but more of gas being thrown on an already burning fire.
The moment we finally start the hard slide into the recession, these over priced homes that these companies have gobbled up for 20-50% over market value will be a liability. However, in a recession with very little cash flow, nobody is going to buy them. So these investment companies are going to take a hit. Just not at the beginning of the recession.
This seems like more of an old school business cycle decline. There is not the same amount of institutional risk as in 2008. Probably going to be more of a Fed Res generated recession to suck money out of the economy and reduce inflation.
can still afford them. And in many markets, like Charlotte, I just don't see it retracting to a measurable degree in which they would be seriously underwater. At worst, they'll be largely stuck in the house for likely longer than they want, which is bad, but not as bad as the 2008 situation.
The far bigger issue IMO is the lack of inventory. That is a much harder hole to get out of, especially when NIMBYs are ferociously opposed to building newer, denser units.
A 1500sqft. house going for $500k may be overpriced in a normal market, but there just isn't inventory out there, so it sort of is worth that much if you want to buy.
The "hopes and dreams" bubble is the one bursting. FJB, and anyone that supported this disaster. Of course people that don't have to rely on a good economy for food, energy, and retirement; couldn't care less.
Now carry on with your "where is my freebie of the day coming from" diatribe.
Everything in today's economy are knock-on effects of the pandemic and pandemic stimulus. Inflation, historically low unemployment, and now with Fed tightening in response a historically high strength of USD.
Asset bubbles are a completely separate issue in my opinion, because they were largely funded by 14 years of cheap debt, and the flood of money onto the street helped fuel a kind of market nihilism that tended to overvalue everything.
With all that, the broader economy is stronger than people actually realize just based on employment numbers. Demand for labor is the ultimate measure of strength or weakness.
I'm starting to lean towards the idea that the quickest fix for inflation will be a recession. I think I posted something on this a few months ago.
The Fed has come out and said their #1 priority is to curb inflation. Job market is 2x openings to every person unemployed. By their numbers, we have a good ways to come down before we are in trouble.
They fixing to short this ##### until inflation is gone, then get back to focusing on the labor market, is my $0.02.
So the bubble is being intentionally popped (after it's been intentionally inflated) by the Fed. The issue isn't the recession happening. We should have hit a legit recession for covid, but they disallowed that. The issue is that they churned through ~$4T for 2 years to get us into a recession anyways...but hey, some body's gotta make some coin out of this deal.
A better analogy might be a balloon. The Fed blew it up, and now they're going to suck some air out of it while their buddies siphon off the incoming/outgoing air to line their pockets to no one's advantage but their own.
It's one of the advantages of having a centrally planned financial system / economy. We're always a JPow speech away from tendies or giving out HJ's for hire behind a Wendy's.