Home Prices Are Already Crashing

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Abstract

spiked in light of inflation.<figure id="92dc"><img src="https://cdn-images-1.readmedium.com/v2/resize:fit:800/1*XNfi0-zIqNAnMK3OQe9U3Q.png"><figcaption>Fed’s portfolio of MBS. Since it is about to go down, this should put even more pressure on mortgage rates.</figcaption></figure><figure id="861f"><img src="https://cdn-images-1.readmedium.com/v2/resize:fit:800/1*Ef_6ftPkOXX6pLZ9HGwF8A.png"><figcaption>Mortgage rates have spiked at a historical rate.</figcaption></figure>A. With all this in mind, what can we establish?1. Well, for one, the recent housing boom is over.2. For another thing, it’s unlikely that prices will go up soon.3. If anything, it’s very likely that prices will continue to go down.4. It’s likely that prices will go down a lot more.5. It’s unlikely that prices will merely go sideways/flat.B. What can’t we establish?

We can’t establish the exact amount that (overall) housing prices will fall.2. We can’t establish the exact timing of when housing prices will fal

Options

l to X extent or range.Why is it likely that prices will go down by a lot? The reason is because of how much prices went up in the last couple of years. It stands to reason that prices will go down — historical data <a href="https://fred.stlouisfed.org/series/CSUSHPINSA">supports</a> this, too. Why would there not be a reversion to the mean in this case? Is real estate/housing somehow “different”? Is it really “different” this time? Obviously, it’s not different this time: it’s the same (and will be the same) as it has always been.One might grant all this, but they might disagree with using the term “crash”. Okay. It’s important to keep in mind that some local markets can ‘crash’ even if other markets don’t crash — no? I think we would all have to agree that this is a live option. Also, my point is a point of emphasis and not clickbait; a correction is taking place already, so it’s not something that might happen or will happen.Notes¹I’m using the terms ‘house’ and ‘home’ interchangeably (same with terms like ‘correction and ‘crash’).</article></body>

Home Prices Are Already Crashing

Home prices have already come down, even though the Federal Reserve has just started letting their mortgage-backed securities mature off their balance sheet.¹ One can only imagine how much more prices will fall from here. On the other hand, most of us remember the last housing crash (so we don’t have to merely imagine a situation).

What is undeniable is that in many markets prices have already started to come down/correct. Why wouldn’t there be a full-blown correction/crash? The simplest explanation is that the process has already started. Why? Because mortgage rates have spiked in light of inflation.

Fed’s portfolio of MBS. Since it is about to go down, this should put even more pressure on mortgage rates.

Mortgage rates have spiked at a historical rate.

A. With all this in mind, what can we establish?

1. Well, for one, the recent housing boom is over.

2. For another thing, it’s unlikely that prices will go up soon.

3. If anything, it’s very likely that prices will continue to go down.

4. It’s likely that prices will go down a lot more.

5. It’s unlikely that prices will merely go sideways/flat.

B. What can’t we establish? 1. We can’t establish the exact amount that (overall) housing prices will fall.

2. We can’t establish the exact timing of when housing prices will fall to X extent or range.

Why is it likely that prices will go down by a lot? The reason is because of how much prices went up in the last couple of years. It stands to reason that prices will go down — historical data supports this, too. Why would there not be a reversion to the mean in this case? Is real estate/housing somehow “different”? Is it really “different” this time? Obviously, it’s not different this time: it’s the same (and will be the same) as it has always been.

One might grant all this, but they might disagree with using the term “crash”. Okay. It’s important to keep in mind that some local markets can ‘crash’ even if other markets don’t crash — no? I think we would all have to agree that this is a live option. Also, my point is a point of emphasis and not clickbait; a correction is taking place already, so it’s not something that might happen or will happen.

Notes

¹I’m using the terms ‘house’ and ‘home’ interchangeably (same with terms like ‘correction and ‘crash’).