https://external-preview.redd.it/XCynxdSYREwNQkn-0_K_LhkS2JdUqr42PU7xDnJwv4A.jpg?auto=webp&s=80de2575071cb06ca53f27f316481e69740bbf1e
It will take a couple of years until adjustable rate mortgages start, well, adjusting, and people will stop paying high interest on 50% underwater housing.
Since 2008 was not too long ago, being foreclosed on, or letting go of a house that is underwater is not a stigma or anything to be ashamed of, so people will be doing it at any hint that their neighbors are doing or planning on doing the same.
What does this mean? The banking sector will be under pressure yet again. The markets will be illiquid and will inevitably go down. It will take another 15 years to recover from the mess.
What does this mean for you financially? The best option in 2007/2008 was to be in cash, or go short financials, and then everything else. But timing a short position is tough so being in cash is probably better. The difference between then and now is that cash depreciates a lot more right now, so to keep up, you must earn some income on it to keep up with inflation.
Looking at dividend paying stocks in 2008, they crashed the least, and recovered the fastest. Say you want to invest in a sector that is a monopoly and has staying power, like telecom, then split your cash and dump it into a market capitalization weighted portfolio made of VZ, T, TMUS, LUMN, and FYBR, and sleep on it for the next 10 years. Then wake up and buy your neighbors house at 30% of what they paid for it in 2021. Lock in whatever 30 year rate you can, at that time. Go to sleep again.
[https://fred.stlouisfed.org/series/CSUSHPINSA](https://fred.stlouisfed.org/series/CSUSHPINSA)
Full disclosure: Not financial advice, poor man’s DD, I own VZ right now.
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Yo homie, ain’t no one here waiting 10 years for a play. 0dte otm fds is the average attention span here.
I’m not sure we’re going to see a repeat of 2008/09 in the US. Lending standards are much different these days and most people aren’t in adjustable rates. People also have much more equity in their homes at this point so there’s a lot more room to fall before they’re underwater. Sounds like UK is much different in terms of adjustable rates, not sure about other countries. Good point on the psychology of people not being ashamed to walk away from houses though.
Low cost carriers are killing VZ…
Disclosure: I am a VZ bag holder
[https://fred.stlouisfed.org/graph/?g=kYEb](https://fred.stlouisfed.org/graph/?g=kYEb)
Chart doesn’t looking nearly as scary when adjusted for inflation against CPI. We are at 110% of the 2008 peak, not the 300% in your original graph. Factors are different now, so I don’t see such a marked crash, but certainly the correction has already started. Higher proportion of fixed rate mortgages this time around. Higher salaries (unless we start to see massive layoffs). Pent up demand still. Sure, higher rates will discourage would be buyers and lead to lower sale prices (that’s inevitable) but then again anyone with a low cost mortgage likely has no desire to sell – even if they are moving some may be better served renting their existing homes for awhile than effectively trading into a high cost loan on a new home.
Learn the squatter and adverse possession laws?
50% underwater – if you are waiting for this, you really are highly regarded, even for these parts of the internet.
So if someone bought a house in 2020 (two years ago), you are expecting that house to drop to less than 50% of its initial purchase price ?
Lol most mortgages right now are fixed at sub 5% levels. Lending standards are also super strict now. Nice try though
This happened to me. That same condo which foreclosed for 350 is now worth almost 800K.
The ARM space is going to be ripe for those of us who have lots of cash.
High on the list of worst WSB posts, so I doth my cap to OP, my regards
Those mothers in Oakland told me I have a right to housing.
Housing market is nothing like 2008. Huge shortage of homes now. There’s no crash.
The housing market is overpriced and overheated with investment companies buying homes to rent out by next summer once the interest rates go up the housing market will crash and you will be able to get foreclosed homes for pennies on the dollar.
Rent’s due
>You’re an idiot if you think buying a house is a good investment.
Cash is a position buddy lol you can leverage it selling puts you can buy puts. I have a ton of cash and I literally sell puts 20% down expire 6 months out. Sell enough and your looking at 1k weekly with how this shit pump and dumps. Every major dump sell puts. If you get assigned. Sell covered calls on the pumps. Use that premium to buy puts. Do this on spy. Pick one. When you are ready to buy a house you ll have enough to buy cash. On average recession are 40% or more from the top. We still got a food 25-50% drop stay heavy cash and only play when shit drops, and set them 20% under. Don’t get fooled by high premium. Going for small premiums but safer.
Who the fuck is getting ARM’s???
To all the people talking about 2008 is not the same as 2022 when it comes to lending standards. You are totally correct. What I believe people are missing though that in 2008 is we went into QE. If not we would have fell even harder everywhere. In 2022 people who bought a house probably drained their savings, living pay check to pay check with a boatload of credit card debt at inflation raising at it’s fast pace ever with no end in sight when it comes to essential goods. But guess what on top of all that?? Not only will we be NOT turning to QE. WE ARE TURNING TO QT. So you are right. This is not 2008. But is it really going to be better because of the better lending standards of post 2008?
So many other industries would be much safer if we just nationalized the housing market and guaranteed that every citizen would be housed and fed. A market is most volatile when the people are uncertain about their livelihoods
You know the Fed owns all the mortgages right? They’ve already lost $100 billion and don’t even care.