Are we in another real estate bubble? If so, what will pop it?

intentional bubble bernanke is on record saying so. they’ll pop it when most advantageous. probably want to get trump out of the way first since he’s too much of a loose cannon. once they get rid of him and line up their plans they’ll pull the trigger/rug

The circumstance between now and 2007 is very different but got the same “feel”. All the sudden house around here are sitting on market for much longer time but no one seem to be able to pin point the cause for it since the general economy and employment are all good.

Rising interest rates plus tax law changes have switched us from a tailwind to a headwind situation. Economy is good, but it was also good for the past few years. Unemployment rate has been under 6% since 2014 and equal to or under 5% since 2015.

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That’s pretty much the difference there. Add stagnant inflation-adjusted wage growth to the tax law capping real estate tax deduction for itemizers and mortage rates (30-yr fixed is 1% higher now than 2 years ago) on top of prices that have outpaced incomes by some distance for a while now and there is simply less demand because houses are simply less affordable now than they were 2-3 years ago.

If you had a $300k mortgage 2-3 years ago that you could barely afford, in today’s conditions, you could not move out of your house and get another similar mortgage. Due to interest rates, you’d have to come up with $150-200 extra each month (on 30-yr fixed) and your wages - even after tax cut - are not that much higher now so that could make lenders reconsider your ability to repay. And that’s for current homeowners who at least rode the wave of increasing home valuations and have built equity during the last few years. For first-time homeowners, higher home prices mean also having to come up with that much higher downpayment. All those point to slowing demand.

But unlike in 2007, I don’t think there is a wild west of subprime loans and connected derivatives out there. But I could see a recession in 2019 maybe triggered by the impact of the midterm election results, effects of tariffs, etc… accelerate the trend for lower demand and thus lower home valuation. But not quite as dramatic as in 2007.

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Nope. House never sold and went off the market. Maybe if they put their head in the sand for awhile some sucker will come by and give them the price they want.

I guess for every halfhearted buyer out there, there’s a halfhearted seller too.

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Here’s a quite different chart :

The 1 year chart shows the prices down ~10% over a couple months and still up for the year.

I think your chart was a commodities trading market maybe so thats just futures prices? That might drop if people are expecting a trade deal soon.

eta : also found :

“Softwood lumber prices plummeted 9.6% in August yet are up 5% on a yearly basis (down from a 19.5% increase year-over-year in July).”

If you put a +20% tax on something that makes the costs go up.

Right? I can’t see how it wouldn’t.

True its just +20% on the 1/3 we import from Canada in this case. but it doesn’t make prices go down…

So any news headline blaming the tarrif for additional price increases is pretty straight forward if you ask me.

Nobody claimed that the tariff imposed in 2017 caused prices go increase from 2015 to 2017…

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ohhh… Now I see the problem. You were arguing with Joe. I skipped past Joe’s post there and wasn’t following the line of debate.

My point is only that taxing lumber 20% causes lumber to be more expensive. period.
Its feasible that the producers of lumber would eat that tax but I highly doubt they operate with that kind of margin, so I think its pretty certain the tax would just be passed on and increase lumber costs.

What impact the lumber cost has on housing construction cost or housing starts is another matter and I am not supporting Joes claim on that matter.

A) It was the homebuilders reporting both the spike in the cost of the lumber they were purchasing and the decline in sales of resulting higher-priced houses they were selling.

B) If you recheck my OP, it wasn’t “blaming it just on tariffs”.

Have a nice day.

Pending home sales fell 0.7%, the seventh consecutive monthly decline in a row.

Wife and I bought a new home in the midwest. I’d been wanting to wait for a price correction, but the purchase price is so low (relative to coasts), that it would take a 50% correction to affect me 6 figures.

However, if there’s a correction that hits the coasts hard, I’ll be looking at real estate in LA as well.

At this point everybody is waiting for a dip so they can get in “cheaply”. Probably means that houses are priced about right and there won’t be much of a correction. The exception would be a massive recession, with stock market crash and layoffs, in which case people can’t get loans except for a few lucky ones with stable employment or who got out of the markets on time and got cash sitting around.

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