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Low inventory for 2017
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PostPosted: Wed Jun 21, 2017 2:43 pm GMT    Post subject: Reply with quote

Real Estate Guy, thank you for that detailed explanation.

I will show this to the people in my life who think now is the time to "get in" as real estate always goes "up, up, up!"
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unclemat



Joined: 25 Nov 2013
Posts: 18

PostPosted: Wed Jun 21, 2017 4:39 pm GMT    Post subject: Reply with quote

Real Estate Guy wrote:
In 2008, our largest financial banks were holding too many MBO's. These mortgage backed securities were created and bundled together in high amounts and traded. While this created much wealth for the bankers in the 2000's, when the bubble popped their "mortgages" were junk. They were upside down. This crash created a freeze of lending and buying mortgages. As the American financial system as we knew it froze up, The PRIVATE Fed Bank with their 1913 charter from Congress decided intervene. They dropped rates to zero for a decades and bought back 85 billion dollars per month in treasuries. This is known as QE1,QE2 and QE3. The Fed says they did this to save the economy. The truth is they did it to save the banks. The hope was their efforts would bail out the banks, and kick start the economy. They gambled with our Country. They assumed that when GDP got back up to 4-5% our economy could absorb the 9 trillion in debt they added to our Country's debt by their manipulation. Problem is. That hasn't happened. Their bailout and manipulation has only propped up EVERY assert class(stock, bonds, real estate) because they have starved us Americans for yield anywhere because the rates are so low for so long. Now, we have worse bubbles than ever, a GDP that is anemic and stuck at 1-2%, budget deficits, and debt now exceeding 20 trillion and climbing. Our GDP barely fuels the interest on the new high debt they gave us. Essentially, America is now broke. Other countries know it, hence see Russia, China, Iran, North Korea's new behavior. They smell blood in the water. Now, because of this corrupt Fed Private Bank, all America has is big talk , an anemic economy and debt it can't handle. We also have massive assert bubbles. So, to answer your question: unless the American economy gets back to 4%+ GDP growth for several years(my math calculates about 10 years), we can not get our new debt under control. The Fed Bank can not keep rates low forever because all the money printed they did is and will continue to create inflation. Hence why asset values are climbing. They are lying about inflation in attempt to go as slow as they can raising rates and unloading their balance sheet. Soon this will expedite. As rates rise and they start dumping all those treasuries they bought to keep rates artificially low, the opposite will happen. Rates will rise. This will eventually(1-3 years) pop the bubble assets-all of them. The problem this time is that without the 4-5% economic growth they bet on the first time, we haven't financially recovered from their prior meddling. They will not be able to print all that money again so I suggest the next correction will be much more severe and they will have to rely on the true "free market" to correct, which will mean lower prices for much longer. If by chance they do try and print those way out again, that will create massive inflation and sacrifice the dollar. Prices would shoot out of grasp and the dollar would become unsought by global investors as the global currency. This is already beginning. So, if it were me, I'd invest right now outside the dollar-metals, emerging foreign markets, select stocks-wait and buy at the correction. To do otherwise is to sacrifice a lifetime of home owner equity to the horrendous policies of the Fed Bank- more particularly: Alan Greenspan, Ben Bernanke and Janet Yelled.


Not sure why you think they cannot let the inflation pick up, even if they talk otherwise. Realistically, I think this is the only way to alleviate the debt burden, but it needs to a be real inflation (in wages), which is hard due to multiple pressures working against that (efficiency, automation, cheap imports).
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PostPosted: Wed Jun 21, 2017 6:51 pm GMT    Post subject: Reply with quote

You can't get wage growth if the economy isn't growing. Although unemployment is low, it's statistics are manipulated. Many Americans working multiple jobs, etc. Even the private corrupt Fed Bank can't make wages rise. Companies do that. If there earnings aren't there, wages don't rise(and they aren't). As you mentioned, the Fed would love inflation to rise to help erode the debt they monetized, IF it came from true growth. Our GDP is NOT rising, especially adjusted for inflation. Thus, if they do nothing, we stay in the land of stagnation with over priced assets. If they raise, the assets pop. The big problem here is that if they don't raise rates, prices will continue to rise and people's wealth will continue to erode. Middle Americans will suffer the most as every dollar they have will buy less. They can not let inflation run forever and they are already well behind where they should be with rates. As you suggest, if they hold rates low assert prices stay up. What happens then if another factor triggers the asset pop? Say for example: another major terrorist attack, major stock correction as money exits the dollar, real estate pull back. If any of these corrections commence on their own(very possible), what can the Fed Bank do-print more? As I mentioned previously, this would erode the dollar(basically destroy it's global value) and create hyper inflation. The Fed Bank can't merely "let" inflation ride high. At some point it has to be pulled in protect the dollar and thus preserve economic prices. We are seeing the early stages now with 4 recent Fed hikes and statements they will begin to unload their balance sheet. Stay tuned and buckle up.
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victorgbishop



Joined: 03 Oct 2016
Posts: 25

PostPosted: Wed Jun 21, 2017 7:44 pm GMT    Post subject: Reply with quote

Anonymous wrote:
You can't get wage growth if the economy isn't growing. Although unemployment is low, it's statistics are manipulated. Many Americans working multiple jobs, etc. Even the private corrupt Fed Bank can't make wages rise. Companies do that. If there earnings aren't there, wages don't rise(and they aren't). As you mentioned, the Fed would love inflation to rise to help erode the debt they monetized, IF it came from true growth. Our GDP is NOT rising, especially adjusted for inflation. Thus, if they do nothing, we stay in the land of stagnation with over priced assets. If they raise, the assets pop. The big problem here is that if they don't raise rates, prices will continue to rise and people's wealth will continue to erode. Middle Americans will suffer the most as every dollar they have will buy less. They can not let inflation run forever and they are already well behind where they should be with rates. As you suggest, if they hold rates low assert prices stay up. What happens then if another factor triggers the asset pop? Say for example: another major terrorist attack, major stock correction as money exits the dollar, real estate pull back. If any of these corrections commence on their own(very possible), what can the Fed Bank do-print more? As I mentioned previously, this would erode the dollar(basically destroy it's global value) and create hyper inflation. The Fed Bank can't merely "let" inflation ride high. At some point it has to be pulled in protect the dollar and thus preserve economic prices. We are seeing the early stages now with 4 recent Fed hikes and statements they will begin to unload their balance sheet. Stay tuned and buckle up.


so as a prospective first time buyer at least give me a time frame that I can look forward to? It seems like since now is not a good time to buy, IN YOUR BEST ESTIMATION - when do you think the bubble will pop? I'm currently squeezed in an apartment with 2 young boys and no open spaces for them to roam. What good is it to pack up and move to a bigger apartment, only to move a year or year and half later? Too many moves in a young childs life will create instability. Can you offer hope of when you think is a good time?
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Real Estate Guy
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PostPosted: Thu Jun 22, 2017 1:47 am GMT    Post subject: Reply with quote

That's a great question. It's the million dollar question. Personally, I believe the housing market will flatten out now and as rates rise it will slow down. I believe there will be a trigger of some sort that will prick the bubble. Possibly stock market, possibly military event. I believe that regardless of what pricks it, whether it be rising rates or another event, the Fed will try and lower rates and start Q4. This is where the dollar falls and the high inflation kicks in. I believe the initial prick of the bubble will happen in the next 12-18 months. The Fed intervention will put a band aid on first year/year and a half of the correction. Thus, at about 3 years after the "pop" is when I think the deep correction will be. Of course, it's impossible to guess completely accurately, but given the signs I see I would place a wager that we prick in 2018 and see deep correction 2020-2022.
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Guest






PostPosted: Thu Jun 22, 2017 3:12 am GMT    Post subject: Reply with quote

Real Estate Guy wrote:
That's a great question. It's the million dollar question. Personally, I believe the housing market will flatten out now and as rates rise it will slow down. I believe there will be a trigger of some sort that will prick the bubble. Possibly stock market, possibly military event. I believe that regardless of what pricks it, whether it be rising rates or another event, the Fed will try and lower rates and start Q4. This is where the dollar falls and the high inflation kicks in. I believe the initial prick of the bubble will happen in the next 12-18 months. The Fed intervention will put a band aid on first year/year and a half of the correction. Thus, at about 3 years after the "pop" is when I think the deep correction will be. Of course, it's impossible to guess completely accurately, but given the signs I see I would place a wager that we prick in 2018 and see deep correction 2020-2022.


Except you are wrong about inflation. The FED will never let the printed money reach the hands of the public. That's why we saw no inflation even though they printed 4 trillion dollars for QE. The FED can print infinite amounts of money as long as the government holds onto it. It's perfectly legal for me to counterfeit money as long as I don't use it. 😀Anyway, the next pop will be like the last one and you will get similar bargains when you buy a house.
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Real Estate Guy
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PostPosted: Thu Jun 22, 2017 12:29 pm GMT    Post subject: Reply with quote

Nice thought, but only partially true. Yes the Fed can print money and hold it, but that's not what they did. They printed money and bought back their own treasuries to suppress market interest rates even further than just their other tool of lowering the Fed Funds Rate. It is those treasuries that haven't been released, not the "printed money". If they fail to release those treasuries, and buy more thus growing their balance sheet, the value of the dollar and future treasury prices will be affected. The value can, and I believe would, fall out of the dollar. The result would be an increase in return investors will require to buy treasuries because of the lack of value and increased risk of the currency. This will push treasury yields up(hence mortgage rates). You see, I believe we're screwed either way. If they hold off on rates now, the asset bubbles remain, UNTIL something else pops them. Then the Fed doesn't have much room to lower rates because they are already close to nothing. Only other choice is to print more money and buy back again. That creates the scenario I explained above. To the contrary, if they continue to tighten policy(as they have very hawkishly proclaimed lately), they will pop their own bubbles. These bubbles are enormous, and the result of a decade of failed policies and in my opinion criminal acts of destroying out Country's wealth by all the money printing and artificially low rates. The result is what I've said before: Anemic GDP growth, unbalanced markets, bubbles in every asset class, higher division in the wealthy and not, etc. Regardless of what happens, this entire mess has been created by allowing a private entity to enter and manipulate free markets.
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PostPosted: Thu Jun 22, 2017 12:32 pm GMT    Post subject: Reply with quote

Real Estate Guy wrote:
That's a great question. It's the million dollar question. Personally, I believe the housing market will flatten out now and as rates rise it will slow down. I believe there will be a trigger of some sort that will prick the bubble. Possibly stock market, possibly military event. I believe that regardless of what pricks it, whether it be rising rates or another event, the Fed will try and lower rates and start Q4. This is where the dollar falls and the high inflation kicks in. I believe the initial prick of the bubble will happen in the next 12-18 months. The Fed intervention will put a band aid on first year/year and a half of the correction. Thus, at about 3 years after the "pop" is when I think the deep correction will be. Of course, it's impossible to guess completely accurately, but given the signs I see I would place a wager that we prick in 2018 and see deep correction 2020-2022.


Large nominal declines in home prices just do not happen very often. Most of the decline is in real terms, when a market is flat for years as inflation diminishes its value. As an investor, this is still important. As a person looking to move into a primary residence, it probably does not matter as much. Sure it would be nicer to buy and see prices increase, but as long as the purchaser is in a position to remain in the home for an extended period, they should be OK. People who bought in the late 80s and mid 00s still did fine as long as they could stay put for awhile (big assumption, I know).
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victorgbishop



Joined: 03 Oct 2016
Posts: 25

PostPosted: Thu Jun 22, 2017 3:58 pm GMT    Post subject: Reply with quote

Anonymous wrote:
Real Estate Guy wrote:
That's a great question. It's the million dollar question. Personally, I believe the housing market will flatten out now and as rates rise it will slow down. I believe there will be a trigger of some sort that will prick the bubble. Possibly stock market, possibly military event. I believe that regardless of what pricks it, whether it be rising rates or another event, the Fed will try and lower rates and start Q4. This is where the dollar falls and the high inflation kicks in. I believe the initial prick of the bubble will happen in the next 12-18 months. The Fed intervention will put a band aid on first year/year and a half of the correction. Thus, at about 3 years after the "pop" is when I think the deep correction will be. Of course, it's impossible to guess completely accurately, but given the signs I see I would place a wager that we prick in 2018 and see deep correction 2020-2022.


Large nominal declines in home prices just do not happen very often. Most of the decline is in real terms, when a market is flat for years as inflation diminishes its value. As an investor, this is still important. As a person looking to move into a primary residence, it probably does not matter as much. Sure it would be nicer to buy and see prices increase, but as long as the purchaser is in a position to remain in the home for an extended period, they should be OK. People who bought in the late 80s and mid 00s still did fine as long as they could stay put for awhile (big assumption, I know).


I'm buying to stay in the house for years - not looking to buy and then move in 5 years. Of course I'd love to see value increase, but being realistic in this market, I understand that it may not be that way.
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Real Estate Guy
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PostPosted: Thu Jun 22, 2017 5:16 pm GMT    Post subject: Reply with quote

There is truth in the stagnation of prices theory Guest portrays as inflation rises. This is definitely what will happen if the Fed keeps rates artificially low below what true inflation is(which I believe they are already doing) and the bubbles don't pop(lower end of likeliness in my opinion). There is a method called "The Taylor Rule" that some economists suggest should be the model the Fed should use when setting the Fund Rate to inflation. Historically it is in line with what the Fed used to do PRIOR to the mess they started in 2009. If that rule is applied today, the FED FUND Rate would be at 3.5%. Currently, even with the latest few small hikes the rate is 1%. So, one way to look at things is that if you can "afford your fixed loan payments" and "don't have to sell or borrow equity from your home" then, yes, you could certainly buy and fix your payment. The damage from the FED would be that the "wealth" that 90% of previous Americans obtained from buying real estate has been destroyed buy this corrupt bank. Decades of Americans will have to look to salary and other investments to wealth....but what investments? Their policies have created bubbles in every asset class. To invest today is not investing in the free markets, but up to the control of what the FED Bank decides to do. Capitalism is completely ruined. Without a massive free market correction, I fear most what Guest suggested: Long term stagnation and erosion of wealth by inflation. This will deplete the value of wealth and savings of millions of Americans that did all the right things. They bought prudently, saved money, had financial planning. They loose, America looses, and the American Dream is gone(isn't it already fading away to our 20 something's?). The Millennial generation is the first generation that will make much less money/wealth than their parents and the 20's people even less. The Fed Bank ensured their fate, and the fate of many generation, unless their is a crash. This is why I advocate so much for the demise of the FED Bank and hope that the American people and their elected officials will Abolish this corrupt entity, or put it back on a Gold standard or Rule based method(Taylor Rule), etc. Who gave them the right to make the decisions they did that has created all this? Americans are too busy worrying about the President and politics that most don't understand it is THE FED BANK that controls the economy, and thus THE ENTIRE COUNTRY. Their policies have robbed America of it's wealth(Many fought and died for) and also altered free market capitalism which is what our founding father's created in the first place way back in 1776. Hopefully Americans will unite, but I suspect it will take much pain and anguish before "We the People" get it-if ever. Regarding your home purchase: Yes, go for it if you can afford the fixed payment and don't need equity from it or need to sell. Best of luck to you.

http://endthefed.org/
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Guest






PostPosted: Fri Jun 23, 2017 6:26 pm GMT    Post subject: Reply with quote

victorgbishop wrote:
Anonymous wrote:
Real Estate Guy wrote:
That's a great question. It's the million dollar question. Personally, I believe the housing market will flatten out now and as rates rise it will slow down. I believe there will be a trigger of some sort that will prick the bubble. Possibly stock market, possibly military event. I believe that regardless of what pricks it, whether it be rising rates or another event, the Fed will try and lower rates and start Q4. This is where the dollar falls and the high inflation kicks in. I believe the initial prick of the bubble will happen in the next 12-18 months. The Fed intervention will put a band aid on first year/year and a half of the correction. Thus, at about 3 years after the "pop" is when I think the deep correction will be. Of course, it's impossible to guess completely accurately, but given the signs I see I would place a wager that we prick in 2018 and see deep correction 2020-2022.


Large nominal declines in home prices just do not happen very often. Most of the decline is in real terms, when a market is flat for years as inflation diminishes its value. As an investor, this is still important. As a person looking to move into a primary residence, it probably does not matter as much. Sure it would be nicer to buy and see prices increase, but as long as the purchaser is in a position to remain in the home for an extended period, they should be OK. People who bought in the late 80s and mid 00s still did fine as long as they could stay put for awhile (big assumption, I know).


I'm buying to stay in the house for years - not looking to buy and then move in 5 years. Of course I'd love to see value increase, but being realistic in this market, I understand that it may not be that way.



To get a sense of what happened during the last two housing corrections, he nominal and real prices for Boston (1987-2014) can be found at:

http://www.jparsons.net/housingbubble/boston.html

If you were unfortunate enough to buy at the exact top, nominal prices eroded on aggregate 10-15% (which could be more depending on the exact location) after which the market remained flat. (During this flatness, real prices continue to drift a bit lower...) Always some risk to buying, so best never to overextend!
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Guest






PostPosted: Sat Jun 24, 2017 8:05 pm GMT    Post subject: Reply with quote

Anonymous wrote:
victorgbishop wrote:
Anonymous wrote:
Real Estate Guy wrote:
That's a great question. It's the million dollar question. Personally, I believe the housing market will flatten out now and as rates rise it will slow down. I believe there will be a trigger of some sort that will prick the bubble. Possibly stock market, possibly military event. I believe that regardless of what pricks it, whether it be rising rates or another event, the Fed will try and lower rates and start Q4. This is where the dollar falls and the high inflation kicks in. I believe the initial prick of the bubble will happen in the next 12-18 months. The Fed intervention will put a band aid on first year/year and a half of the correction. Thus, at about 3 years after the "pop" is when I think the deep correction will be. Of course, it's impossible to guess completely accurately, but given the signs I see I would place a wager that we prick in 2018 and see deep correction 2020-2022.


Large nominal declines in home prices just do not happen very often. Most of the decline is in real terms, when a market is flat for years as inflation diminishes its value. As an investor, this is still important. As a person looking to move into a primary residence, it probably does not matter as much. Sure it would be nicer to buy and see prices increase, but as long as the purchaser is in a position to remain in the home for an extended period, they should be OK. People who bought in the late 80s and mid 00s still did fine as long as they could stay put for awhile (big assumption, I know).


I'm buying to stay in the house for years - not looking to buy and then move in 5 years. Of course I'd love to see value increase, but being realistic in this market, I understand that it may not be that way.



To get a sense of what happened during the last two housing corrections, he nominal and real prices for Boston (1987-2014) can be found at:

http://www.jparsons.net/housingbubble/boston.html

If you were unfortunate enough to buy at the exact top, nominal prices eroded on aggregate 10-15% (which could be more depending on the exact location) after which the market remained flat. (During this flatness, real prices continue to drift a bit lower...) Always some risk to buying, so best never to overextend!


It really is hopeless if you are looking to buy anything in decent shape. There are at least 10 buyers for each available house. You are better off renting for the next few years and hope for a deep recession to bring an end to the madness.
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PostPosted: Tue Jun 27, 2017 11:56 am GMT    Post subject: Reply with quote

Not sure if any of you guys noticed, there are flood load amount of homes into the market for the last 3 months. There is this urge of trying to sell now seems happening in the Boston area.
People might argue this is the summer, and the busiest season for home sell. But if you pay close attention, you will spot there are all these mid 500k homes in nice areas such as needham, netwon, belmont wellseley etc, start to pop up in redfin and zillow, which we have not see for a while. And even in Brookline, I start to see a few sub million SFH, which was non exists last year this time.
I think low inventory is starting to come to the end, as seller realized they might not get any better price than now, as interest rate hike will start to cool off the price hike that was happening for the last 7 years. With all these new built of homes still on its way to the market, do we have enough demands to take all these? Greedy home owner try to continue demand higher rent, and once they realized their investment properties sit empty long enough, would that also be the cause of these more inventory to the market?
I got a feeling this summer is the last party before the bubble pop.
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Real Estate Guy
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PostPosted: Tue Jun 27, 2017 5:22 pm GMT    Post subject: Reply with quote

I sure hope your right and this summer is the start of the crash. I have also noticed inventory started to back up a little, however I saw this happen last fall also and then this spring demand absorbed all the inventory. The summer is a slower time so it's hard to say, but it is interesting that every person I know that has experience in real estate and has been in it a long time, all feel the market is in a bubble and will crash. All of them, and including myself. We'll see......
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Guest






PostPosted: Tue Jun 27, 2017 5:59 pm GMT    Post subject: Reply with quote

Real Estate Guy wrote:
I sure hope your right and this summer is the start of the crash. I have also noticed inventory started to back up a little, however I saw this happen last fall also and then this spring demand absorbed all the inventory. The summer is a slower time so it's hard to say, but it is interesting that every person I know that has experience in real estate and has been in it a long time, all feel the market is in a bubble and will crash. All of them, and including myself. We'll see......


This isn't the start of the crash yet. There's always a recession or a major stock market correction before the real estate crash.
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