Property Values Are Going To Fall, Hard. So, So Hard
People who are watching the real estate market are noticing places, that are quite expensive. And if people had good jobs, and everything wasn't so much more expensive, they might rent these places. The rent is lower than a mortgage. But no one has rented the place in a year. However, the sellers haven't really lowered the price.
You know the saying of a beach ball held underwater too long, how it will shoot up higher and faster? Well, this is like a that, but opposite. A brick that used to be held up, and now is the time when the brick has noticed gravity. This is where house prices are. The problem is, the ground has been excavated out from under the brick.
This will not be a 2008 correct. It is going to be the start of dead cat bounce so spectacular that the brick will appear to float in air, once again, before it goes to zero.
The Real Estate market is a mess!
The real estate market is filled with developers and landlords, and now corporate overlords.
And they have their houses mortgaged to the max. There is no equity here, and everyone expects interest rates to go down and prices to go up. But, we have reached a point where too many buyers (or potential buyers) are priced out of the market.
There is no fresh fuel for this fire. It is about to burn itself out.
There are brand new houses that haven't been sold, while many people are living in tents on streets.
There are commercial buildings that are now empty, which the owners are looking to convert into apartments, which will just bring more overpriced rentals to the market.
So, everything is going to have to be brought down in price, or everyone's income has to go up. (stimmy checks may be coming)
Everyone was anticipating more demand, higher houses prices, and lower rates. Just one of these not coming true destroys the entire house of cards. All three have failed to appear. This is the beginning of the end.
Demographics are king
There are people out there say that real estate is still a good place to invest. These people are just cheerleaders cheering on a dead horse.
Demographics rules this market. And demographics are dropping. Every news broadcast should have a spot about declining demographics. However, it isn't just low birthrates that are the problem. Death is also up.
The All Causes Mortality is at hundred year highs. And doesn't seem to be slowing down.
If we add in all the other things lowering the numbers, like "immigrants" being deported and people leaving cities, it is only a short matter of time before there are more houses than people who want to live in them.
And, when that happens, the entire real estate market turns upside down. When there is one buyer for every two houses on the market, we start a downward price war.
There is nothing to support housing prices
Up until now, we have had more people than there was houses. And we had upward moving income. And near the end, almost 0% interest rates. These things kept the prices going up. Now that they are gone, is there a floor for suburban real estate?
There would be a floor for newly constructed homes, but what is the prices for houses that are just sitting their empty?
We don't usually think of ghost towns when talk about suburban housing, but it is the only thing we can really compare to. When there are suddenly few buyers, and many sellers, the town/house pricing limps along.
However, during this time, people who can leave do. These are the smarter and/or higher wage earners; the middle class and above. And when there is only the lower class, the druggies, the drug dealers, the petty thieves, than something worse happens. The people who respected property rights are gone.
And then, the people who need housing just move in. Either because other people are doing it, or states like Commifornia say something like "housing is a right", and enact price controls. Which makes all the landlords run for the hills, and/or go bankrupt. Meaning, there will be even more empty houses. Empty, unmaintained houses. Slums.
Suburban real estate has everything against it.
- You do not want to be living in a city. Every reason to be there is going.
- Demographics is going down
- The banks are dying, as well as sources for mortgages
- Jobs are disappearing. Corporations are laying off thousands
- The boomers, who own 25% of the houses, will be dumping them on the market
- People will be moving to be with their tribe/"family"
A short time in the future, there will be acres of suburban houses left abandoned.
We should abandon the idea of a "real estate market". It will save the few people who are still trying to buy a house a lot of heartbreak.
Really imagine it. Someone today, who still has a decent job, mortgages themselves to the hilt, to afford the American Dream. And all they see is their house value going down every year. And in a few years, will see lots of vacant houses. They did everything right, but they are not making any equity. They mortgage servicer hounds them endlessly. (even when they shouldn't, because they can't really do anything besides make the tenant mad at them. They will not be able to kick them out.)
Get out of the cities.