Market Watch

[CloverKnollFarms]

Prices were not 6x income back then. Now they are.

Prices were about 2.5x income in the 80's. That is a huge difference.

This is why the baby boomers generated historic asset level wealth. In the 80's when interest rates spiked, people were still able to buy due to low asset prices. Once the interest rates came back down, the boomers were able to refinance and reinvest the equity in a relatively cheap house. Most boomers were able to pay off their house well before the 30 year time frame. It allowed that generation to be the first to buy record number of second homes.

There is nothing between the 80's and today that one can draw parallels from. The two periods are drastically different. Young kids today will never be able to do what their parents did financially. They will be stuck buying an expensive house and deal with expensive financing.

Bingo. Interest rates only exacerbated the problem with high cost of housing and poor wage growth

 

[rScotty]

Very true. My comment was about interest rates. Interest rates are at their normal levels; housing prices are hugely inflated. Artificially low interest rates for years is one of the causes for housing price inflation.

The solution is much the same as it always has been for people who don't have much money - buy cheap land and build a house yourself. Building your own house is surprisingly simple work, and help is everywhere.

As a matter of fact, that works for used tractors too.

 

[Snobdds]

The solution is much the same as it always has been for people who don't have much money - buy cheap land and build a house yourself. Building your own house is surprisingly simple work, and help is everywhere.

As a matter of fact, that works for used tractors too.

Land around cities are all in development profolios to develop when the time is right. That puts people far away from any cities with jobs. Then they either have to commute or hope for remote work. Remote work actually help fuel a land grab after covid.

There is no more cheap land around job centers.

 

[newbury]

That is leverage and it's going to go boom here soon.

It kind of went boom in 2008 and I've been hanging on to cash. But people have been expecting it to go boom for years now.
C'mon let's get the crash over!

 

[Snobdds]

It kind of went boom in 2008 and I've been hanging on to cash. But people have been expecting it to go boom for years now.
C'mon let's get the crash over!

We are in the starting innings of it.

The RE market is locked up. Nobody is buying and nobody can sell. Once that transfers into other areas of the economy, it will go.

Plus the bond market is screaming at the top of their lungs, durational interest rate risk is spreading fast.

 

[2manyrocks]

I don't know if it was cheap or not at the time, but the farmland around Nashville got bought up by real estate developers back in the 1980s. There used to be farmland further out in the communities 30-45 minutes away, and much of it is now covered in subdivisions.

Some things went seriously wrong when investors started buying up single family homes as a source of significant returns. Historically, the cost of insurance, utilities, maintenance, and property taxes ate up so much of the return. Illiquidity and high transactional costs also meant single family homes weren't regarded as a good investment.

I suspect there was so much liquidity in the system that it just flowed into residential real estate despite the obvious shortcomings.

All these people who have turned into house flippers kind of reminds me of the people who formed investment clubs prior to the dot.com bubble bursting.

 

[newbury]

All these people who have turned into house flippers kind of reminds me of the people who formed investment clubs prior to the dot.com bubble bursting.

Before that they were selling time-share campsites.

 

[rScotty]

Land around cities are all in development profolios to develop when the time is right. That puts people far away from any cities with jobs. Then they either have to commute or hope for remote work. Remote work actually help fuel a land grab after covid.

There is no more cheap land around job centers.

I think we need to be looking for solutions. Problems are easy to find.

 

[Snobdds]

I think we need to be looking for solutions. Problems are easy to find.

obviously...

 

[Cahaba Valley Farm]

Our last governor was the best in my lifetime, he served two terms, then retired to Florida. Our current governor is on her second term; her first term was such a mess that the old governor moved back up here and ran against her. Well, he lost, and we got what we asked for.

At least your man enough to admit it. Something I don't see with other voters.