Fantastic info. Looking forward to seeing you on YT.
Other issues 99% of the YT alleged “experts” looking for views either ignore or don’t know.
1. Massive amount in EBL loans (100 billion?) used for those “all cash” buys. In the RE market they appear as all cash transactions. But they are anything but. Think that will end well?
2. Institutional all cash transactions essentially the same deal. Some of the loans used to fund those are already inside the rollover window. Think that ends well?
3. % of NQM loans used to purchase income or AIrBNB properties at a level not dissimilar to the % of subprime loans in 2008. Think that ends well?
When people push back and say “it’s different this time” my response is always the same.
No, it’s never different. But if you are correct and it is different, then it will be worse.
Ultimate bottom (national avg) will take until at least mid 2026. Prices will ultimately revert to 2012 levels, in real terms. And I think there is a real chance they could get close to 2012 levels in nominal terms. At that point we can say the asset is cheap and it’s time to buy.
1) ABSOLUTELY. All this "superprime" lending on equity assets, crypto, and PPP, etc.....all-cash sales were not all-cash
2) Yep
3) MAXEX just announced their DSCR product last week....like what?
And, I agree with you. It's going to be much worse than the GFC b/c with those all-cash sales there will be nothing keeping the counties from foreclosing with tax liens, etc. During the GFC everything was the bank's responsibility - paying taxes, insurance, code violations, etc. If you haven't listened to my LeadLag from Jan you should check it out. I think you would enjoy it: https://www.youtube.com/watch?v=zuDPYp0sEAM
Indeed. You are welcome. Anyone not following you and Amy Nixon are totally missing the boat.
I have not watched that video but I will do so tomorrow.
I laugh (sick laugh) when I read comments from young people about how the Boomers screwed everything up for them. They have no idea of reality. I’m 67. We lost a lot of money in the dot com bubble. Then we lost it all in the GFC. Business. House. Job. Lot of money. 2013 we declared BR.
We were blessed to own a sailboat and so having no place else to live we moved onto the boat and bailed out. A decade later we are still on the boat. We’ve both had about a dozen different temp jobs and have seen a lot of the world at 6 knots. Living cheap we have been able to save enough money that we might make it until the end. We have zero debt and don’t even own a car.
If we are correct about RE we might consider a cabin in the woods for our final adventure. If not they will likely have to drag us off the boat.
Keep up the great analysis. I’m so glad you are writing on Substack. I follow you on Twitter but I don’t have an account. I got kicked off 2 years ago and despite multiple attempts I can’t get reinstated. I guess the DS didn’t like me constantly calling them out for their illegal behavior. Lol.
Thank you so much and love it! To me it is such a waste of time for people to blame one generation, etc. We are all in this sh*tstorm together, so instead of fighting one another, let's work together against the entities that perpetrate the madness. Sigh. On a happy note, you will have to keep me posted about your travels. Boats and travel are in my blood...I've just never owned one. And, like you, I hope to find my own cabin in the woods as well....perhaps next to a babbling brook and never-ending water supply :).
We spent the winter in Myrtle Beach. On 22 March we took the boat out of the water, took the mast down, had it all loaded on a truck and shipped to Bay City MI. That is our home port on Lake Huron where we started sailing together in 1980. The boat arrived on 26 March, the marina put it in a heated building, we put the mast back together, painted the bottom, greased the prop, replaced the zincs, did a few other maintenance jobs and we re-launched on 4 April. We own a dock at a marina in Bay City, so we will be there until early June when we head north, cross the Lake and disappear into the Canadian Wilderness for a few weeks. No itinerary and as yet no
plans or timing for heading south. We are considering Storing the boat for the winter, finding a cheap condo in Myrtle Beach, and circumnavigating Lake Superior next summer. It’s the only Great Lake we have not spent time in and it’s on our bucket list.
We had a week of ‘summer’ weather but it’s back to MI ‘spring’. 40 and rain.
You made my heart sing a little bit reading this....what amazing adventures (and adventures to come). I lived in MN for 7 years and spent as much time as I could on the north shore of Superior...and on Madeline Island (must-visit - great biker bar with amazing bloody marys and a blazing fire pit). My youngest sister has just gotten into boating and they did Ft. Lauderdale down to the Virgin Islands last summer. She and I were just chatting this week about her writing stories about it. Hoping she will start a Substack as well. And, we should keep in touch. I make it over to MI regularly....would love to meet up with you guys maybe in June when you are docked! Thank you so much.
Wow. How interesting. Lauderdale to VI’s. Be interesting to know how they did it. Non stop or island hopping? The general rule from anywhere north of Charleston is to head East to Bermuda. Leave Bermuda to the North, (if you don’t stop) and once you are abeam the middle of the island make a 90 degree turn to starboard and ride the westerly trade winds on a beam reach all the way to St Thomas. 10-15 days in total, depending on wind, weather, and crew.
When you look at an overview chart it seems counterintuitive. Why not just head directly to the VI’s. The reasoning is both simple and complex. The simple answer is to get west of the Gulf Stream as soon as possible and then enjoy the simple navigation and steady wind in the open ocean, versus having to deal with the Gulf Stream for longer, trickier navigation, and the fickle and ever changing wind and sea conditions caused by all the island land masses between say Lauderdale and St Thomas. And that’s the simple answer! LOL.
Lastly, here’s some interesting data. I am 67. I’ve spent 25% of my nights sleeping on a boat. My saintly wife has spent nearly 50% of her nights sleeping on a boat. Her parents had a boat and she spent every weekend and 2-3 months in the summer on the boat basically from birth until college. Until I met her in 1977 the only boat I’d ever been on was a row boat. Unless you count the Hobi a few of us rented on our senior trip in 1973 in the Bahamas. We were all drunk so I’m a bit foggy on the details.
Our 2nd date was on her parents boat on Lake St Clair and that was it. Hooked on the girl and the water. Lots of seafaring on my moms side of the family going back hundreds of years. At the Great Lakes Museum at the Soo there is an exhibit dedicated to a famous Great Lakes captain named Richard Bristol. My mom was a Bristol and directly related to him. So I guess it was inevitable that I would eventually go dow to the sea, as they say.
I do have a Substack and our boat is my profile pic. I’ve yet to write anything. But Someday I’m going to start telling stories. I’ve got a million. Maybe nobody will be interested. My wife says I need to do it if for no other reason than our kids will have some good memories and laughs about all the crazy stuff that happened over the decades.
Let me know if you are going to make it to MI this summer. Guests always welcome.
fyi For images, if you click on the top right of the image there should be an option for "set large size" or "set full width". Might help with large images.
Thank you so much from the other side of the pond (which I love to travel). My first video was really crappy quality...apparently my mic wasn't hooked up to my new computer properly. Winning :)! But, it will get better: https://www.youtube.com/@m3_melody
Good for you. No argument with your 2nd to last sentence. As to your last sentence, I’ll likely be dead (and if not dead definitely drooling) in 25 years. So you’ll have to check in with my kids.
What I will say is that if you have the experience, knowledge, and capital then your goal of building a portfolio should not be governed by, as you say, trying to time tops and bottoms. Complete agreement. But most people are not wanting to build a portfolio, they are wanting to be able to buy a property to call home. And so many
are unable to accomplish that today. And a lot of them have lost hope. My goal is to provide them with some measure of hope.
I’m only one person with an opinion. But my opinion is based on actual facts, and data, and history. And having personally experienced (and in some cases suffered greatly) from every economic cycle since the mid 1960s (which is when I started paying attention).
I am also completely unbiased on housing. I live on a sailboat. I’m not trying to buy, or sell, or rent. We own no property anywhere in the world. We don’t even own a car. Home is wherever the boat is located at that particular point in time. So I have no dog in the fight.
So where do I find hope? Very simply, it’s all about the cycle and how it has consistently played out since 1800 (data collection began that year). If one is an individual looking to buy a home to live in, understanding the macro and micro environments is critical to not getting trapped in a miserable situation of being seriously underwater as we were in 2009.
The FOMO of 2021-2022 has already put many in a bad situation. And if it’s not bad yet, the probability is high that it will get there eventually. And when it does the impact on inventory, pricing, interest rates, liquidity, and everything else that matters will change. It’s never different and mean reversion is a real thing.
Based on history going back to 1800, real estate cycles play out every generation. More precisely, 18.5 years on average from trough to peak to trough. Or peak to trough to peak, depending on how one wants to look at it. The average up cycle is 12 years, the average down cycle is 4.5 years, and there is generally some plateau time in between which added up gets the average to 18.5.
Because I have the data, I could trace every cycle. Nobody would read it. TLDR. But just reflecting on the current situation:
(looking at national averages while realizing every market is different)
Prices peaked in September 2005. Following a year or so of stability, prices began to fall in mid to late 2006. The FED began rate cuts late in 2007. Bear Stearns collapsed in March 2008. Lehman collapsed in September 2008. Equity markets crashed in December 2008, and again in March 2009. Housing prices bottomed out in mid 2011 in some geographies, but not until mid 2012 in others. So taking the midpoint of those you have a peak in late 2005 and a bottom in late 2011. That is 6 years of declines, and some geographies were closer to 7 years) peak to trough, and 4-5 years after the first rate cut.
Prices began to rise in mid 2012 and with a brief pause following the 2013 mini recession continued on an upward trajectory until July 2022 and the plateaued for about 6 months before starting to decline.
So in totality 6-7 years of declining prices, 10-11 years of rising prices. A few months of plateau in between and it all adds up perfectly to a generational cycle of 18.5 years.
Which brings me back to the point of my OP. Unless it’s different this time, which would require overriding 223 years of history, the market bottom is years away. Maybe many, many years. With an average down cycle of 4.5 years, and with the decline starting early in 2023, that puts the bottom in mid 2027. If reaching the bottom takes as long as the prior cycle that would mean late 2029 into 2030. Or, if the down cycle is shorter, as it was in the cycle prior to the GFC (3 years) that still moves the bottom out to the late 2026, early 2027 timeframe.
Could it be shorter? Sure, anything is possible. But when one actually examines the data and 223 years of history and focuses on the probabilities, one can make a very educated bet that we are only now at the beginning of what will be a multi year decline in home prices. And that educated bet would include a serious uptick in the rate and % of decline, once the FED starts to cut interest rates. And lastly, that the longer the FED postpones making that first rate cut, the greater the chances that the ultimate bottom will be pushed farther out in time.
So there is hope. But patience is required. It is my opinion that those who can be patient and preserve capital will ultimately be very handsomely rewarded, with prices eventually reverting to the long term P/I mean…which equates to 2012 level prices in real terms, i.e., adjusted for inflation. And based on history, a return to 2012 levels in nominal terms is not outside the realm of possibility. And there are industry experts with whom I communicate that believe this could actually happen.
Apologies for the length of this post. There’s just a lot of BS and fear porn and garbage information out there and there is no way to combat it other than with actual and irrefutable data. So if you got this far, thank you. And if I have just one person some hope then that will make my day. Eric V
I also believe in the cycle, but I think we may see price declines faster this time. But, I caution this statement by saying I always think things should happen faster. What's weird about this time is that I believe we have been in a silent depression since 2007 (https://www.youtube.com/watch?v=dcl1RP1ziNo). I follow Eurodollar University and their work on the shadow banking system. This cycle is a bit different I think.....but then again I could be wrong. But, right now we have a 2005/2006 scenario with a 2008 banking crises backdrop....we could get Phase I of the all-cash buyers defaulting before Phase II and the typical credit crunch. Or they could all blend together for a horrible, prolonged chop to the downside. I did some good podcasts on this that you might enjoy as well: https://podcasts.apple.com/us/podcast/melody-wright-566/id1436799008?i=1000602061199
And, layer on AI, it's hard to say truly what deflationary impact that will have. And, with de-globalization, can we return to a non-consumer driven economy? These are all things I ponder daily. Likely I will never find all the answers, but I'm on the path to finding them. That's the best we can do right? Either way, we are knowledge-seekers and hope-bringers :)
Ah, you are too kind. My dad was a character. He lived a great life and it ended pretty much how he wanted it to end. He wanted to outlive my mom. Which he did. And then when he found out he had cancer he said he would just keep going until they day he was unable to get out of bed. That day came on a Wednesday. He called to say goodbye. We had a great chat. When he did not respond to my text the next morning I knew exactly what was going on. He went to bed Wednesday night (after staying up
late to talk to my brother and watch his alma mater (MSU) play basketball one last time) he willed himself to sleep with the thought process that he wouldn’t wake up. Ever the pragmatist. And that’s exactly what happened and he died on Saturday. Honestly I’m glad my parents aren’t around to witness the shit show we got going on. My dad was a Vet and very active with the VFW organization in Chippewa Falls WI. And my mom was very patriotic with two brothers who were in WW2 and a husband who was in Korea.
The things going on today would break their hearts. Gail’s parents are both still alive, at 97 and 94 (I think). Her dads a WW2 vet. He’s pretty much out of it but when he has a lucid moments he mostly bitches about the food in assisted living or the miserable state of the country. I didn’t say this previously but part of the reason we are back in MI is the parent issue. We just moved them into assisted living 10 days ago, right after we floated the boat. Dad’s got serious dementia and is out of it 95% of the time. And Granny is blind. So they are quite a pair. Nobody but us to give them help. So we decided that we could at least be around for some of the time after they moved to help them get settled.
Ok. So I wrote something on a YT channel in response to a post which was a response to a prior post I wrote. It’s stupid but I have this time wasting thing of scrolling real estate focused channels and trying to correct the idiots and provide hope to the forlorn. It’s really long but I want you to read it when you have time. Or I should say I would like you to read it…and just tell me whether there is anything in it you think got wrong. I’m pretty confident of my facts so I’m not asking you to like look stuff up or anything like that. I’m more interested in your opinion of the general tenor of my position as it relates to RE and the future.
I’m going to send it in a separate post. No rush obviously. I’m working on various ways to drill stuff down so I can standardize something and cut and paste it. So many young people out there without hope. I want them to know that there is hope.
Thank you. The order of these posts got messed up so I was a bit confused. I get it now - I think you did a really great job on the summary. I think it would be illuminating and educational for anyone to read.
I posted some interesting links that aren't to counter what you said but to sort of give even more context (for when or if you have time).
Thank you so much. It's a bit hard to say definitively, but I find the Redfin data on people searching to move out of their city a semi-useful way to answer the "everybody is moving to the South" narrative.
I know when I did my travels to Austin, Nashville, Charlotte, Tampa, Orlando, Jacksonville, Lakeland, Phoenix, Las Vegas, etc. I talked to a lot of hospitality workers that had moved down and had already made plans to move back due to affordability issues. Now, this is anecdotal, but it also speaks to WHO moved down in the first place. And, Census shows all that moving slowed. How many were hospitality or construction workers? And, now it's so expensive who is going to move there?
Fantastic info. Looking forward to seeing you on YT.
Other issues 99% of the YT alleged “experts” looking for views either ignore or don’t know.
1. Massive amount in EBL loans (100 billion?) used for those “all cash” buys. In the RE market they appear as all cash transactions. But they are anything but. Think that will end well?
2. Institutional all cash transactions essentially the same deal. Some of the loans used to fund those are already inside the rollover window. Think that ends well?
3. % of NQM loans used to purchase income or AIrBNB properties at a level not dissimilar to the % of subprime loans in 2008. Think that ends well?
When people push back and say “it’s different this time” my response is always the same.
No, it’s never different. But if you are correct and it is different, then it will be worse.
Ultimate bottom (national avg) will take until at least mid 2026. Prices will ultimately revert to 2012 levels, in real terms. And I think there is a real chance they could get close to 2012 levels in nominal terms. At that point we can say the asset is cheap and it’s time to buy.
Thank you so much for reading.
1) ABSOLUTELY. All this "superprime" lending on equity assets, crypto, and PPP, etc.....all-cash sales were not all-cash
2) Yep
3) MAXEX just announced their DSCR product last week....like what?
And, I agree with you. It's going to be much worse than the GFC b/c with those all-cash sales there will be nothing keeping the counties from foreclosing with tax liens, etc. During the GFC everything was the bank's responsibility - paying taxes, insurance, code violations, etc. If you haven't listened to my LeadLag from Jan you should check it out. I think you would enjoy it: https://www.youtube.com/watch?v=zuDPYp0sEAM
Indeed. You are welcome. Anyone not following you and Amy Nixon are totally missing the boat.
I have not watched that video but I will do so tomorrow.
I laugh (sick laugh) when I read comments from young people about how the Boomers screwed everything up for them. They have no idea of reality. I’m 67. We lost a lot of money in the dot com bubble. Then we lost it all in the GFC. Business. House. Job. Lot of money. 2013 we declared BR.
We were blessed to own a sailboat and so having no place else to live we moved onto the boat and bailed out. A decade later we are still on the boat. We’ve both had about a dozen different temp jobs and have seen a lot of the world at 6 knots. Living cheap we have been able to save enough money that we might make it until the end. We have zero debt and don’t even own a car.
If we are correct about RE we might consider a cabin in the woods for our final adventure. If not they will likely have to drag us off the boat.
Keep up the great analysis. I’m so glad you are writing on Substack. I follow you on Twitter but I don’t have an account. I got kicked off 2 years ago and despite multiple attempts I can’t get reinstated. I guess the DS didn’t like me constantly calling them out for their illegal behavior. Lol.
Thank you so much and love it! To me it is such a waste of time for people to blame one generation, etc. We are all in this sh*tstorm together, so instead of fighting one another, let's work together against the entities that perpetrate the madness. Sigh. On a happy note, you will have to keep me posted about your travels. Boats and travel are in my blood...I've just never owned one. And, like you, I hope to find my own cabin in the woods as well....perhaps next to a babbling brook and never-ending water supply :).
Here is a ‘taste’.
We spent the winter in Myrtle Beach. On 22 March we took the boat out of the water, took the mast down, had it all loaded on a truck and shipped to Bay City MI. That is our home port on Lake Huron where we started sailing together in 1980. The boat arrived on 26 March, the marina put it in a heated building, we put the mast back together, painted the bottom, greased the prop, replaced the zincs, did a few other maintenance jobs and we re-launched on 4 April. We own a dock at a marina in Bay City, so we will be there until early June when we head north, cross the Lake and disappear into the Canadian Wilderness for a few weeks. No itinerary and as yet no
plans or timing for heading south. We are considering Storing the boat for the winter, finding a cheap condo in Myrtle Beach, and circumnavigating Lake Superior next summer. It’s the only Great Lake we have not spent time in and it’s on our bucket list.
We had a week of ‘summer’ weather but it’s back to MI ‘spring’. 40 and rain.
You made my heart sing a little bit reading this....what amazing adventures (and adventures to come). I lived in MN for 7 years and spent as much time as I could on the north shore of Superior...and on Madeline Island (must-visit - great biker bar with amazing bloody marys and a blazing fire pit). My youngest sister has just gotten into boating and they did Ft. Lauderdale down to the Virgin Islands last summer. She and I were just chatting this week about her writing stories about it. Hoping she will start a Substack as well. And, we should keep in touch. I make it over to MI regularly....would love to meet up with you guys maybe in June when you are docked! Thank you so much.
Wow. How interesting. Lauderdale to VI’s. Be interesting to know how they did it. Non stop or island hopping? The general rule from anywhere north of Charleston is to head East to Bermuda. Leave Bermuda to the North, (if you don’t stop) and once you are abeam the middle of the island make a 90 degree turn to starboard and ride the westerly trade winds on a beam reach all the way to St Thomas. 10-15 days in total, depending on wind, weather, and crew.
When you look at an overview chart it seems counterintuitive. Why not just head directly to the VI’s. The reasoning is both simple and complex. The simple answer is to get west of the Gulf Stream as soon as possible and then enjoy the simple navigation and steady wind in the open ocean, versus having to deal with the Gulf Stream for longer, trickier navigation, and the fickle and ever changing wind and sea conditions caused by all the island land masses between say Lauderdale and St Thomas. And that’s the simple answer! LOL.
Lastly, here’s some interesting data. I am 67. I’ve spent 25% of my nights sleeping on a boat. My saintly wife has spent nearly 50% of her nights sleeping on a boat. Her parents had a boat and she spent every weekend and 2-3 months in the summer on the boat basically from birth until college. Until I met her in 1977 the only boat I’d ever been on was a row boat. Unless you count the Hobi a few of us rented on our senior trip in 1973 in the Bahamas. We were all drunk so I’m a bit foggy on the details.
Our 2nd date was on her parents boat on Lake St Clair and that was it. Hooked on the girl and the water. Lots of seafaring on my moms side of the family going back hundreds of years. At the Great Lakes Museum at the Soo there is an exhibit dedicated to a famous Great Lakes captain named Richard Bristol. My mom was a Bristol and directly related to him. So I guess it was inevitable that I would eventually go dow to the sea, as they say.
I do have a Substack and our boat is my profile pic. I’ve yet to write anything. But Someday I’m going to start telling stories. I’ve got a million. Maybe nobody will be interested. My wife says I need to do it if for no other reason than our kids will have some good memories and laughs about all the crazy stuff that happened over the decades.
Let me know if you are going to make it to MI this summer. Guests always welcome.
Eric V
S/V Blessings
Bay City, MI
fyi For images, if you click on the top right of the image there should be an option for "set large size" or "set full width". Might help with large images.
Wow informative and interesting. Like a roller coaster it goes up and down and I think it's reaching a peak and is about to go down, like really bad.
Excellent! Thank you!
Thank you so much!
You’re welcome. Travel safe and don’t burn yourself out. You’re valuable.
Great insights as usual Melody for a voyeur on the other side of the pond!
Good luck with your YouTube channel... have you a name to follow?
👏
Thank you so much from the other side of the pond (which I love to travel). My first video was really crappy quality...apparently my mic wasn't hooked up to my new computer properly. Winning :)! But, it will get better: https://www.youtube.com/@m3_melody
M3-here’s what I posted on YT.
Good for you. No argument with your 2nd to last sentence. As to your last sentence, I’ll likely be dead (and if not dead definitely drooling) in 25 years. So you’ll have to check in with my kids.
What I will say is that if you have the experience, knowledge, and capital then your goal of building a portfolio should not be governed by, as you say, trying to time tops and bottoms. Complete agreement. But most people are not wanting to build a portfolio, they are wanting to be able to buy a property to call home. And so many
are unable to accomplish that today. And a lot of them have lost hope. My goal is to provide them with some measure of hope.
I’m only one person with an opinion. But my opinion is based on actual facts, and data, and history. And having personally experienced (and in some cases suffered greatly) from every economic cycle since the mid 1960s (which is when I started paying attention).
I am also completely unbiased on housing. I live on a sailboat. I’m not trying to buy, or sell, or rent. We own no property anywhere in the world. We don’t even own a car. Home is wherever the boat is located at that particular point in time. So I have no dog in the fight.
So where do I find hope? Very simply, it’s all about the cycle and how it has consistently played out since 1800 (data collection began that year). If one is an individual looking to buy a home to live in, understanding the macro and micro environments is critical to not getting trapped in a miserable situation of being seriously underwater as we were in 2009.
The FOMO of 2021-2022 has already put many in a bad situation. And if it’s not bad yet, the probability is high that it will get there eventually. And when it does the impact on inventory, pricing, interest rates, liquidity, and everything else that matters will change. It’s never different and mean reversion is a real thing.
Based on history going back to 1800, real estate cycles play out every generation. More precisely, 18.5 years on average from trough to peak to trough. Or peak to trough to peak, depending on how one wants to look at it. The average up cycle is 12 years, the average down cycle is 4.5 years, and there is generally some plateau time in between which added up gets the average to 18.5.
Because I have the data, I could trace every cycle. Nobody would read it. TLDR. But just reflecting on the current situation:
(looking at national averages while realizing every market is different)
Prices peaked in September 2005. Following a year or so of stability, prices began to fall in mid to late 2006. The FED began rate cuts late in 2007. Bear Stearns collapsed in March 2008. Lehman collapsed in September 2008. Equity markets crashed in December 2008, and again in March 2009. Housing prices bottomed out in mid 2011 in some geographies, but not until mid 2012 in others. So taking the midpoint of those you have a peak in late 2005 and a bottom in late 2011. That is 6 years of declines, and some geographies were closer to 7 years) peak to trough, and 4-5 years after the first rate cut.
Prices began to rise in mid 2012 and with a brief pause following the 2013 mini recession continued on an upward trajectory until July 2022 and the plateaued for about 6 months before starting to decline.
So in totality 6-7 years of declining prices, 10-11 years of rising prices. A few months of plateau in between and it all adds up perfectly to a generational cycle of 18.5 years.
Which brings me back to the point of my OP. Unless it’s different this time, which would require overriding 223 years of history, the market bottom is years away. Maybe many, many years. With an average down cycle of 4.5 years, and with the decline starting early in 2023, that puts the bottom in mid 2027. If reaching the bottom takes as long as the prior cycle that would mean late 2029 into 2030. Or, if the down cycle is shorter, as it was in the cycle prior to the GFC (3 years) that still moves the bottom out to the late 2026, early 2027 timeframe.
Could it be shorter? Sure, anything is possible. But when one actually examines the data and 223 years of history and focuses on the probabilities, one can make a very educated bet that we are only now at the beginning of what will be a multi year decline in home prices. And that educated bet would include a serious uptick in the rate and % of decline, once the FED starts to cut interest rates. And lastly, that the longer the FED postpones making that first rate cut, the greater the chances that the ultimate bottom will be pushed farther out in time.
So there is hope. But patience is required. It is my opinion that those who can be patient and preserve capital will ultimately be very handsomely rewarded, with prices eventually reverting to the long term P/I mean…which equates to 2012 level prices in real terms, i.e., adjusted for inflation. And based on history, a return to 2012 levels in nominal terms is not outside the realm of possibility. And there are industry experts with whom I communicate that believe this could actually happen.
Apologies for the length of this post. There’s just a lot of BS and fear porn and garbage information out there and there is no way to combat it other than with actual and irrefutable data. So if you got this far, thank you. And if I have just one person some hope then that will make my day. Eric V
Yes, yes. I am also a student of history. One of the books I keep re-listening to at night is A Brief History of Doom which goes over all the financial crises of the past 200 years or so: https://www.amazon.com/Brief-History-Doom-Financial-Foundation/dp/0812251776
I also believe in the cycle, but I think we may see price declines faster this time. But, I caution this statement by saying I always think things should happen faster. What's weird about this time is that I believe we have been in a silent depression since 2007 (https://www.youtube.com/watch?v=dcl1RP1ziNo). I follow Eurodollar University and their work on the shadow banking system. This cycle is a bit different I think.....but then again I could be wrong. But, right now we have a 2005/2006 scenario with a 2008 banking crises backdrop....we could get Phase I of the all-cash buyers defaulting before Phase II and the typical credit crunch. Or they could all blend together for a horrible, prolonged chop to the downside. I did some good podcasts on this that you might enjoy as well: https://podcasts.apple.com/us/podcast/melody-wright-566/id1436799008?i=1000602061199
And, layer on AI, it's hard to say truly what deflationary impact that will have. And, with de-globalization, can we return to a non-consumer driven economy? These are all things I ponder daily. Likely I will never find all the answers, but I'm on the path to finding them. That's the best we can do right? Either way, we are knowledge-seekers and hope-bringers :)
Ah, you are too kind. My dad was a character. He lived a great life and it ended pretty much how he wanted it to end. He wanted to outlive my mom. Which he did. And then when he found out he had cancer he said he would just keep going until they day he was unable to get out of bed. That day came on a Wednesday. He called to say goodbye. We had a great chat. When he did not respond to my text the next morning I knew exactly what was going on. He went to bed Wednesday night (after staying up
late to talk to my brother and watch his alma mater (MSU) play basketball one last time) he willed himself to sleep with the thought process that he wouldn’t wake up. Ever the pragmatist. And that’s exactly what happened and he died on Saturday. Honestly I’m glad my parents aren’t around to witness the shit show we got going on. My dad was a Vet and very active with the VFW organization in Chippewa Falls WI. And my mom was very patriotic with two brothers who were in WW2 and a husband who was in Korea.
The things going on today would break their hearts. Gail’s parents are both still alive, at 97 and 94 (I think). Her dads a WW2 vet. He’s pretty much out of it but when he has a lucid moments he mostly bitches about the food in assisted living or the miserable state of the country. I didn’t say this previously but part of the reason we are back in MI is the parent issue. We just moved them into assisted living 10 days ago, right after we floated the boat. Dad’s got serious dementia and is out of it 95% of the time. And Granny is blind. So they are quite a pair. Nobody but us to give them help. So we decided that we could at least be around for some of the time after they moved to help them get settled.
Ok. So I wrote something on a YT channel in response to a post which was a response to a prior post I wrote. It’s stupid but I have this time wasting thing of scrolling real estate focused channels and trying to correct the idiots and provide hope to the forlorn. It’s really long but I want you to read it when you have time. Or I should say I would like you to read it…and just tell me whether there is anything in it you think got wrong. I’m pretty confident of my facts so I’m not asking you to like look stuff up or anything like that. I’m more interested in your opinion of the general tenor of my position as it relates to RE and the future.
I’m going to send it in a separate post. No rush obviously. I’m working on various ways to drill stuff down so I can standardize something and cut and paste it. So many young people out there without hope. I want them to know that there is hope.
Thank you. The order of these posts got messed up so I was a bit confused. I get it now - I think you did a really great job on the summary. I think it would be illuminating and educational for anyone to read.
I posted some interesting links that aren't to counter what you said but to sort of give even more context (for when or if you have time).
Haha. I’m the old guy who is supposed to be the one confused!
Thanks for the feedback. Where did you post the links?
:) In my first response to your the post you did for YT. I replied yesterday afternoon.
Copy. Yep got it. Confusion is the order of the day. I took one look at my mining portfolio and have no plans to look at it again. Lol.
Great article! Great data! Looks like one of the quick takeaways is people looking to move back closer to major cities post covid?
Thank you so much. It's a bit hard to say definitively, but I find the Redfin data on people searching to move out of their city a semi-useful way to answer the "everybody is moving to the South" narrative.
I'm wondering if those who moved to the south in the rush to the Sun Belt are now looking to leave, for various reasons. It's really interesting.
I know when I did my travels to Austin, Nashville, Charlotte, Tampa, Orlando, Jacksonville, Lakeland, Phoenix, Las Vegas, etc. I talked to a lot of hospitality workers that had moved down and had already made plans to move back due to affordability issues. Now, this is anecdotal, but it also speaks to WHO moved down in the first place. And, Census shows all that moving slowed. How many were hospitality or construction workers? And, now it's so expensive who is going to move there?
Thank you! I was hoping someone would give me a tip :).