The global housing market is heading for a brutal downturn

[lpapez]

Summary of this article is that we can expect from 0 to 5% year-on-year GROWTH in asset prices, compared to 15% we saw last year. Hardly a brutal downturn in my opinion.

[Chirono]

I still find it strange that housing is expected to be an appreciating asset class, rather than a depreciating one that requires continual investment to counteract wear and tear etc. I understand that this is largely by design, but it seems odd to me how much this is accepted as fundamental to properties, rather than something that’s been constructed.

[randomdata]

Also, seems like it will also be short-lived so long as food remains scarce.

Last time we had food troubles (2007) we saw the housing market crash as investment dollars started gambling on futures contracts, but it wasn't long before people started paying big bucks for the farmland around settlements to try and profit on the production side, making it more costly to build new housing, thereby impacting housing supply and soon bringing all housing back up in price. We're already starting to see insane farmland offers showing up.

Maybe this time, especially with increased WFH, we'll start to see more growth away from historical settlements built on prime farmland, but with the high cost of fuel and shipping in general that isn't going to be the easiest transition either.

[chewz]

Nominal price growth below inflation rate. So prices drop in real terms. If your assets/income grows above inflation rate you win...

[rmbyrro]

No wonder why these people are having a hard time convincing others to pay for their writing.

[bamboozled]

I guess this does give people a chance to catch up to save and buy, at some point, it was a rocket ship, now it seems more like a broken old bus.

[ThrowawayTestr]

Contrary to the wording of the title, this is a good thing for people that treat housing as a place to live instead of an ever appreciating asset.

[benj111]

Not necessarily.

If you have an asset worth 100k and a mortgage for 200k, then it isn't very good if you want to move, or change mortgages.

Also, if you're a net seller (downsizing, moving to a care home) you may have been relying on funds locked in the house for other things.

So this is generally good for younger people and bad for older people.

[charlieyu1]

Housing downturn in an environment of rising interest rates doesn’t help affordability

[owlbynight]

Sure it does, after 2008, my parents bought a house for $25k that would probably sell for $250k right now.

[doix]

I've been waiting for a downturn since I missed the one in 08 and it seems to never come.

I've resigned to the fact that I'll probably never own property and eventually move into a camper van.

[bbarn]

I see you haven't looked at the camper van market lately.

[bamboozled]

I think one of the issues is this, there are so, so many people waiting to buy in the downturn with money saved that it will create its own boom.

I do wonder though, if all this cash in the bank people are hoarding for the downturn will have other effects on the economy, recession ?

I'm in the same boat though, I've saved and invested a shirtload of cash waiting for a downturn.

[cm2187]

The problem is that it is kind of like the stock market. This year's Nasdaq's bear market has only reversed a couple of years worth of growth. If you have been waiting on the sideline in cash for a sell off to invest for the last 10 years, you are way worse off than having jumped in at the first opportunity and taken the ups and downs of the market.

[baq]

It’ll happen slowly then all at once. Be ready to make a move in the next couple years. Be patient, but pounce quickly.

[cntainer]

https://archive.ph/lthwZ

[rmbyrro]

Un-pay-walled: https://archive.is/lthwZ

[inglor_cz]

If the nominal prices stagnate or even go down, but mortgage interest rates go significantly up, there is no positive change in affordability for the average buyer. The monthly mortgage installment will stay high, only the principal/interest balance within it will change.

The sellers are the ones who will get less money, but the buyers, unless they have huge savings, won't benefit much.

[ReptileMan]

They will since they always can renegotiate their mortgage once interest rates go down.

[rightbyte]

The buyer do benefit from lower prices. How is this even a talking point. It is as silly as counterintuitive.

If there is less loan to pay back for the same asset, the loan taker benefits.

[pharmakom]

Retail housing investors are getting a rough lesson in risk correlation.

Get a variable rate (or short term fixed) loan to leverage the purchase on an asset whose main price driver is interest rates and things can go south quickly.

[rkagerer]

Is it me or does the first graph in that article look a bit wonky? The "forecast" shading starts at the beginning of 2022, and today's date on the X axis would have just about already hit the bottom of the big trough (which isn't what I gather they intend to convey).

[fredgrott]

Obvious question since corp debt uses the same financial black magic as housing loans, will corp debt crash the same way?

In the USA there was a law passed past 2008 to deal with CDOs, but banks have found a loop-hole to go around it.

[cudgy]

Existing corp debt has already crashed due to a rise in the bond yields to match the higher interest rate environment.

[ReptileMan]

One can only hope. I would really enjoy one but I don't see the prices going down until a lot of money are syphoned off the system.

[switch007]

I’ll believe it when I see it in the UK