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worn down
MHFIN
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Comments by "worn down" (@worndown8280) on "MHFIN" channel.

It was always flippers in 2008. Subprime just made to floor drop out. And then the Fed saved everyone. This time if the Fed tries that inflation will explode and a rapidly deflating housing market will be the least of peoples concerns. You can already see people wishing for the Fed to "pivot" wanting them to lower rates to save this. Either way, the bill is due, as others have said. So we either get deflating asset prices or much higher inflation basically devaluing asset prices in real terms. Sometimes I feel like people cant do math. We never addressed the underlying causes of the crash in 2008. Its demographics. You can fake demand for a while with loose credit, but eventually, that has to be paid back or you reach a limit that you cant pay back what you already owe. Thats where we are.
79
What you dont know is how leveraged he is. He could be like yea I own 300 houses but just has them all mortgaged. And when there is a rug pull he falls on his face. If he actually owns all of them, not just having a positive cash flow, he could be in a very good situation.
11
apparently you didnt understand his explanation of how inflation compounds year over year.
8
Demography explains all of this. 2020 was the year of peak demand demographically speaking. Millennials in the family forming age were at their peak. This changed market psychology while at the same time there was near free money via low interest rates and a tsunami of stimulus money. Add to the fact that so many Americans shove money into their 401ks and IRAs that REITs were getting insane cash infusions that they used to buy real estate further skewing the market. But real demand, from a demographic standpoint is going to decrease every year going forward and at the same time the boomers, who own 41% of real estate are starting to leave as well. All of this combined with home prices that are already to high will lead to a massive crash, worse than the one in 2008. Thats because this time the Fed cant save anyone without inflation exploding. The idea that you need a million homes on the market for it to be a buyers market is a outdated one considering the total buyers at anyone time is decreasing and is going to accelerate in that decrease all the way until at least 2040 if not 2050. The only thing that might lessen the crash is that due to a lack of workers wage inflation of the same time period is going to be massive without serious technical innovation.
8
People forget in 2006 how many flippers there were. They were the first to walk away. Not those with subprime mortgages. It was the flipper. One the flippers folded and home prices dropped, then subprime folded. These new real estate types are just another kind of flipper, but with more steps. The effect will be the same though. But this time with inflation, a vastly different demographic structure and the horrific amounts of debt that exist now it will be much much worse. And the Fed wont be able to lower rates to save everyone. No, this one is going to hurt.
7
Are rental prices declining yet there? Are there a lot of vacancies? I might bet a lot of those houses are airbnb's and rentals that couldnt be rented. We are starting to see that here in Tennessee too.
6
@robwithrbk in regards to unemployment I think this recession will be something new. With the change in demography, all the boomers retiring, there simply wont be enough workers. You are going to see a lot of businesses close because they cannot afford labor. Eventually we will get it trimmed down to where businesses accommodate the employment pool. I mean we have never had this happen in American history, this massive change in working age people. But I am with you I dont think we will see Fed rates anywhere near 3%, inflation would just explode again, which its probably going to do anyways.
6
Its low because we are at peak population in most western nations. As the population drops so will prices. In 1980 Tokyo was the most expensive place on the planet. Now its not even in the top 20 most expensive cities. As the boomers die in every nation, we will see a housing glut. Just like Japan has. They are giving away rural houses to anyone who wants one.
5
You can even see their posts here. Its pretty crazy.
5
Because they have already sold off the mortgage, in short, not there problem.
5
Something your video did not take into consideration is the effect the losses in the commercial real estate sector will have on banks ability to lend mortgages. In order for a home to sell you need a buyer and seller and typically a bank to fund the transaction. Without the bank the vast majority of people are not buying or selling real estate. And considering how much rental loans are going to need to be rolled over at much higher rates, we could very well see a massive flood of rental housing hit the market due to an inability for the current owners to afford the new mortgages. If both those things happens, it will make 2008 look like good times. There will simply be no liquidity for anyone who does not have cash to buy anything. That means, very likely, insane deals.
5
The LA price drop was so severe because of the end of the cold war and the massive loss in defense spending and manufacturers there. They even made a movie about it, Falling Down. Same thing happened in silicone valley. There was a huge military industrial complex foot print there. And when it imploded, the much cheaper real estate prices helped the internet boom take off. Creative destruction always helps the markets, production and buyers of goods and services. It boggles my mind still that even wise people are scared of recessions. They always help more than they hurt, if you let the markets do their thing. Dont be afraid of the process. Be afraid of politicians trying to help.
4
@Battleneter Then why is inflation going back up even though the monetary supply is shrinking and has been for well over a year? according to your logic it should be going down, but it is not. Its like folks pick and choose what data they want to look at.
4
Thats not why companies give raises. They give raises for increases in productivity, if you leverage your worth to your company. Most people just arent worth that much. That said, you think inflation is only impacting your bottom line? Its happening to businesses too. While they nominal profits may be higher, just like yours, those real world dollars are worth much much less, making them as well as you, poorer.
4
15 million empty houses just sitting.
3
@Coffeendonuts I would normally agree with you but the problem is that the Fed let the problem run to long. Everything inflated, housing, meme stocks, meme coins, the stock market, commodities. Everything. And then on top of all that you have two trillion in the overnight at the fed. There is so much money floating around that if the Fed doesnt start squeezing it out, inflation will cause a recession(Which is already to late) and then it will still have to squeeze all the money out to get rid of the inflation. They should have started raising rates in 2018, but the stock market cried and now we are here today.
3
@michellet7013 Thats the effect of zero percent money.
3
@Etaoinshrdlu69 buy a farm and learn to.
3
He stated why, places like Connecticut arent seeing price drops yet. Places like connecticut arent seeing massive build outs, like the western states are, of new housing. New housing always sets the price. But the people that re sell their homes, they dont like to think that they have to be the first person on the block to lower their prices, so their prices stick a little more. But eventually someone has to sell. And then the comps adjust. Once that happens people who need to or are considering to sell, all rush for the exit. Because the trend, in this case, isnt their friend. That said it also depends on your states demography and jobs stability. I dont recall Connecticut having any massive layoffs yet. If you do, well expect drops.
3
@Battleneter It really is more than just money printing. You have massive reshoring of whole sectors that were off shored way back in the Clinton years. That is inflationary. Add to that that the Boomers are retiring and you have a lack of workers. Not just service level workers, but workers in all areas. Try finding a mechanic who can get you in the next day. Or a handyman. All these things have inflationary pressures via wages. That means those people have more money in their pockets and prices go up because demand goes up. Then there is the fact that the Federal government spending is 40% of GDP. None of those has to do with money supply. The added money is just fuel to the fire already.
3
Seller psychology still hasnt changed. They think they can get more than they will. And few listen to realtors. So they list high and no one looks at their place. Or someone comes in a gives them a decently priced offer and they are insulted like they are being low balled. This summer they will see no one is biting and start panic cutting. I mean the amount of building here in East Tn is just crazy. There isnt that much demand.
3
@WheelerRickRambles Most of those were already owned by other REITs.
3
With the inflationary increase in housing, rent, food, fuel and energy, this time it is different. With 11 million job openings unfilled you know its a problem. Businesses cannot afford to pay what it would take to fill those jobs, so they sit, ever vacant. Inflation is consuming everything. And it will cause the economy to seize up. And the only option the Fed has is to raise interest rates, with will make the seizing happen faster or lower rates and let inflation run rampant and seizing anyways. People simply will not have the money to keep liquidity flowing. So they will sell sell sell any asset they can to meet their obligations. What shocks me is people cannot see this.
3
@Coffeendonuts Oh and in regards to people applying, no they wouldnt necessarily. I mean you wont even tell me what type of job is being hired for, so ill have to generalize. The thing is if a job cant find a worker it isnt paying enough. Period. Thats proof of the inflation that we are in right now. Her employer cannot raise wages to the rate they need to to hire someone because then whatever job they did would not be adding value to the business. Again, basic economics. Just like if a house doesnt sell, the price is to high, right? The market decides what the price is, not the seller. Of course the seller doesnt have to sell and the employer doesnt have to increase the wages they are willing to pay. But if they arent, is it a needed job? Id say no.
3
But then it will be to late to sell. This is going to be rough on boomers. A lot have most of their retirement tied up in their homes.
3
Boomers own 44% of all homes. The youngest boomers are 58. They are starting to die. As this accelerates thats a lot of housing that is going to come on the market or be taken up and reducing demand by their younger relatives. We might have a 20% crash, but housing will never recover. The US hasnt had a positive birth rate since 1972. Even with immigration in the next few years we could very well see an actual decline in total numbers of people in the US.
3
There is one factor you left out. Square footage. There has been massive amounts of bloat in what the average American deems as a first home. My first home in the 1990s was a 750 sq ft house. Today I see people wanting a 2000 sq ft house as a started. Some people complain that their arent enough starter homes. But I would argue people dont want them. Even my third home when I had two kids was only 1200 sq ft. Your graph is good though for a general analysis though. But I think there is to many differences between the late 70s and 80s compared to today to make a very accurate one with the limited data you used. Either way I appreciate the content.
2
@cryptofacts4u Jan 2020. Not adjusted for inflation. Adjusted for inflation it would be less.
2
Houses, like any asset, are only worth what someone is willing to pay for it, regardless for what is appraised at. And for the last few years, anyone with a pulse could get a loan. What happens to home value when thats not the case anymore due to all the small and mid level banks that give out mortgages stop due to liquidity problems like what is happening now?
2
If only it would happen.
2
Because its not.
2
People think it would be good, but think of the economic damage that would have to occur for that to happen. I mean its already in the process of occurring. So I mean, I think its a more a kind of be careful what you wish for.
2
@jesse_- Why would you think we need that many more homes? Do you think we have that many more people? Demand peaked in 2020 demographically speaking and is set to fall for the next 20 decades. 10 million more homes would be enough to house 40 million more people. Where are they coming from? For every boomer who dies there is only half a zoomer to take their place.
2
Well Goldman already said what they think, 25% drop in 4 cities, and lesser drops in others. In just 2023. The question is does one trust Goldmans analysis.
2
@Etaoinshrdlu69 perhaps, but you will eat.
2
@lpass1 I totally understand. And while I don't know the specifics of your life or job field, have you considered relocating? A lot of people are afraid to, but with good research you can find a place with much better prospects long term
2
@Battleneter So explain why even though the federal reserve has tightened monetary supply for well over a year that inflation is increasing? The printing of money did indeed make the inflation we experienced worse. But it wasnt the only cause.
2
@Anonbin Arymouse ima dude, a very old dude. 07
2
High job openings are a sign that employers cannot afford to pay a wage that would attract a worker. Its literally a sign of inflationary pressure on both sides of the equation. A worker wont take it because it doesnt make economic sense. And employer wont raise rates because to do so means they cannot compete.
2
@YouTubeUserCMXVIICDI You only looked at half my statement. lol typical.
2
@FreddieBob leasing doesnt allow pipes and build permits. They can hand out all the leases they like, but if they dont allow build permits, they are useless political kabuki.
2
interesting. I am in Tennessee myself. Are you looking and new built or resale homes here in Tennessee? I can tell you for certain that home builders are starting to discount their prices. Though resale homes, especially in rural areas with land, are wanting to accept the market change yet. I am in east tn though. So it might be different where you are at. We certainly wont be crashing hard like other areas. To much inward migration. But we have to drop at least 10% so locals can buy again, otherwise there just wont be demand.
2
In many places prices havent moved, yet in others there have been 20% declines. These things roll in waves.
2
@Coffeendonuts So respectfully, I'll answer, but from your post you are either so disconnected from the average American or have a fundamental misunderstanding of basic economics. Which is why I am saying respectfully, I am not trying to be insulting. You dont understand the crippling effects of inflation. So that fuel increase which is insignificant to you, is roughly 140 a month difference. So maybe that is insignificant to you, but what about the people barely getting by. So they cut back other places. How much has your food bill gone up? If you are normal American, in 2020 the average household spent almost $7800.00 a year on food. Add the 20% price increase to food this year and... thats an annual increase of $130 bucks. So now we add 140+130 and ones discretionary income has dropped by 270 dollars per year. Shall we talk about rents or home prices? Those are up what 20% too? So people cut and cut and cut and soon then are only spending on what they must. But even then inflation doesnt let go. And then employers have to start laying people off. Mcdonalds lays off or automates, wait they already have. All the costs of their food inputs increase, so they raise prices and people go less often, leading to a death spiral in the business. This happens in all businesses with inflation and recession. Its my stagflation is so dangerous. And only one thing fixes stagflation, interest rates as high as the inflation to squeeze all the excess money out of the system that is causing the inflation. Whats that do to home prices? Its not just oh no a recession house prices fall, its the whole economy. And since the 2008 crash we havent addressed the fundamental issues. Because to do so would cause most people to have to lower their standard of living.
2
@Coffeendonuts Prices went up then because incomes doubled in that same time period. Incomes cant double now. Business cant afford it. Do you know how you can tell? There are 11 million job openings. The reason these jobs are open is because they arent willing to pay enough. They cant pay enough, they cant afford to. Thats how you know the market is broken. Look I get it, you think housing is going to go up. Good, make your bet on it. But people cant buy something when they dont have the money. Thats not even mentioning that boomers own 44% of all single family homes in the US. When they die, those assets will be sold. Guess what the boomers are starting to do, die, around 29% so far. And the zoomers are to small even by half to make up that demand.
2
Its amazing how a recession shakes people out of their homes. Regardless of their APR.
2
@tomo1168 most people never sell and take profit. They hold and lose value. Every time. Because most people dont look at their primary residence as an investment. To them its just a home.
2
@KirkFickert apparently you have never heard of the term, "capital investment". lol
2
@EclipseEditzx3 appreciation is part of the problem an unexpected increase in tax payments can be rough on a fixed income. And if a boomer sells now, then they either have to buy a new home or they have to rent, placing another outlay on a fixed income. Boomers aside, I'm not really a fan of that generation, that kid of situation is pretty rough financially. Shame that there aren't more multigeneration homes. It solves so many of these issues people, young and old, are having.
2
@EclipseEditzx3 I don't believe I stated anything about interest rates. But I don't think they should be lowered. As for hyperinflation in the housing market, respectfully, that's a little dramatic. House prices will decline back to the mean, they always do. But you have a very large amount of people who state they want a 60 or 70 percent crash in the housing market. They say this for no other reason than they want to purchase housing cheaply. They don't think about the carnage that will occur then. To me they are just as greedy but worse, they try to make it out like they are virtuous.
2
@KennTollens You can only be exploited if you let yourself be. I do hope people see that. Many people would rather be slaves with a good standard of living rather than free and live a simpler life. But that is their choice to make. My observations of Man has proven to me that most dont want to be free, they want to be comfortable. The two seldomly over lap.
2
Except the boomers are starting to die off in mass. Already 30% of boomers have died. As the rest die off, demand will collapse.
1
Get land, enough to grow and farm what you need, a few acres for a family of four is more than enough. Lower your standard of living. Learn usable skills. From welding to canning to anything in between. Thats all. You dont need to move to the middle of nowhere. You dont need to buy an armory. You dont need to have 10k in dehydrated food. Just look how your family lived 100 years ago. Most humans in the west today have zero skills and if they vanished overnight society would keep on running. Only a few people keep the lights on.
1
@TheSgrizli Like when FDR outlawed gold and forced everyone to sell it back to the government so they could stabilize the economy. You think they wont do that with crypto? So many people seem to have a short memory. And when your neighbors have lost everything, they will be happy to see you beggard as well. Thats just the human condition, unfortunately.
1
You just need to look at demographics. The Boomer cohort owns 42% of all housing. They are beginning to leave. You are about to see an unprecedented shift in demand in all things. The reason for this is that for every 2 Boomers who die, there will be less than one Zoomer taking their place. Just have to look at the demographics. It tells you actual real demand. And its just not there.
1
It was fueled by free money. And now we are seeing the effects of it in the economy.
1
Your math is a tad off. Austin needs a 37% price drop. Still a lot. But seeing how its already dropped 9% from its peak in May of 2022, Id say its trending in that direction. And if that trend holds, which is pure speculation, you will get your 37% price drop in 2 years. Just for those who are loosing heart.
1
And the vast majority of those were pre 1970s
1
The only problem using a long term trend is that births have been below replacement for the last 45 years. Demand going forward is going to be flat at best if not declining. You only have to look at the demographics of those 30 and below to see what the future holds. Even with the anemic immigration we have now.
1
except, the tax man that is.
1
Considering over the last two weeks bank lending has imploded, I doubt this summer many people will qualify for mortgages and many flippers or rental owners who just refi for cash flow wont be able to do so. We are rapidly approaching an impasse,.
1
This idea that prices wont come down is an odd one. We have had a historic one time event when demand peaked (demographically), money was artificially cheap (All time low fed rate) and supply was cut (Covid). And all three things happened almost overnight. 2020 saw peak demand for housing, yea it was the peak as the largest part of the Millennial cohort entered the family creation phase. Going forward its going to be less and less and less every year for at least the next 25 years. Even then it probably will still decline. And for every two Boomers who die there will only be one Zoomer to take their place. This kind of thing happened already in Japan. Now they are giving away free homes there. Korea, China and most of Europe are having property crashes as we speak. This is what happens when you dont have enough babies over 50 years, demand dies. The cheap supply of money is gone and its not coming back. People need to stop thinking it will talking about a fed pivot. And the whole "there isnt enough inventory" thing, well again, people dont understand how homes get priced. New construction sets prices. And right now they are cutting prices because they have bills to pay and they are sitting on 8 plus months of homes that need to be sold. Add to the fact that to sell them they have to do rate buy downs, in a year or two when they adjust, many of these people are probably going to lose their homes just like in 2008 with ARMs. This says nothing of the highest building rates of housing since the early 1970s to cope with the income boomer cohort. And add to it 15 million empty homes already existing but not being sold. We probably already have a housing glut. Market psychology just hasnt changed yet.
1
Adjust for inflation home prices in the 1970s were flat. Thats even with the massive baby boomer demand coming onto the market increasing demand. Now we have all the boomers leaving. And for every 2 boomers who leave, only 1 zoomer to take their place. We are going to see massive deflation in all the sectors that boomers inflated, like housing, and inflation in all the sectors the boomers deflated, like wages.
1
@Coffeendonuts hence why I said adjusted for inflation. Nominal values arent adjusted for inflation.
1
@MHFIN But how high was the original run up until then? Most of that run up happened in the last two years and then POP.
1
@norwegianblue2017 Many markets in California are unique. They are hemmed in by the geography, especially if you are talking about the bay area and coastal areas. In most places the land where you build the house is worth next to nothing and the improvements are the value. In California the opposite is true.
1
You do understand that those companies can purchase those homes if they have positive cap rates. And the thing is, why would you buy real estate with a cap rate of 4% with potential negative downside when you can buy treasuries that will give you 5.5%. These companies that were buying up homes have stopped. They no longer have capital and many like Blackstone and Blackrock are actively preventing people from withdrawing funds from their investments. This will cause these REITs to sell their assets. And considering how poorly they take care of them they are going to take massive losses on them.
1
@Cjohn31 Couldnt be the people that elect them could it?
1
@wayward03 The future is now friend. Peak demand was in 2020. Millennials at their larges part of their cohort have already passed the family creation stage. Gen Z is even smaller than the smallest Millennial sub cohorts. And as the Boomers own 44% of all housing, as they die those homes will either be passed to their families or sold on the market. And 27 % of Boomers have already left. Tick tock, the clock never stops.
1
Most of Japan, outside Tokyo metroplex area, is extremely cheap. Some places will give you land because its only old people.
1
@Kaileighblue On the bright side it wont last. The demographics are very clear. But in the short term it doesnt do much for the local culture does it?
1
Your assessment of the 1970s housing increase is flawed. Housing costs tripled because boomers entered the market and created families. They inflated the cost of everything, except wages. Wages stagnated. Why? Because there were more boomers. The demographics now are the reverse. Boomers currently account for 44% of all home ownership. As they die, and 29% of boomers already have, those assets will flood the market. And the Zoomers and Gen Alpha together dont match the demographic numbers of the boomers. The demand will not be there. You also state that unemployment was 9% in the 1970s. They calculated it differently then compared to now, so not a good metric to use. The only reason out unemployment is so low is due to the monetary policy over the last two years. It has altered the jobs market so much that their are 11 million excess jobs that should exist. But in the end housing can only cost as much as one is willing to pay for it. And with inflation making everything cost more, housing must adjust lower. If it doesnt the Fed will squeeze harder. And then, there are lay offs.
1
When gobs of endless money keep getting pumped into the system by the fed, to keep everything a float that makes predicting impossible. I never saw anything in the Feds mandate that allowed them to protect the stock market. They were supposed to protect against inflation. I know I know, I am being naive.
1
@valkyriefrost5301 They refuse to admit that all inflation is monetary. Its not just been the US printing, its EVERYONE. China has printed 5 times what we have for at least a decade every year. Its why their prices shot up so high. I dont see how people dont understand this.
1
Demographics. Boomers. 29% of Boomers have already passed. The remaining 71% own 44% of all US homes. As those boomers die their families will need to liquidate those assets. The Gen X and Millennial generations are already past and fully into family creation mode, so their demand has peaked as well. The generation coming up, the zoomers, is an echo of the x'ers, and is the smallest in American history. Gen Alpha, created by Millennials, is not even half the size it was expected to be. This will all be deflationary. The demand for ever increasing home prices will just not be there. Per every demographic analysis peak demand was 2020.
1
@MHFIN Immigration is even worse. It bypasses the young age which is the age that individual had the most money spent on them. Though you do get an instant worker who deflates wages at their level of work and while you get a worker, they are lower end workers, generally speaking, making it even harder for the poor. And even places like Mexico arent even at replacement rates. None of South America is. Out of 195 nations, as of 2020 only 12 had fertility rates higher than 2.1 per woman. Immigrants would probably have a higher impact on rents rather than home prices.
1
Lets not forget that the average square foot for a home and the things included in said home are massively different. Not including things like the value of the dollar, as others have already stated, and more importantly tax burden. For some people their tax and insurance is fully half their mortgage cost.
1
No one pays attention to the demographic cliff we are heading for. I dont even think companies are showing drops in demand. Apple refuses three separate times on its latest meeting to even answer questions about future demand. I cant tell if they are ignorant or blind to it. Or many its a case of we are going over the cliff so what does it matter?
1
@JB-ri6zp So the price of that house would have to fall, thats how higher interest rates deal with inflation. lol
1
The government does though. It needs your tax revenue.
1
There are a lot of reasons people would leave. You are just looking at one aspect, the interest rate being low. But they could have a medical event and no longer be able to use their home. A family member could have a medical event and they need to move to be closer to them or move in with them. They could just not need as big of a house. When you get older owning a huge home is actually really hard to do having to take care of everything, more so if you are by yourself. There are divorces, jobs losses, jobs that require one to relocate. This is just off the top of my head. You can choose to wear blinders, but it will be your own fault when you walk into a wall or off a cliff.
1
@glorgau apparently we have different definitions for the word "forced".
1
@Coffeendonuts Yes but unemployment of today, isnt calculated any where close to how it was in the 1970s. Calculated the way it was in the 70s its close to 8%.
1
@Coffeendonuts congrats she works for a fortune 500 company. How does that change my statement that if unemployment today was calculated the same way as it was in the 1970s it would be 8 percent? That isnt a guess or an assumption, its math. The fact that there is no one looking for work should tell you that the economy isnt healthy and is in a bubble. An everything bubble. I bet if they paid more for the employees they would get more offers, but then you have wage inflation and you are no longer cost competitive. Thats what inflation does. It makes it not profitable to run a business. So you close it and lay people off. Doesnt matter if you are a 500 company or selling hot dogs out of a cart. But hey im just some guy. Next year im sure everything will be fine. lol
1
Boomers own 44% of single family homes in the US. Boomers are starting to die, 29% of their generation has already passed. Housing is in for a huge deflationary event. The question is timing, will it happen at all at once or is it a slow 20 year decline with fits and starts?
1
@tomo1168 Yea the first guy who sells in a down market, for whatever reason, sets the new comp. And then people start to cry, but last year my house was worth "$X". lol
1
@MHFIN Those states are laughable. It says the average debt servicing ratio is 9.3%. Its the word "Average" that is concerning. Whats the median? Because if the median household income in the US is 63k, 9.3% of that is $6774.19. Per quarter thats roughly $1700.00. You know people who spend $1700 per quarter on mortgage, credit card, auto loans, student loan debt, etc etc? That stat is a joke. It throws Elon Musk in with Joe shit the rag man.
1
@JIMN26 most boomers have the majority of their wealth trapped in their homes. I get it though, there are a lot of humans like yourself who care nothing about those around them.
1
@EclipseEditzx3 that's not what hyperinflation means. Though your explanation of how you are using the word clarifies what you are saying.
1
All those words to describe liquidity crisis. lol
1
@KennTollens that assumes people are rational and all have the same goals. They do not. You cannot want for another person. You cannot save other people from themselves. That's why people hate a truly free market. It very quickly dispels the myth that equality is a thing. And so in trying to salve our feelings from the brutal honesty of nature we harm ourselves further.
1
@KennTollens Nothing is wrong with that idea. But how many want to live like a 1950s milk man? Much of what people forget is the effect of the baby boomer cohort did to markets. The boomers have been called a pig going through a python, because of their age cohorts size. This has caused market costs to inflate. Then come the X'ers, a smaller cohort but still demand increase. Then the Millennials, almost as large as the boomers. And all the prices are so highly inflated that they cant get a start. Our economic policy was to manipulate things to make life as good as possible. Rather than let the natural path take its course. Because of the high costs, Millennial family creation is lower than it was during the great depression. So demand will naturally decrease, and as the boomers enter retirement they will spend a lot less than they normally did. This one two punch of demand loss is where we are at right now. If we had not manipulated the economy, to make people live above their means, it would be gentle. But we didnt, so its going to hurt, a lot. You cannot manipulate the market for benefit and not expect blow back. Fairness doesnt even play into it. Its just economics.
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@KennTollens No, boomers, simply by their numbers changed market dynamics. Add to that women entering into the work place making labor only worth, roughly speaking half as much, since you are doubling the labor pool. These have effects. As the boomers slip off their mortal coil and leave their assets Millennials will get the wealth thats left over via inheritance. But demand will still be down. Because those boomers are gone and Millennial family creation just didnt happen so less kids (people with kids spend the most). Add to that 6 generations of welfare spending from SSI, Medicare and Medicaid and you have to pay that back too. None of this is fair. But thats just the way the world is now. But prices will deflate. If you are curious as to the effect demographics have on the economy I would recommend you look at videos from Harvey Dent and Peter Zeihan. Demographers have seen this coming since the 80s. I am an Xer so im right in the middle. I am assuming you are a Millennial. And all I can say is, you have my sympathies. No one knows how a post growth economy will work, we havent had one since the Black Death was killing people in mass.
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@KennTollens Price is still increasing because the boomers are still in the early stages of their die off. But as they pick up the pace, demand will plummet and supply will rise, from houses to food, IF production stays steady. But it wont. Production already maxed out in 2018-2019. The question will be if demand declines faster than production. If it does, then you will see real price decline. But again, as deflation hits, the debt burden weighs more and, more importantly, its on fewer shoulders. Then comes the time to decide, do we (whatever group we is) keep paying or do we default. Both options cripple. Default hurts more at the beginning, but allows a society to rebuild faster. But people and corporations always want welfare. So it will be the last thing to happen. And that means their will be another lost generation, just as Japan has had. But this time its world wide. In regards to asking why dont we just go ape crazy with debt, we have over the last 3 years. Its destroyed our markets. Its caused inflation and now the fall will be from a higher height, making the impact worse. No one is buying the debt. So the Fed has to. Pretty soon there will be no more money in the system, so you make more causing even more inflation. Then you end up like Zimbabwe. The difference between a billion and a trillion is a lot. When I was born a Coke cost 25 cents and a house averaged 20k. Thats the difference between a billion and a trillion and the higher it goes the more it increases. And what few seem to understand, that people who have investments love inflation, it makes their wealth worth more to those that have none. And those people who have no investments are very quickly left in the dust as inflation eats them alive. I want to restate, I dont dislike your idea or want, but unfortunately those who came before you put you on a course with limited options. May I ask your age?
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@KennTollens No, things werent alright when we went off the gold standard. You have to go all the way back to the Bretton Woods agreement. We basically took over the British Empires financial responsibility for the world. The Petrodollar was created. This single act, where all oil transactions are paid for in US dollars, was a double edged sword. It made dollars valuable so print away and it wont show up because everyone everywhere in the world wants them. Even right now the dollar is strong, everyone everywhere still wants dollars. We also agreed to open our markets to the world so that they would A0 stop killing each other and B) join us in the fight against the Soviets should war break out. But this effectively eroded our nations industrial capacity in the long run. Part of this agreement was protecting the ocean shipping lanes. Under the Trump admin we finally started rolling that back by basically telling India the India ocean is yours. we arent policing it. We cant afford to anymore. As far as rich people being mad for a financial reset, again no not really. Most people think rich folks have vaults of money that they swim in like scrooge McDuck. They dont. Rich people have assets. Currency is just a tool to leverage to gain wealth. Your dollars in your wallet are actually debt. Our nation does its best to keep normal people ignorant about these things. No, if there was a monetary reset anyone who had a mortgage or a car note would be hardest hit. Most "Rich" folks dont have those. If they have debt, they can liquidate some assets to pay off any debts that they did owe before any reset occurred. The end result would be people having to live according to their means. Which if we did in the first place, none of this would have happened. But the root cause of all this is universal suffrage. To people today voting is a right. But voting, throughout history was never a right, it was a responsibility. A responsibility granted to only those who were independent and personally responsible. How many Americans are actually independent today? How many people pay more in, than they take out? Few, probably less than 20%. Thats where we need to fix things. Because if everyone can vote the irresponsible will just out vote the responsible. And we will be right back in this situation. Well thats how i see things anyways.
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@KennTollens If it was me? You dont want it to be me. Sometimes the forest needs to burn to clear everything out. Thats where we are. To many people for multiple generations have messed things up. It cant be fixed. But as things devolve only the responsible will maintain. Only the hard working will prevail. The problem fixes itself if you just stop trying to put a finger on the scale and make things "right" or "fair". The smart and industrious are rewarded. The foolish and overly greedy are punished. All the things people claim they want. But you have to be personally responsible for that to work. And no one has time for that. But then the pain begins. And people dont like pain. The dollar amounts dont matter. But things like the Fed exist to create a little inflation and people are happy that their pay goes up even if the value of that pay is slowly eroding. Why, because most people dont understand basic economics. Some wont, some cant.
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The disparity between new homes and resale can be explained by the supposed demand. The truth is we have declining demand. The Millennials are past their high point in family creation per their cohort. Add to that Boomers who own 44% of all housing are starting to die. As they die those homes either get sold or passed down reducing demand further. I dont think the actual real demand is anywhere near as high as the numbers reflect. And going foward its only going to get worse. The zoomers are smaller than even Gen X and they will not even be able to replace boomer demand by half. This will lead to a real estate glut. This is going to be a long generational decline.
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@pattonknew928 then it's a great time to buy isn't it.
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@jessicabixler1658 yes but only 41% of single family residences.
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