All Forum Posts by: Andrew Syrios

 They don't get-it Joe, they just don't get it. 

It seems that there is such a blood-lust for a collapse in R.E., out of a desire to have been an investor in 2009, that anything and everything going on = "collapse" in peoples mind, it's tunnel-vision on shrooms, it really is. 

Firstly, Inflation = Inflation, not Deflation. Homes did not just go up in price, your dollar went DOWN in it's purchasing power. I have not heard 1 person argue how groceries are going to go down 20%. Housing is coined "The" hedge against inflation for a reason, and it's not because it devalues while everything else inflates. 

Next, and I still don't understand person's disconnect with this, we are at net SHORTAGE of housing, SHORTAGE. Now add that ingredient with INFLATION for all the things that go into making a home, the labor for everyone involved, the materials and tools they use, those cost's of inputs dictate the price to market. New unit costs will drop 20% when everything and everyone that makes on takes 20% less, it's not complicated.     The result of this math, is called STAGFLATION, high cost of an item with more limited purchasing of that item makes lower volume NOT collapse. 

And lastly the fun one also ignored all the time which is most are sitting on record high equity and liquidity. People in large part DON'T have to sell, at all. On average at least $100k of equity would have to be burned away AND then those occupants put into a financial crisis of income, and this is just to start to get in realm of potential for risk of foreclosure. Or in terms, 2008 collapse X3. It's a ridiculous notion. 

We also have a massive net shortage of rental units. This makes a nice "landing" buffer for builder's/developers for pivoting there activity. Some won't, some will just stop, or decrease volume. Others will adjust. Things could not be more different then 2007, everything is different in world of development today. 

A thought that high interest rates will collapse housing, please do the basic research of a little thing we call the '80's, rates hit 14% and guess what, no collapse. What did happen in the '80's was a setting of the stage for the bull-run of the 90's. 

We are in STAGFLATION. This fall/winter will see the lowest prices in R.E. for the next years to come. By Q2 of '23' housing shortage will press the leveling and bounce up in R.E. pricing, and as much as people will not like the price level, they will pay it because it's the cost of having a roof over there head, shelter in non-optional. 

And then, I predict political meddling to gain votes in the form of directing Fannie/Freddie to securitize and normalize the 40/50yr mortgage because, it gives feeling of affordability while not actually touching price. THAT's how housing becomes "affordable" again. That happens, median price will shoot up, yet again. I am betting there will also be something to address MBS purchases, but most will miss that point as it's over most persons heads but in truth that's where the whole issue of rates is coming from so most likely something done there. 

Now then, then you may get into a high leverage environment, setting the stage for a "collapse" of some type in or around "25-'27'. As it stands now, we have inflation with liquidity, that spells STAGFLATION if anything.