Yeah, and the market is RED-F$^#&@G-HOT here in California where people are supposedly fleeing too...
It's easy to say "it's different this time"--those are the scariest damn words of any asset bubble in existence. It's the point where smart money flees.
It's not different this time. The root causes of the next crash won't be the same as the last one--but people can't afford these homes that they're buying... At least not if interest rates spike (and nobody can buy homes) or a recession hits and people need to sell their homes to people that can't buy them because of interest rates.
In my own guessing where real estate might be going you’re post hits on the two opening points I’ve lead my thoughts with:
“…people can't afford these homes that they're buying…”1) With homes selling at such comparably higher values than two years ago – i.e. a previous rental address of mine in Portland OR selling for $250K in 2017 sold for $400K in late 2021 – they are, by raw valuing, substantially
higher risk mortgages for the individuals qualifying for ownership.
a. By extension, there will statistically be more foreclosures in the next 2 or 3 years…
b. …especially as Federal Reserve borrowing rates are planned for an incremental rise to 2.0% by calendar year’s end.
2) Compounding the risk of higher value mortgages is the overall interest rate (7 percent?) along with rising gas prices cutting into the homeowner’s ability to pay these abruptly higher value mortgages.
“The root causes of the next crash won't be the same as the last one…” 1) In 2008 the banks AND the individual home buyers were BOTH exposed to risk. This time around, I believe the risk is almost entirely on the buyer. Banks mitigated their lending risks in wake of the 2008 meltdown and, unlike in 2008, they have the advantage of demand presumably remaining high. Banks can likely sell foreclosures without the tide of financial losses that spurred 2008’s meltdown.
2) I will go further and say the next foreclosure “crisis” might not play out as a crash or even a market disruption. Home values might very well remain high through oncoming waves of expected foreclosures if the demand remains high thanks to the increase costs of building materials, construction, and time consuming regulations slowing down the ability to raise supply high enough to meet demand.
