The current housing bubble: It's different this time

Is there a housing bubble? It depends on who you ask.
77% of Americans who’re planning to buy or sell a home in the next year believe we’re currently in a housing bubble. 49% of Americans, including 57% of lower income people, believe that housing affordability is a major problem.
However, just 44% of real estate agents, and even fewer economists, agree that there is a bubble.
Without question the housing market is going gangbusters.

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The U.S. housing market shifted into overdrive during the pandemic, with more than 6 million homes selling in 2021 despite skyrocketing prices in many cities. From Miami (18.8% year-over-year increase) and Denver (18.6%) to San Diego (22.4%) and Phoenix (30.2%), it’s a national phenomenon. The median selling price for a home in November, $416,900, was nearly 25% more than it was in February 2020.

In the early weeks of 2022, there’s no sign that cutthroat bidding and rising prices won’t continue. The total inventory of homes on the market dipped below 300,000 nationwide in early January — less than half of the inventory available before the pandemic.

As you can imagine, this is bleeding over into rents.

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Rents for professionally managed apartments went up 10% in the third quarter of 2021 alone. The apartment rental site Dwellsy, meanwhile, found the national average rent went up 4.8% in just a single month between December 2021 and January 2022.

A sizzling Sun Belt rental market last year found rents up roughly 30% or more in Jacksonville, Memphis, Tampa, San Diego and Las Vegas — and an astonishing 49.8% in Miami, with early indications that they will continue to remain high throughout 2022.

The previous record for rising home prices was 14.4% year-over-year in the fall of 2005. That mark was broken in April of this year, with a new record set every month since. Year-over-year price increases currently stand at 19.9%.

If a housing affordability crisis meant a housing bubble then we most definitely have one.
However, that's not exactly how bubbles work.
There are reasons to believe that things can get much worse before it's a bubble.

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Credit standards are higher now. Simply ensuring as much as possible that someone can afford a mortgage before giving them one will help slow down any deflation of the housing market.
...
One of the hallmarks of the housing crisis of the Great Recession was the foreclosure crisis...
We're seeing nothing like that now. After quickly recovering from the wrenching economic collapse of the pandemic's first few months, 2021 came to a close with foreclosures at an all-time low and the delinquency rate near its record low-water mark as well, according to data kept by Black Knight.
...
Inventory of unsold existing homes was at an all-time low of 910,000 as 2022 dawned, and that represents enough for about 1.8 months of inventory at the current pace, the lowest since 1999.

What makes this different is who has been buying.
A bursting bubble requires weak hands, those that won't survive a mild downturn.
This bubble is being powered by strong hands with deep pockets. This is class war.

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Cassiodorus's picture

whose main purpose is to command the printing of money so it can be given to the already-rich.

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"the Democratic Party is not 'left'." -- Sabrina Salvati

mimi's picture

real estate investors.

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6 users have voted.

Thank you for the explainer gjohnsit.

This is class war.

Let's not fight. Let us make peace, or dirt, or bake an apple pie, or create a new universe. Let's not fight.

Peace and Love

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@eyo badtime.PNG

In our hyper-capitalist society, one dollar equals one vote. So any rise in asset prices is a "good thing".
Which is why everyone always cheers when energy and food prices shoot up, amirite?

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5 users have voted.

@gjohnsit @gjohnsit yes, you are right.

I don't want to fight my landlord, I want him to get his investment back, not lose it. He lives in San Francisco. In a house that looks a lot like the one my mom grew up in on Church Street.

My room rental in bumfuckistan northern-most sonoma pays the property taxes here, lord only raised the amount twice in eight years. So I am paying way below market rate. It is still half my fixed income.

Edit: see strikethroughs. stay positive. lol

Of course, a real estate agent has contacted him, so now he is scheduling an appraisal to "see what he can get". When If he sells we will might all be evicted so the new owners can recover the increased property taxes, plus whatever profit their financial advisors require.

Thought experiment:

What can landlord do?
What can renter do?
What can real estate agent do?

I mean what instead of LIHOP let it happen on purpose. More misery. I'm all thunk out...

Peace and Love
curious cat

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7 users have voted.

then it follows that they are going to be lifetime renters.

The upside (for the exceptional few) is that they will become landlords with a large, fully captured, market of needy renters. It IS a class war, by all appearances, but I am not worried. Klaus and his very exceptional minions have declared that “we will have nothing, and be happy.”

That remains to be seen.

What is clear is the wealthiest of the investor class are counting on landing on top of the pig-pile with full control of the necessities of life of all we lesser humans . The proof of this intent is amply demonstrated by their recent efforts to develop driverless big rigs.

Truckers are far too rebellious for them to rely on and will need to be re-educated and forced to submit. Like everyone else.

[edited to add Dylan lyrics link] It’s All Right, Ma

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“What the herd hates most is the one who thinks differently; it is not so much the opinion itself, but the audacity of wanting to think for themselves, something that they do not know how to do.”
-Arthur Schopenhauer (1788-1860)

zed2's picture

@ovals49 @ovals49 From that point onward they cant rent. So they cant vote. They cant live without a space to occupy with their bodies. They may go to property thats not able toi be sold like under freeways, but local laws against vagrancy force them out. All their belongings, even ID and family photos are thrown out or stolen and they themselves are raped or arrested.

You dont see government doing anything to help these people that doesn't involve this backchannel dialogue of disenfranchisement and displacement. Society doesnt want you, you are nobody, nothing, its saying to them.

Many of them were illegitimate also, so they dont inherit except under unusual circumstances. At least not from fathers. In the past they were non-people, filus nullius. or Child of Nobody

As a group, illegitimates are poorer than any race or other group. They are born in poverty, grow up in poverty and die in poverty. Lacking an adequate education, they often cant get jobs, even the most stupid and menial ones.

Now, thanks to the neoliberal takeover, The only thing the US poor have, the benefit of being a US citizen ( in terms of higher wages) is being taken away. The poor rarely have valid id so they may be arrested for that also.

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zed2's picture

something happens to rearrange property relations so that the people with the new power own everything. Its because the ruling group has to reward them and the only way to do it is to take everything the previous group had and send them packing.

This is similar to what happened under colonialism. In Kenya it was a systematic programme of disenfranchisement. Hundreds of thousands of people died. They beat people who would not provide them with slave labor. People had no choice but to cooperate or they were imprisoned in the gulag camps or killed. President Obama's grandfather was one of these people they tortured.. .

This is a BBC documentary about Kenya "White Terror" and the work of Caroline Elkins in documenting the British Gulag. The British were in charge and they wanted the indigenous African people and their needs out of their way. It was incredibly rich agricultural land and the "White Highlands" were areas witrh a pleasant climate that the British "settlers" had given to them, after the natives were evicted and in many cases, killed.

In the years after World War II the aristocratic people in the UK, regretting the granting of benefits like the NHS and social housing schemes (they claimed that the victories of Labor in the postwar years were coercive and illegitimate) wanted to change the deal in Britian. If they could not, they wanted the working class to leave, to go elsewhere. Places like Kenya that they had stolen from their actual owners. History shows us what happened. Ads in glossy magazines offered incentives for people to leave. To relocate the working class to places like the White Highlands or Indian Hill Stations. Which were (now) famously hedonistic communities sustained by the most unimaginably unequal and greedy situations. Black families were not allowed to live there unles they were in the employ of whites. (Much like the GATS Mode Four guest worker schemes that are promoted by our trade deals, like GATS. And compared to "Modern Slavery")

So these settlement schemes encouraging white families to move to Kenya to take the pressure off of their nobility in the home country, is kind of an example of white privilege in its worst form. They even advertised "Free Land" in magazines. This is the land that the Kikuyu people in Kenya had owned in the recent past. So they objected, they rose up in response to the large scale land grabbing by the Britiosh. By means of the Kenyan Land and Freedom Army. Which the British named "Mau Mau".

Here in this video a retrospective look is taken at this era, basically the 1950s in Kenya. you will hear many stories of how they killed and tortured people including children. They also would also brutally rape women, again and again and again. Many of the perpetrators are still alive and they have largely gone unpunished. The UK has not compensated people who had been tortured, or castrated.

Basically they were treating Africans like Hitler treated what he called "slave races". They were unwanted people. Because of what they had a natural right to, originally. (Kenya)

It is all about property and power. The poor losers of these battles arent desired any more because they serve as a reminder of the theft. They are only in the way.

So they are always done away with in some kind of way.

This shows how important land is. The landless people have no anchor that gives them permanence. Everything takes them to a situation of statelessness. The poor are artificially put in and then are kept in various states of non-personhood. They have nothing. They live under freeways because that is "land" that cant be sold to anybody. (currently) They have no addresses. Cellphones may be given to them but the reasons are informative, they are used to take fromthem, not give anything to them. Any benefit has to have its price, often the price they must pay is huge, their children, their ability to earn money and take precious vanishing jobs. Cellphones are used to track the poor.

They are systematically disenfranchised, as they live nowhere so are not voters or legal students they cannot be educated. Now the UK uses cell phones to determine that homeless people dont live in the districts they try to attend school, then they assess charges against people for stealing services. In Australia they claw money directly out of peoples bank accounts digitally. Its called "RoboDebt" and there is a lot on YouTube. Beware of the push to make everything "Cashless" its purpose is to empower digital seizure of money from people so that people cannot avoid paying debts, by offshoring jobns they make everybody dependent on the dole and expose people to having everything they might earn or own taken away diguitally and then they have to have money to pay for a lweyer but of course these hapless people wont have anything. If they have any money it will be sized the second it goes into an account, they wont be able to get an attorney.

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was the last gasp of GWB's "ownership society. The latest bubble is a component of "you will own nothing" and like it. A highly sophisticated version of owing one's soul to the company store.

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