Housing Crisis 2.0

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Locked
Topic Author
justsomeguy2018
Posts: 1084
Joined: Wed Oct 03, 2018 8:11 pm

Housing Crisis 2.0

Post by justsomeguy2018 » Wed Mar 25, 2020 10:17 pm

I haven't seen this mentioned much, but wouldn't a coronavirus induced recession/depression with 20% unemployment rate create another housing meltdown? Demand for housing (and prices) would plummet, leaving many homeowners underwater and unable to pay their bills, so many would juat walk away from the mortgage, creating a glut of supply on top of everything else going on the demand side. Plus who is going out to be shopping for houses during a pandemic. Home prices could drop 20% to 40% I feel like.

aloknrao
Posts: 9
Joined: Mon Mar 18, 2019 9:19 am

Re: Housing Crisis 2.0

Post by aloknrao » Wed Mar 25, 2020 10:28 pm

As of now. it is conjecture that there will be unemployment at 20%, and a cascade effect of that will follow into Housing. If that does happen, then its not just housing, but all sectors of the economy will feel the pinch. Almost impossible to predict.

CoastalWinds
Posts: 1063
Joined: Sat Apr 06, 2019 8:28 pm

Re: Housing Crisis 2.0

Post by CoastalWinds » Wed Mar 25, 2020 10:32 pm

Real estate is very local, so I suspect price declines will vary considerably by region and city. That being said, with unemployment spiking and poised to only increase further in the coming weeks, I don’t see any way that housing goes unscathed.

Unladen_Swallow
Posts: 779
Joined: Tue Dec 10, 2019 6:12 pm

Re: Housing Crisis 2.0

Post by Unladen_Swallow » Wed Mar 25, 2020 10:35 pm

This is now just disaster pron. Each thread talking about another disaster prediction with no information.

Wait and see. Who knows how things go.

Unless you just enjoy doomsday talk, then I'm sure starting this thread was the right thing to do.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

Topic Author
justsomeguy2018
Posts: 1084
Joined: Wed Oct 03, 2018 8:11 pm

Re: Housing Crisis 2.0

Post by justsomeguy2018 » Wed Mar 25, 2020 10:41 pm

We have all the information we need, the velocity of money has come to a screeching halt and will stay that way for at least another month to 3 months.

User avatar
firebirdparts
Posts: 1394
Joined: Thu Jun 13, 2019 4:21 pm

Re: Housing Crisis 2.0

Post by firebirdparts » Wed Mar 25, 2020 10:44 pm

justsomeguy2018 wrote:
Wed Mar 25, 2020 10:17 pm
Demand for housing (and prices) would plummet, leaving many homeowners underwater and unable to pay their bills, so many would juat walk away from the mortgage, creating a glut of supply on top of everything else going on the demand side.
I certainly recall very much brainwashing on this subject 10 years ago. What prevents people from paying bills is unemployment, mostly, or underemployment. The real estate market doesn't really break you if you're just paying a mortgage. However, there will be plenty of both, I guess. Real estate has been overheated for years.

As you can imagine, the problem for all of us is all the interconnected banks and investment companies that would go broke. They were stress tested in 2010 just for this, but I would certainly imagine they've gotten more endangered since then. That seems to be the normal pattern, always. The Federal reserve and treasury are going to be busy, but normally they catch all this when it falls. They let Lehman brothers go out of business the last time just so that people wouldn't get the idea that everybody gets a parachute no matter how stupid you've been. I think that was a good idea, but it was much criticized. What they will do when/if this happens is have shotgun weddings with healthier banks or dismantle failing banks and make sure somebody takes up all the accounts.

When I look at bond funds, my strong preference would be to avoid mortgage backed securities entirely just for this reason. There are certainly a lot of them out there. "The Problem" that set the world on fire in 2008 is not the same problem we have now, but yes, you should see house prices come down. You would certainly think so.
A fool and your money are soon partners

Alex Frakt
Founder
Posts: 11074
Joined: Fri Feb 23, 2007 1:06 pm
Location: Chicago
Contact:

Re: Housing Crisis 2.0

Post by Alex Frakt » Thu Mar 26, 2020 2:08 am

Locked. This subforum is for investing and investment discussions. General economic discussions are off-topic/non-actionable.

Locked