New Housing Crisis Possible in 2019

dberz94

Professional Slacker
Joined
Feb 14, 2015
Messages
883
Reaction score
1
So yeah, I'm a boring finance nerd, but since the world is made of money, it pays to know what is going on. If I feel like creating a TL;DR later I will but for now, please listen up.
I must state, however, that the information I am telling you about is my own opinion and should not be mistaken for legal advice or instruction to make financial decisions. Please consult experts within the field for more information and I claim no responsibility for any losses or legal actions, financial or otherwise that occur relating to my opinions or the information listed.

That being said,

I'm going to talk about GDP and a few economic things which I explain in further detail. Just because you hear something on the news, doesn't mean it will continue in the long run. Most news is short term and instant reactions.

Many economists are viewing the same warning signs they did back in 2007.
https://www.bloomberg.com/news/articles/2019-01-18/economists-downplay-indicators-that-say-u-s-recession-is-coming

The equation that warns us of this is
rising interest rates + (increase in real estate listings - real estate prices) + rising rental/leasing markets = bust.

If you are waiting to put your house on the market, you might want to hold off. If you need to, I would not wait until the spring/summer because that is when the market gets saturated (overwhelmed) with new listings.

When real estate sales increase alongside the rental market increasing, that means people can no longer afford to pay their mortgages or buy homes without large interest rates.

So far, with the tax write-off cap being held at $10,000 many wealthy homeowners are selling off their access homes on both coasts. Although you may have $32k in write-offs, most have now realized it doesn't mean you can deduct that from your real estate taxes. Recently, the tariffs that have impacted most economies of scale have not provided the job increase as predicted. The US Steel Corporation ($:X on the stock market) was one of the only winners with a 193% increase since 2016 as estimated by Bloomberg. They did not create jobs but instead used it to cover overhead costs (salaries, supplies, and bonuses, sadly.) The other companies could not hedge (manage losses) against the tariff.

Side note:
--Almost immediately the USDA had to buy $4.6 billion worth of livestock and grains from U.S. farmers and supply $1.7 billion in available relief to farmers that could not make their final production estimates just to keep the economy afloat.

Although unemployment has dropped consistently since the all-time high of 10% in 2010, it is now showing signs of a breakout pattern. (A breakout pattern prediction is when ongoing graphs, like a stock price, have narrowed growth or when decreases have ceased to continue over a specific time period.) The Bureau of Labor Statistics shows the subtle increase in the unemployment rate -> https://data.bls.gov/timeseries/LNS14000000


However, the rental and leasing sector has increased a few percent which means rental housing price will increase. This means that the price of rental properties will increase overtime. As seen here-> https://www.bea.gov/news/2019/gross-domestic-product-industry-third-quarter-2018

Real GDP growth slowed to 3.4 percent in the third quarter, from 4.2 percent in the second quarter. Real estate and rental and leasing was the leading contributor to the deceleration in real GDP growth in the third quarter. Real value added for the industry group increased 1.4 percent, after increasing 5.3 percent in the second quarter.
Don't be fooled by that last increase stat, that means it lost a growth of almost 4% from last quarter.

Also the bulk sale and production of electric cars has caused an immense on-site surplus of cars for domestic manufacturers. This has been occurring at a steadfast rate since 2015. After the steel tariff rumors began to spread, they began ramping up production to ward off any future complications that could have arose, like they did. However, for the third quarter Real GDP (the measure of including inflation/deflation into the actual GDP (the final financial product of all goods/service of the country)) has shown that real estate and car sales have slowed the economy down by 0.8%.


With rising inflation of the U.S. Economy and devaluation of the Euro, we have increased wholesale exports to European countries, especially the United Kingdom, to help control leverage after the Brexit deal becomes a reality. (That is why Trump keeps saying the economy is better than ever.)
China began to buy our crops again in 2019 due to our investigation of unfair trade practices and other countries estimates for crops being delayed.


Crazy times are upon us, watch what you do in the next coming months.
 

10sec

I haz dat teddy bear smile.
Donating Member
Joined
Jul 26, 2008
Messages
23,542
Reaction score
266
I am just glad I don't own anything in this state. Other states are worth the BS, here it's not. I am liquidating all of my assets this year and preparing to bail when the opportunity presents itself. Also hoping my landlord doesn't increase my rent.
 

Yaj Yak

Harbor Master
Donating Member
Joined
May 24, 2007
Messages
90,417
Reaction score
1,367
[MENTION=341]sickmint79[/MENTION] where ya at dog
 

blakbearddelite

I'm not one of your 'shit-hole' buddies!
Donating Member
Joined
Jun 28, 2007
Messages
24,982
Reaction score
209
Location
South Elgin, IL
Fortunately we just bought our house not that long ago, and we don't plan on moving until we get closer to retirement age.
 

Bruce Jibboo

Well-known member
Joined
Apr 18, 2008
Messages
19,788
Reaction score
40
Location
Elgin
Yep trump hiding tax returns and shielding the fact he "probably" hasn't paid federal income tax for decades then turning around and putting that 10k limit on property tax deductions is a fucking joke.
 

sickmint79

I Drink Your Milkshake
Joined
Mar 2, 2008
Messages
18,675
Reaction score
91
Location
grayslake
Many economists are viewing the same warning signs they did back in 2007.

even the layman like myself could clearly see the problem had all but the crying left by 2007, the good (and few) economists that saw problems were calling them out in 2005 and earlier. and they were much more significant than anything would be now. i don't think there is anything we need to get particularly excited about really beyond normal market gyrations. hoping to sell my house in the next few months also.
 

N20GT

Plz place 3,000 kudos here. kthx
Joined
Sep 6, 2006
Messages
47,502
Reaction score
813
Location
Crown point, IN
I need to do some research on outstanding CDO debt relative to mortgage debt. That's really what turned what would have been a recession, in to a global disaster. We're due for a correction, but I wouldn't necessarily call a correction a "crisis"

 

GLADIATOR

Are you not entertained?
Donating Member
Joined
Mar 29, 2004
Messages
21,104
Reaction score
485
Location
New Lenox IL
Interesting. We have been on the fence with putting house up for sale and starting over but affordable new construction is cheap and blah. It almost makes us want to stay in our house. I don’t know if I have the energy to house shop and compete with bidders right now since I am working a lot of hours.
 

10sec

I haz dat teddy bear smile.
Donating Member
Joined
Jul 26, 2008
Messages
23,542
Reaction score
266
I understand the people that plan on staying in their houses not worried about the market dropping, but what about when you're fed up with paying out the ass for taxes and you DO want to leave?
 

Yaj Yak

Harbor Master
Donating Member
Joined
May 24, 2007
Messages
90,417
Reaction score
1,367
rent your shit out.


i know quite a few people that did that after 07/08 crash and they were super underwater.

few years of renting it out, got above water a good amount, made some money... whatever.


or just walk away from it :dunno:
 

10sec

I haz dat teddy bear smile.
Donating Member
Joined
Jul 26, 2008
Messages
23,542
Reaction score
266
I see a lot of things being rented in the future, not a large amount of people to commit to a mortgage unless they're married and/or have a family. I just hope rent prices don't sky rocket, then I'll have to buy again like I did in 2012 :rofl: Rent was high buying was low.
 

Create an account or login to comment

You must be a member in order to leave a comment

Create account

Create an account on our community. It's easy!

Log in

Already have an account? Log in here.

Top Bottom