barter for other things they needed or wanted. Thus, was born Thanksgiving, the Pilgrims thanking God for blessing them with the genius of capitalism and its ample rewards!
Originally posted by @James Hamling:Originally posted by @Joseph Hennis:Originally posted by @James Hamling:@Thor Sveinbjoernsson what you have put out is the single worst, most incorrect over-simplification of the " 08/09 Housing Collapse", written with complete and total ignorance of every financial and investment market mechanism involved INCLUDING the actual housing market data and factors involved. And the fact that your calling yourself an accountant! I am totally blown away and terrified for business persons who may be looking to you for sound business advice that they would catalyze into actual actions.
First off, the housing collapse was (in a simplified manner) 2 MAIN actions: a housing SURPLUS (and a massive one at that) AND a significant monetary contraction. Thats it, NOTHING like today, nothing at all.
The monetary contraction was a ticking time bomb, it's was destined to happen by the sheer design of it and as you were oblivious to all of this I will not attempt to get into the finer detail of mortgage-backed securities and the layering of tranches. Short story, the securities were destined to fail AND those securities had factors of x20/x40.x50+ of funds gambled upon them so each security that went down took a grossly disproportionate amount of capital down with it.
At this point you may be asking "this guy seems to know a bit more than average on this", yeah, because I was actually there, and I spent a time as a Mortgage Banker to boot. The housing collapse was a monster sized freight train that many fo us saw coming miles away, not to the full extent of what it was BUT many of us in the business knew a correction was coming, knew lending was hugely inflating the market, knew the math of over-supply and on and on all meant correction was coming, we just didn't know when and how bad.
Today, we are in a housing SHORTAGE. We do NOT have the same crazy system on mortgage-backed securities we had in 08/09, or to be more accurate the Jenga stack of gambles is not built in a way as it was.
There is so much distortion in your post and promotion that it verges on criminal. For example, saying everyone better hurry and sell in next 6 months "or else" there will be mass flooding of market with sales, your telling people to flood the market genius. Thats inciting a run on the market. Your inciting fear and panic.
Your correlating unemployment with housing market collapse, well guess what, pre 08/09 collapse unemployment was under 4%. So by your logic low unemployment = housing collapse, because thats what it was. It was the housing collapse that made unemployment rise, not the other way around.
i gotta stop, because I could literally write pages of false information and false premise in your doom pandering, with matching pages of actual economic and financial reality, basically all those things actual accountants learn in a university which is why I am confused by your stated position and statements, they don't match at all.
Will unemployment effect mortgage defaults and the economy, absolutely, and not in the manner stated because we DON'T have a declining market we have a restricted market from regulation suspension. What the difference, well a declining market is one where the whole is reducing from fundamental factors, a restricted one, which we are in, is where desired economic activity is restricted and with that it builds tension, like a spring, and as restriction are removed that tension is expressed by massive economic boom. Don't believe me, just look everywhere that is opening and removing restrictions.
Look, I'm not an economist, but I did study economics, and all this I am saying is a combination of life business experience and that economics study and basic principles, all of which are and have proved true over and over again. There is NO collapse coming like this ya-hoo is trying to incite.
So I already gave Thor a hard time about overfitting the data and assuming a collapse is coming... But you seem to be overfitting in the opposite direction and assuming there is no collapse coming.
Here's the fact of the matter: We DON'T KNOW if a collapse is coming... Unless maybe you are from the future... In that case please PM me, I want to know which stocks to pick.
All we know are the risks that are out there, and we should be prepared to weather whatever storm may come. Personally, I am sitting on a pile of cash, but I am not liquidating all my assets. If you are leveraged beyond your means already, then liquidating may be a good idea, even if a collapse doesn't come.
I have laid out a considerable list of facts, data, economic theory and mechanics, countless times spelling out in detail exactly how economics actually work especially as it pertains to the housing industry, which clearly is stating THERE IS NO COLLAPSE, NOT NOW, NOT SOON, NOT COMING, NOT AT ALL. Your argument is -ignorant of facts -unsupported, plain and simple. If you'd like to actually attempt to counter the facts I have laid out please, feel free, but I laid out the math and data and that is what I am reading which DOES tell the future.
James, I appreciate the effort you've put into your posts.
What would need to happen for you to change your mind and believe that a housing "collapse" is coming?
Don't forget evolution, the majority of humans lack aggressive genes to fight for the top positions. If they had those genes all would be constantly fighting for territory (includes food) and the right to mate.
Most of our cousins in the primate family are content to sit and watch someone else call the shots (provide jobs etc.) and tell them what to do.
To think if everyone applied him/herself we would all be capitalistic billionaires is .... unrealistic just as thinking that everyone given handouts will never escape such dependency.
Originally posted by @John Williams:@Paul Shannon The Fed’s balance sheet is $7 trillion, not $27 trillion.
https://www.federalreserve.gov/releases/h41/current/h41.htm?mod=article_inline
Not my post
One thing is certain, these markets don't make sense. They aren't behaving normally due to the FED injecting so much money into the system. "Brrr" as they say... I think these are logical assumptions but we cannot predict the markets. Be conservative, diversify, and don't over-leverage yourself and I think we will get through this.
@Paul Shannon my apologies, I stand corrected. It was @Thor Sveinbjoernsson who incorrectly reported the size of the fed balance sheet.
@Thor Sveinbjoernsson
Past performance does not guarantee future performance. The fundamentals of economy are still strong.. stronger than 2008. Also, I’m seeing a constricting supply and any properties that come up are still snatched up quickly.
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Originally posted by @Bill F.:Originally posted by @James Hamling:Originally posted by @Joseph Hennis:Originally posted by @James Hamling:@Thor Sveinbjoernsson what you have put out is the single worst, most incorrect over-simplification of the " 08/09 Housing Collapse", written with complete and total ignorance of every financial and investment market mechanism involved INCLUDING the actual housing market data and factors involved. And the fact that your calling yourself an accountant! I am totally blown away and terrified for business persons who may be looking to you for sound business advice that they would catalyze into actual actions.
First off, the housing collapse was (in a simplified manner) 2 MAIN actions: a housing SURPLUS (and a massive one at that) AND a significant monetary contraction. Thats it, NOTHING like today, nothing at all.
The monetary contraction was a ticking time bomb, it's was destined to happen by the sheer design of it and as you were oblivious to all of this I will not attempt to get into the finer detail of mortgage-backed securities and the layering of tranches. Short story, the securities were destined to fail AND those securities had factors of x20/x40.x50+ of funds gambled upon them so each security that went down took a grossly disproportionate amount of capital down with it.
At this point you may be asking "this guy seems to know a bit more than average on this", yeah, because I was actually there, and I spent a time as a Mortgage Banker to boot. The housing collapse was a monster sized freight train that many fo us saw coming miles away, not to the full extent of what it was BUT many of us in the business knew a correction was coming, knew lending was hugely inflating the market, knew the math of over-supply and on and on all meant correction was coming, we just didn't know when and how bad.
Today, we are in a housing SHORTAGE. We do NOT have the same crazy system on mortgage-backed securities we had in 08/09, or to be more accurate the Jenga stack of gambles is not built in a way as it was.
There is so much distortion in your post and promotion that it verges on criminal. For example, saying everyone better hurry and sell in next 6 months "or else" there will be mass flooding of market with sales, your telling people to flood the market genius. Thats inciting a run on the market. Your inciting fear and panic.
Your correlating unemployment with housing market collapse, well guess what, pre 08/09 collapse unemployment was under 4%. So by your logic low unemployment = housing collapse, because thats what it was. It was the housing collapse that made unemployment rise, not the other way around.
i gotta stop, because I could literally write pages of false information and false premise in your doom pandering, with matching pages of actual economic and financial reality, basically all those things actual accountants learn in a university which is why I am confused by your stated position and statements, they don't match at all.
Will unemployment effect mortgage defaults and the economy, absolutely, and not in the manner stated because we DON'T have a declining market we have a restricted market from regulation suspension. What the difference, well a declining market is one where the whole is reducing from fundamental factors, a restricted one, which we are in, is where desired economic activity is restricted and with that it builds tension, like a spring, and as restriction are removed that tension is expressed by massive economic boom. Don't believe me, just look everywhere that is opening and removing restrictions.
Look, I'm not an economist, but I did study economics, and all this I am saying is a combination of life business experience and that economics study and basic principles, all of which are and have proved true over and over again. There is NO collapse coming like this ya-hoo is trying to incite.
So I already gave Thor a hard time about overfitting the data and assuming a collapse is coming... But you seem to be overfitting in the opposite direction and assuming there is no collapse coming.
Here's the fact of the matter: We DON'T KNOW if a collapse is coming... Unless maybe you are from the future... In that case please PM me, I want to know which stocks to pick.
All we know are the risks that are out there, and we should be prepared to weather whatever storm may come. Personally, I am sitting on a pile of cash, but I am not liquidating all my assets. If you are leveraged beyond your means already, then liquidating may be a good idea, even if a collapse doesn't come.
I have laid out a considerable list of facts, data, economic theory and mechanics, countless times spelling out in detail exactly how economics actually work especially as it pertains to the housing industry, which clearly is stating THERE IS NO COLLAPSE, NOT NOW, NOT SOON, NOT COMING, NOT AT ALL. Your argument is -ignorant of facts -unsupported, plain and simple. If you'd like to actually attempt to counter the facts I have laid out please, feel free, but I laid out the math and data and that is what I am reading which DOES tell the future.
James, I appreciate the effort you've put into your posts.
What would need to happen for you to change your mind and believe that a housing "collapse" is coming?
Interesting question, very interesting..... You said "collapse", not a recession but a collapse. For a collapse to be possible there is a few things that have to happen;
(A) supply has to exceed demand in a significant proportion. Short of a mass kill off of people I don't know how this could happen, you literally have to remove roughly 35million+ people from needing a home, specifically home owners. All I can think of is WWIII, how else do you make that first necessary ingredient happen? 08/09 housing collapse was result of more than a decade of overbuilding.
(B) collapse of the mortgage mechanisms of economics; In theory "IF" China called the entirety of US Notes they are holding, all foreign nations call due US Notes, and all foreign nations stop acquiring US Notes. In addition this would also mean the entire planet universally stops using the "Dollar Standard", so they also all agree on a different standard, insert and distribute that world wide, and call all US Notes, that would collapse the US financial mechanisms and with that mortgage liquidity would all but completely end, indefinitely. Without leveraged capital for home purchasing, deflationary pressures come into action. Yes, the entire country would be "burning" and it would be apocalyptic chaos in the streets but yes, this would have deflationary effects on home prices.
Again, your question specified "collapse" not recession and while there was the 08/09 collapse what too many are forgetting is name the last collapse before that, yeah, it was the Great Depression. And when looking back in history every collapse has come from the financial markets, or invasion, collapse has never come from the economic working sector ever in history go as far back as the Tulip Crash. So barring an invasion of US mainland, I can't find any plausible means other than the above 2.
Originally posted by @Pau Kha:@Thor Sveinbjoernsson
Past performance does not guarantee future performance. The fundamentals of economy are still strong.. stronger than 2008. Also, I’m seeing a constricting supply and any properties that come up are still snatched up quickly.
What do you consider fundamentals of the economy? employment? GDP? US deficit? Consumer confidence? Because all of these are as bad as ever.
All good points here, but it seems to me it's a matter of when, not if. There will be people who don't get their jobs back and will have to sell their houses. True, there may not be as many foreclosures, but there will still likely be a surge in sales, driving prices down. So personally, I plan on holding onto what I've got (since I've got tenants paying in every unit) and buying more when things bottom out, wherever and whenever that bottom is.
@Thor Sveinbjoernsson GREAT more opportunities to buy ?
Originally posted by @James Hamling:Originally posted by @Bill F.:Originally posted by @James Hamling:Originally posted by @Joseph Hennis:Originally posted by @James Hamling:@Thor Sveinbjoernsson what you have put out is the single worst, most incorrect over-simplification of the " 08/09 Housing Collapse", written with complete and total ignorance of every financial and investment market mechanism involved INCLUDING the actual housing market data and factors involved. And the fact that your calling yourself an accountant! I am totally blown away and terrified for business persons who may be looking to you for sound business advice that they would catalyze into actual actions.
First off, the housing collapse was (in a simplified manner) 2 MAIN actions: a housing SURPLUS (and a massive one at that) AND a significant monetary contraction. Thats it, NOTHING like today, nothing at all.
The monetary contraction was a ticking time bomb, it's was destined to happen by the sheer design of it and as you were oblivious to all of this I will not attempt to get into the finer detail of mortgage-backed securities and the layering of tranches. Short story, the securities were destined to fail AND those securities had factors of x20/x40.x50+ of funds gambled upon them so each security that went down took a grossly disproportionate amount of capital down with it.
At this point you may be asking "this guy seems to know a bit more than average on this", yeah, because I was actually there, and I spent a time as a Mortgage Banker to boot. The housing collapse was a monster sized freight train that many fo us saw coming miles away, not to the full extent of what it was BUT many of us in the business knew a correction was coming, knew lending was hugely inflating the market, knew the math of over-supply and on and on all meant correction was coming, we just didn't know when and how bad.
Today, we are in a housing SHORTAGE. We do NOT have the same crazy system on mortgage-backed securities we had in 08/09, or to be more accurate the Jenga stack of gambles is not built in a way as it was.
There is so much distortion in your post and promotion that it verges on criminal. For example, saying everyone better hurry and sell in next 6 months "or else" there will be mass flooding of market with sales, your telling people to flood the market genius. Thats inciting a run on the market. Your inciting fear and panic.
Your correlating unemployment with housing market collapse, well guess what, pre 08/09 collapse unemployment was under 4%. So by your logic low unemployment = housing collapse, because thats what it was. It was the housing collapse that made unemployment rise, not the other way around.
i gotta stop, because I could literally write pages of false information and false premise in your doom pandering, with matching pages of actual economic and financial reality, basically all those things actual accountants learn in a university which is why I am confused by your stated position and statements, they don't match at all.
Will unemployment effect mortgage defaults and the economy, absolutely, and not in the manner stated because we DON'T have a declining market we have a restricted market from regulation suspension. What the difference, well a declining market is one where the whole is reducing from fundamental factors, a restricted one, which we are in, is where desired economic activity is restricted and with that it builds tension, like a spring, and as restriction are removed that tension is expressed by massive economic boom. Don't believe me, just look everywhere that is opening and removing restrictions.
Look, I'm not an economist, but I did study economics, and all this I am saying is a combination of life business experience and that economics study and basic principles, all of which are and have proved true over and over again. There is NO collapse coming like this ya-hoo is trying to incite.
So I already gave Thor a hard time about overfitting the data and assuming a collapse is coming... But you seem to be overfitting in the opposite direction and assuming there is no collapse coming.
Here's the fact of the matter: We DON'T KNOW if a collapse is coming... Unless maybe you are from the future... In that case please PM me, I want to know which stocks to pick.
All we know are the risks that are out there, and we should be prepared to weather whatever storm may come. Personally, I am sitting on a pile of cash, but I am not liquidating all my assets. If you are leveraged beyond your means already, then liquidating may be a good idea, even if a collapse doesn't come.
I have laid out a considerable list of facts, data, economic theory and mechanics, countless times spelling out in detail exactly how economics actually work especially as it pertains to the housing industry, which clearly is stating THERE IS NO COLLAPSE, NOT NOW, NOT SOON, NOT COMING, NOT AT ALL. Your argument is -ignorant of facts -unsupported, plain and simple. If you'd like to actually attempt to counter the facts I have laid out please, feel free, but I laid out the math and data and that is what I am reading which DOES tell the future.
James, I appreciate the effort you've put into your posts.
What would need to happen for you to change your mind and believe that a housing "collapse" is coming?
Interesting question, very interesting..... You said "collapse", not a recession but a collapse. For a collapse to be possible there is a few things that have to happen;
(A) supply has to exceed demand in a significant proportion. Short of a mass kill off of people I don't know how this could happen, you literally have to remove roughly 35million+ people from needing a home, specifically home owners. All I can think of is WWIII, how else do you make that first necessary ingredient happen? 08/09 housing collapse was result of more than a decade of overbuilding.
(B) collapse of the mortgage mechanisms of economics; In theory "IF" China called the entirety of US Notes they are holding, all foreign nations call due US Notes, and all foreign nations stop acquiring US Notes. In addition this would also mean the entire planet universally stops using the "Dollar Standard", so they also all agree on a different standard, insert and distribute that world wide, and call all US Notes, that would collapse the US financial mechanisms and with that mortgage liquidity would all but completely end, indefinitely. Without leveraged capital for home purchasing, deflationary pressures come into action. Yes, the entire country would be "burning" and it would be apocalyptic chaos in the streets but yes, this would have deflationary effects on home prices.
Again, your question specified "collapse" not recession and while there was the 08/09 collapse what too many are forgetting is name the last collapse before that, yeah, it was the Great Depression. And when looking back in history every collapse has come from the financial markets, or invasion, collapse has never come from the economic working sector ever in history go as far back as the Tulip Crash. So barring an invasion of US mainland, I can't find any plausible means other than the above 2.
Those are some pretty "when pigs fly" scenarios that RE would ever collapse again. Many probably thought JCPenney and Macy's would never go out of business because they've been around 100+ years.
If the stock market crashed again even more (Dow 15,000), you'd likely see a huge ripple to RE as many retirement accounts would likely be wrecked...and they'd need their equity now.
So there are other scenarios more likely than simply "World War III".
-------------
P.S. You can rebuttal people's responses without being a condescending you-know-what. You scoff at those who think there will be a crash coming because they think 'they know it all.' Yet, you answer in the same way...
Originally posted by @Bob Prisco:@Thor Sveinbjoernsson GREAT more opportunities to buy ?
If you bought at the peak in 2008 you'd still be recovering
Originally posted by @Amy Pfaffman:All good points here, but it seems to me it's a matter of when, not if. There will be people who don't get their jobs back and will have to sell their houses. True, there may not be as many foreclosures, but there will still likely be a surge in sales, driving prices down. So personally, I plan on holding onto what I've got (since I've got tenants paying in every unit) and buying more when things bottom out, wherever and whenever that bottom is.
Well said Amy, same plan for me.
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Originally posted by @Joe Cassandra:Originally posted by @James Hamling:Originally posted by @Bill F.:Originally posted by @James Hamling:Originally posted by @Joseph Hennis:Originally posted by @James Hamling:@Thor Sveinbjoernsson what you have put out is the single worst, most incorrect over-simplification of the " 08/09 Housing Collapse", written with complete and total ignorance of every financial and investment market mechanism involved INCLUDING the actual housing market data and factors involved. And the fact that your calling yourself an accountant! I am totally blown away and terrified for business persons who may be looking to you for sound business advice that they would catalyze into actual actions.
First off, the housing collapse was (in a simplified manner) 2 MAIN actions: a housing SURPLUS (and a massive one at that) AND a significant monetary contraction. Thats it, NOTHING like today, nothing at all.
The monetary contraction was a ticking time bomb, it's was destined to happen by the sheer design of it and as you were oblivious to all of this I will not attempt to get into the finer detail of mortgage-backed securities and the layering of tranches. Short story, the securities were destined to fail AND those securities had factors of x20/x40.x50+ of funds gambled upon them so each security that went down took a grossly disproportionate amount of capital down with it.
At this point you may be asking "this guy seems to know a bit more than average on this", yeah, because I was actually there, and I spent a time as a Mortgage Banker to boot. The housing collapse was a monster sized freight train that many fo us saw coming miles away, not to the full extent of what it was BUT many of us in the business knew a correction was coming, knew lending was hugely inflating the market, knew the math of over-supply and on and on all meant correction was coming, we just didn't know when and how bad.
Today, we are in a housing SHORTAGE. We do NOT have the same crazy system on mortgage-backed securities we had in 08/09, or to be more accurate the Jenga stack of gambles is not built in a way as it was.
There is so much distortion in your post and promotion that it verges on criminal. For example, saying everyone better hurry and sell in next 6 months "or else" there will be mass flooding of market with sales, your telling people to flood the market genius. Thats inciting a run on the market. Your inciting fear and panic.
Your correlating unemployment with housing market collapse, well guess what, pre 08/09 collapse unemployment was under 4%. So by your logic low unemployment = housing collapse, because thats what it was. It was the housing collapse that made unemployment rise, not the other way around.
i gotta stop, because I could literally write pages of false information and false premise in your doom pandering, with matching pages of actual economic and financial reality, basically all those things actual accountants learn in a university which is why I am confused by your stated position and statements, they don't match at all.
Will unemployment effect mortgage defaults and the economy, absolutely, and not in the manner stated because we DON'T have a declining market we have a restricted market from regulation suspension. What the difference, well a declining market is one where the whole is reducing from fundamental factors, a restricted one, which we are in, is where desired economic activity is restricted and with that it builds tension, like a spring, and as restriction are removed that tension is expressed by massive economic boom. Don't believe me, just look everywhere that is opening and removing restrictions.
Look, I'm not an economist, but I did study economics, and all this I am saying is a combination of life business experience and that economics study and basic principles, all of which are and have proved true over and over again. There is NO collapse coming like this ya-hoo is trying to incite.
So I already gave Thor a hard time about overfitting the data and assuming a collapse is coming... But you seem to be overfitting in the opposite direction and assuming there is no collapse coming.
Here's the fact of the matter: We DON'T KNOW if a collapse is coming... Unless maybe you are from the future... In that case please PM me, I want to know which stocks to pick.
All we know are the risks that are out there, and we should be prepared to weather whatever storm may come. Personally, I am sitting on a pile of cash, but I am not liquidating all my assets. If you are leveraged beyond your means already, then liquidating may be a good idea, even if a collapse doesn't come.
I have laid out a considerable list of facts, data, economic theory and mechanics, countless times spelling out in detail exactly how economics actually work especially as it pertains to the housing industry, which clearly is stating THERE IS NO COLLAPSE, NOT NOW, NOT SOON, NOT COMING, NOT AT ALL. Your argument is -ignorant of facts -unsupported, plain and simple. If you'd like to actually attempt to counter the facts I have laid out please, feel free, but I laid out the math and data and that is what I am reading which DOES tell the future.
James, I appreciate the effort you've put into your posts.
What would need to happen for you to change your mind and believe that a housing "collapse" is coming?
Interesting question, very interesting..... You said "collapse", not a recession but a collapse. For a collapse to be possible there is a few things that have to happen;
(A) supply has to exceed demand in a significant proportion. Short of a mass kill off of people I don't know how this could happen, you literally have to remove roughly 35million+ people from needing a home, specifically home owners. All I can think of is WWIII, how else do you make that first necessary ingredient happen? 08/09 housing collapse was result of more than a decade of overbuilding.
(B) collapse of the mortgage mechanisms of economics; In theory "IF" China called the entirety of US Notes they are holding, all foreign nations call due US Notes, and all foreign nations stop acquiring US Notes. In addition this would also mean the entire planet universally stops using the "Dollar Standard", so they also all agree on a different standard, insert and distribute that world wide, and call all US Notes, that would collapse the US financial mechanisms and with that mortgage liquidity would all but completely end, indefinitely. Without leveraged capital for home purchasing, deflationary pressures come into action. Yes, the entire country would be "burning" and it would be apocalyptic chaos in the streets but yes, this would have deflationary effects on home prices.
Again, your question specified "collapse" not recession and while there was the 08/09 collapse what too many are forgetting is name the last collapse before that, yeah, it was the Great Depression. And when looking back in history every collapse has come from the financial markets, or invasion, collapse has never come from the economic working sector ever in history go as far back as the Tulip Crash. So barring an invasion of US mainland, I can't find any plausible means other than the above 2.
Those are some pretty "when pigs fly" scenarios that RE would ever collapse again. Many probably thought JCPenney and Macy's would never go out of business because they've been around 100+ years.
If the stock market crashed again even more (Dow 15,000), you'd likely see a huge ripple to RE as many retirement accounts would likely be wrecked...and they'd need their equity now.
So there are other scenarios more likely than simply "World War III".
-------------
P.S. You can rebuttal people's responses without being a condescending you-know-what. You scoff at those who think there will be a crash coming because they think 'they know it all.' Yet, you answer in the same way...
JC Penny, Sears, Kmart, yeah they were all major players but along came the internet, "The" market disruptor, and really that is what happens in a market disruption. Whale oil was a giant industry, then along came this Eddison guy and his light bulb and "poof" that industry is dead. Market Disruptor. People have been projecting the death of brick & mortar retail since the 90's so in that no, it isn't any surprise, and they have been on a downward slide for many years.
Yeah, I somewhat agree on the "IF the DOW hits sub 15,000" but that fit's into that fantasy category because what catalyst is there for sub 15k DOW? And at 15k people won't be in liquidation mode, hold-fast absolutely, constricting capital so any durable time around 15k will have damage, but to really get the level required to get people to start liquidating holdings at significant loss's I believe we are looking at DOW 13k. With covid we were already near that 15k mark and there wasn't liquidations going on int hat affect, it actually spurred buying.
Good talk