re: credit bubble vs house prices

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Also, WA foreclosures rank very low nationally.

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When I posted that, I didn't know he was in WA so I just went with what's going on nationally. Also, if we get into a consumer-debt bubble pop I don't think many places are going to remain untouched.

Still, real estate is very local so I should have gotten a little more info first.

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The article you linked states that 46% of mortgages are equity rich, meaning the value of the home is at least twice what is owed on the home. 2.7% are seriously underwater.

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Yes, but that's in a steady decline.

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The portion of mortgaged homes that were equity-rich in the first quarter of 2024 is down from 46.1 percent in the fourth quarter of 2023 (to 45.8% in Q1), marking the third straight quarterly decline. The latest figure also was down from 47.2 percent in the first quarter of 2023, hitting the lowest point in two years.

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Granted, it's not a massive drop but it's a drop happening as inflation is rising, wages are having a tough time keeping up, consumer debt has skyrocketed to help carry the inflation burden and that debt is at historically high interest rates. All this while Unemployment is creeping up.

Speaking of Unemployment, in the Seattle area it went from 3.0% in April of 2023 to 3.9% in December, then jumped to 4.7% in January. It finally came down .2% in March but the trend is still upward for the area (and a bit above the national average).

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96% of commercial and 97% of residential loans are in good standing.

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Foreclosures in Q1 were actually down YOY (they were up compared to Q4 2023, but down YOY).

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Residential? Sure. CREs though? CRE foreclosures began a stark rise last year. Full disclosure: CRE delinquency rates are still near historic lows but have been trending up for the last year and a half-ish and as the economy slows due to returning inflation growth (if that continues, and I have no reason to think it won't for at least the next couple of months) that is likely to continue (thus also pushing foreclosures up).

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Bankruptcy filings were up 14% in the first quarter, so there is some anecdotal evidence that more are coming, but these are based on YOY filings, which have been low since Covid.

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Agreed on that as well, but again: the economic environment we're in means there's little to stop it from continuing to rise. If we get the consumer-debt bubble pop like I believe we will, that number will rise quickly.

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I am not sure this data supports the suggestion to wait.

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For his area, maybe not. Tech has been a market juggernaut this year but that's been on the back of the Mag7... errr 6... uhm... 5... 3? Meanwhile, the tech sector has been shedding jobs for the last year or so (for 2024 that number is already over 64k). Granted, not all of them have been in the Seattle area, nor even in the US, but it points to the tech industry moving to downsize and that means a slower economy for tech-driven areas.

At the very least, rates very likely aren't coming down until the September meeting. Waiting until then means not only putting more money back, but also a possibly lower interest rate (meaning their purchasing range increases).