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Was all "growth" in the last three years fake?
Posted by Huey Lewis on 9/30/22 at 8:03 am104
It feels like it to me anyway. I think maybe - at best - real economic activity today is at the 2019 level. If that's even close to being the truth, should we realistically expect another ~10% to the bottom?
I know we've got about five other topics on the first page about it, but I guess what I'm asking is specifically the original question - was it all fake? Were there / are there any market segments that had real growth?
I know we've got about five other topics on the first page about it, but I guess what I'm asking is specifically the original question - was it all fake? Were there / are there any market segments that had real growth?
re: Was all "growth" in the last three years fake?Posted by Lone Wolf McQuade on 9/30/22 at 8:10 am to Huey Lewis
The pharmaceutical market had real growth.
Take away government spending and I would say it was minimum.
Take away government spending and I would say it was minimum.
re: Was all "growth" in the last three years fake?Posted by 21JumpStreet on 9/30/22 at 8:11 am to Huey Lewis
Real estate prices are here to stay
re: Was all "growth" in the last three years fake?Posted by Bard on 9/30/22 at 8:15 am to Huey Lewis
Are muscles created through heavy steroid use considered fake? The growth we've seen over the last decade or so is due (to varying levels at various times) to QE injections and then it was dogpiled onto with the OD of stimmy checks, PPP, rent forbearance, economic shutdown, etc.
re: Was all "growth" in the last three years fake?Posted by Aubie Spr96 on 9/30/22 at 8:22 am to Huey Lewis
quote:
Was all "growth" in the last three years fake?
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.
re: Was all "growth" in the last three years fake?Posted by fallguy_1978 on 9/30/22 at 8:26 am to 21JumpStreet
quote:
Real estate prices are here to stay
Nah. Interest rates will take care of that.
re: Was all "growth" in the last three years fake?Posted by UpstairsComputer on 9/30/22 at 8:29 am to Aubie Spr96
Pretty sure this would create such an ugly picture you can guarantee would cause government bailouts and a fed 180...
re: Was all "growth" in the last three years fake?Posted by wutangfinancial on 9/30/22 at 8:39 am to Huey Lewis
It wasn't fake. It pulled forward demand from the future and compressed it into a short time frame. On top of that we had a generational consumption pattern shift because our dear leaders wanted to cosplay WWZ.
re: Was all "growth" in the last three years fake?Posted by thunderbird1100 on 9/30/22 at 9:14 am to fallguy_1978
quote:
Nah. Interest rates will take care of that.
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.
re: Was all "growth" in the last three years fake?Posted by fallguy_1978 on 9/30/22 at 9:57 am to thunderbird1100
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. Moody's outlook is relatively bearish as well. Guess how far we drop depends on how bad the economy gets.
quote:
Peak-to-trough, Moody's Analytics now expects U.S. home prices to fall between 5% to 10%. In significantly "overvalued" housing markets, that forecasted drop is now between 10% to 15%. If a recession hits, Moody's Analytics expects that U.S. home price decline to widen to 10% to 15%, and the drop in significantly "overvalued" housing markets to range between 20% to 25%.
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re: Was all "growth" in the last three years fake?Posted by LSUFanHouston on 9/30/22 at 10:49 am to Huey Lewis
Fake isn’t the right word.
It was subsidized by unsustainable subsidies.
It was subsidized by unsustainable subsidies.
re: Was all "growth" in the last three years fake?Posted by HailToTheChiz on 9/30/22 at 11:39 am to 21JumpStreet
quote:
Real estate prices are here to stay
Let's talk again in a year or two
re: Was all "growth" in the last three years fake?Posted by Strannix on 9/30/22 at 12:35 pm to Huey Lewis
Yes, look at equities/M2
re: Was all "growth" in the last three years fake?Posted by boogiewoogie1978 on 9/30/22 at 1:03 pm to Huey Lewis
quote:
Was all "growth" in the last three years fake?
You had money artificially inserted into the economy and large hedge funds essentially took that money and temporarily went home.
re: Was all "growth" in the last three years fake?Posted by 21JumpStreet on 9/30/22 at 3:39 pm to HailToTheChiz
No way it gets lower than 2019 prices. Will go down slightly. But don't expect 50%
re: Was all "growth" in the last three years fake?Posted by deltaland on 9/30/22 at 4:17 pm to Huey Lewis
re: Was all "growth" in the last three years fake?Posted by CabtainStabbin on 9/30/22 at 7:03 pm to Huey Lewis
I watched a Youtube video a few months ago basically arguing the same thing.
They printed a bunch of fake money to artificially create a "strong" market but the chickens are coming home to roost.
Paper wealth can be created out of thin air and disappears just as quickly.
They printed a bunch of fake money to artificially create a "strong" market but the chickens are coming home to roost.
Paper wealth can be created out of thin air and disappears just as quickly.
re: Was all "growth" in the last three years fake?Posted by tide06 on 9/30/22 at 9:32 pm to Huey Lewis
quote:
Was all the growth fake?
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.
re: Was all "growth" in the last three years fake?Posted by buckeye_vol on 10/1/22 at 1:17 am to fallguy_1978
quote:I’m highly skeptical that there is going to be much of a correction, if any, for a number of reasons.
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.
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).
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