Was all "growth" in the last three years fake?

Real estate prices are here to stay

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Was all "growth" in the last three years fake?

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I wish I was smart enough to back out gov't spending and the Fed Reserve's shenanigans from the S&P500 chart and see what it actually should be.

Pretty sure this would create such an ugly picture you can guarantee would cause government bailouts and a fed 180...

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Nah. Interest rates will take care of that.

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Interest rates are not going to crash the real estate market.

New home prices are up over 35% the last couple years toward the peak earlier this year. While there's a correction going on due to rising mortgage rates, it's not going to come close to crashing the market where we're back to early 2020 real estate prices suddenly. Real estate increases tend to stay pretty priced in, the only time it didnt was 2008 when things came crashing down and these conditions are nowhere near that right now.

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Real estate prices are here to stay

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Let's talk again in a year or two

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Was all "growth" in the last three years fake?

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You had money artificially inserted into the economy and large hedge funds essentially took that money and temporarily went home.

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Was all the growth fake?

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Pretty much.

The fed printed an unfathomable amount of money that will either break the system ultimately or best case cause a crippling burden to future generations and it was pissed away without any real infrastructure or advances being made.

For what was printed we should have high speed trains, free college, paid off mortgages and incredible infrastructure.

We didn’t get any of that and are about to have to pay the tab anyway.

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I think most US markets are going to have a housing correction and interest rates will have a big role in that. People simply can't afford the payments with a 7% mortgage.

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I’m highly skeptical that there is going to be much of a correction, if any, for a number of reasons.

1. There is a housing shortage (at least housing where it’s needed and wanted) as a result of too little supply post-great recession. And this is housing in general, whether rent or own, and just to actually, you know live in. And this is a problem that is over a decade in the making, and even a concerted and effective effort to address it would take a while to get fixed, but we don’t even have that happening. So there was already a pretty big buffer for demand to drop in home buying, even assuming supply doesn’t also drop.

2. While home buying may be more price elastic, housing in general is still pretty inelastic. And given the issues with supply, even if that demand moves to renting, that demand is going to cause rent prices to rise, which then makes it more likely to blunt that drop in demand. Furthermore there is a lag in this relationship, so usually following large price increases and a widening price to rent ratio, rental prices increase faster than usual while home prices still increase, but slower than normal. So demand likely shifts, but that has probably happening, but then when rents increase quickly and closes the price to rent ratio, all of a sudden buying doesn’t look as bad.

3. While rising home owning costs should decrease the demand, it appears to also impact supply in the same direction. In fact, for the last decade with low rates, one supply problem that has occurred is that people who may have been traditionally downsizing and what not, were reluctant to move because they were locked into a low rate. And just the fear of rising rates lowered supply. So now that rising rates, and even higher rising costs (rates and price increases), all of a sudden the incentive to keep one’s house of the market is much higher. As a result, there is a good chance supply of existing housing will likely decrease. So now that decrease in demand, that already had a buffer, is likely to coincide with a decrease in supply, and without the needed new housing, prices should be even more persistent and require any even greater drop in demand beyond that original buffer.

All in all, we might see some corrections, particularly in some markets which maybe increased faster than supply-demand would predict, but I think broadly, there are a lot of facts that are going to keep prices at least relatively stable overall. We won’t be seeing what was already unsustainable and problematic 20%+ YOY increases, but a lot has to happened to go from that to 0%, let alone <0% especially anything resembling a meaningful decrease (more than a dew percentage points).