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Housing a Big Bubbly Pile of Garbage that will soon be on Fire, a follow up to my Market Crash Post

So I made this [post](https://www.reddit.com/r/wallstreetbets/comments/oe9ruu/how_to_play_the_upcoming_market_crash/) about how to play the coming market crash and a lot of you have been asking, both in the comments and messages, about why I think the housing market is fucked and bubbly and primed for a crash. There’s a bunch of reasons I’ll get to shortly, but first lets take a little trip down memory lane to 2000-2001 in California when there were a bunch of rolling energy blackouts.

In 2000, California was getting hit with blackouts and high prices, power companies were failing, and it seemed like the crisis came out of nowhere. I remember watching this on the news and being confused as to how Cali had power for all their stuff last week, but not this week, and all the press talked about how this was the new normal and people needed to get used to it/stop using so much power/people were too greedy with AC, etc. etc. Then there was this one guy who came out and said Gov. Gray Davis should send the National Guard to seize the power plants and keep them on. Everyone pointed and laughed at the crazy conspiracy guy. Except, here’s the kicker. Crazy conspiracy guy was 100% right. Enron was shutting down power plants to drive up demand and cause artificial shortages to make money. When the blackouts and price spikes were happening, Cali had 45GW of installed power, and demand was running at 28GW. Fuckery was afoot.

So, whenever I see something that doesn’t make sense in any kind of market, I always wonder, is there a reason for this? Or is it Fuckery? Let’s talk about the current boom in housing prices and why I suspect Fuckery.

All data is taken from the Fed and the US Census Bureau. I left off decimals wherever possible because I know my audience can’t do that kind of fancy math.

In 2004 (roughly the peak of US homeownership rates) the US homeownership rate was a bit over 69%. In 2021 it’s at 65%. In 2004 there were 122 million housing units in the US. In 2021 it’s 141 million. US population in 2004 was 292 million. In 2021 it’s 331 million. Throw all these numbers into a blender and you get:

A 13% increase in population, a 4% decrease in homeownership rate, and a 15% increase in housing supply. Yes, that’s right, the housing supply has increased faster than the population, and the homeownership rate during that time has dropped. So where the fuck is this crazy demand coming from?

Are people making more money? Nope. Workers share of corporate income has fallen from 79% in 2004 to 77% in 2021. So in real terms wages are down.

Is it immigrants? Nope, immigration has been falling for years.

Is it young people starting families? Nope, family formation is close to all time lows and the oldest millennials who are approaching 40, are 20% poorer than boomers were at their age.

Is it inflation? Nope, bond yields are currently signaling deflation, but the bond market has been wonky as fuck all year so who really knows.

So basically you’ve got more supply relative to population, construction of new units is slowing down – 1.8 million starts in Jan to 1.7 million starts in March down to 1.6 million starts in May, prices are rising, and sales are slowing. Jan 6.5 million existing home sales, 993,000 new home sales. May 5.8 million existing home sales, 769,000 new home sales.

So, to recap for the slower folks in the helmets on the short bus with the flavored windows:

**Prices: Up. Wages: Down. Supply relative to population: Up. Demand: Down. Sales: Down. Construction: Down.**

Yeah, it’s a fucking bubble. And clearly, Fuckery is Afoot. Who is doing the fuckery and why I don’t know. Maybe it’s Chinese nationals trying to get money out of the CCP’s control, maybe it’s AirBnB, maybe it’s Blackrock and REIT ETF’s, maybe it’s something else entirely, but it’s definitely a bubble, and it’s definitely Fuckery.

**TLDR: Fuckery is Afoot. It’s a bubble. Don’t buy a house until the market crashes. And remember, millions of units are waiting to come on the market once evictions start up again.**

Positions, same as the last post, puts on HYG because there are a lot of bullshit zombie companies that should have died years ago but are propped up by index investing and cheap corporate debt that the FED keeps buying, calls on SPXS because when this thing pops it’s going to explode like nothing seen before to the point where Bigfoot and the Loch Ness Monster are going to sit around roasting marshmallows on the dumpster fire that used to be the stock market.

One last nugget about housing? Residential Fixed Investment (it’s a recession indicator, the acronym is apparently a banned ticker) was declining before the COVID crash, we were actually just starting a normal recession when that hit, which caused the FED to hit the panic button on the money printer. On a 30 year or more chart SPY has been vertical since the COVID bottom. Vertical lines in an index on a long term chart like that generally indicate the euphoria phase that precedes a massive crash.

My date range remains unchanged, sometime between June and November of this year. If you want some specific dates to watch, check July 12th, July 19th, August 23rd, September 20th, and October 25th. I probably like August 23rd the most of those, but I buy retard positions on WSB, so you definitely shouldn’t listen to me.

EDIT: Sorry I’ve haven’t updated this and am just now getting around to replies. Got my first pump and dump shill DM, so that’s an achievement unlocked I guess.

I just want to say how much I love all you beautiful retards. Half the goddamn replies are “housing is up where I live so there’s no bubble” The absolute best was the guy who pointed at a bunch of houses near him that have 10x’d in the last few years, and the one he just sold that nearly 2x’d in a year and a half. Bro. THAT IS THE FUCKING BUBBLE INFLATING. Like, the sheer number of you who think pointing out high prices rising fast refutes instead of confirms my thesis is amazing. Pure WSB retardation gold there.

To explain something else that I’m seeing mentioned a lot, renters ARE accounted for, so are multifamily households. That’s why I used total population and total houses and homeownership rate. +40 million people and +20 million houses only works out to less supply if well more than half of those 40 million are living alone. And spoiler, they aren’t. The decline in homeownership coincides with the increase in renters.

EDIT2: because I’m seeing a lot of “but people own more than one house” posts. A pair of quotes:

“I own six houses. And a condo.” “THERE’S A BUBBLE!!!”

What do you think?

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41 Comments

  1. I think you’re leaving out a critical piece. We live in an age where everyone thinks you buy rental properties to amass wealth. Thus, you have investors buying up single family homes to rent out either month to month, yearly, or as vacation rentals (eg Air BnB). So more people looking to rent these houses because prices are rocketing so supply is not keeping up with demand, so actual home ownership is falling.

  2. I’m with you man. There is some serious fuckery afoot. One point I might add is that you are looking at this from an overall point of view which would naturally neglect the fluctuation from area to area. For example, here in Ontario we are seeing a big shift from the Toronto core to people moving to the outskirts and even further. Some areas are seeing a decline in real-estate value for the first time in 100 years. Other areas like mine are seeing a massive boom in house prices. Over ten years its been over 125% in my area.

  3. I work directly in the foreclosure area for one of the biggest banks in the US. The foreclosure dam is getting ready to burst at the seams again. Not quite like the crisis but not far from it either. The emphasis has been to get all these people on loan assistance (forbearance/loan mods) etc., to hold back the flood gates. So far it’s simply putting a bandaid on a bullet hole. With the US CFPB directions we’ll be doing that until the end of the year. But the jobs that most of these people lost aren’t coming back or back in the same capacity as before. Many are in a continual loop of modifying or forbearance and defaulting on new terms every few months if not every month. There’s only so many times we can change the terms. CFPB is trying to make it nearly impossible to deny loan mods basically minimal documentation, take their word for it now. But they keep defaulting regardless. I have many friends and family that have been trying to buy a house and are being outbid left and right. People are taking advantage of low rates, which is good but they’re overpaying on property that isn’t nearly worth what they’re financing for. Driving up market price everywhere and property taxes and causing a bubble to form as these properties values will flip come next year. All the information we receive from the government is that come Jan 1, 2022 all these borrowers are SOL and no further assistance will be provided. We’ve a few hundred thousand loans in default that are marinating in the forbearance/loan mod stew. I’m pretty sure every bank in the country has a sizable amount of loans that are in the forbearance/loan mod purgatory, waiting to move to foreclosure. Come Jan 1, there will be some major changes to the housing market if enough people default on their new terms which they already are. If you’re looking to buy a house wait until end of first quarter beginning of second next year. If the government doesn’t take action which is what we’ve been told they won’t do then there’ll be an overabundance of foreclosures on the market again and prices should fall.

  4. Hedge Funds are buying residential houses and wealthy investors like Bill Gates are balls deep in farmland. Powell printed a ton of money and it’s got to go somewhere.

  5. The thing about fuckery is that people are unreasonably willing to extend it until it’s too late. Look at Burry in 2006. He predicted what would happen, but not how it played out. He was certain that the people in charge would stop soon and buy his positions and he would make good money. Instead they dragged it out until it collapsed and he made a fuck ton in 2008, but had to endure the stress that his investors hated his guts. Burry underestimated how far people will go when they think they can get away and you might as well.

  6. Many of the assumptions of this post are incorrect, though yes we are in a bubble.

    Housing prices have artificially inflated throughout covid because (overwhelmingly) millennials with money are competing for a very limited supply of market inventory and driving prices up, while the cost of construction has risen due to labor and material shortages.

    Two things are changing though.

    Materials prices are dropping and as states end expanded unemployment benefits, labor supply should improve. This will make it a bit more profitable to build.

    At the same time, eviction moratoriums, recently ruled illegal, are set to end July 31st. It won’t happen overnight, but this will open a considerable amount of inventory to the market.

    I state this only as my opinion, but I don’t think there are any malicious factors at play here, merely current circumstances of the world. I do expect there to be a gradual easing of prices throughout the fall, and buying opportunities for money on the sideline.

    The real unfortunate part is everyone’s property taxes next year are going to rise on the frenzy and subsequent spike in valuation.

  7. Some places have a very low supply. Example – all of Florida. Try finding a house in Naples right now. My dad had a hard time finding a house there because they’d be grabbed in less than a day.

  8. >Are people making more money? Nope. Workers share of corporate income has fallen from 79% in 2004 to 77% in 2021. So in real terms wages are down.

    How much has corporate income grown?

    Even if as a whole, the percentage for employees is down, the growth for the top end is massive. This is the group buying all of the homes. Say only millionaires can afford to buy a home. If the number of millionaires has increased during the period, that’ll cause the housing market to rise.

  9. Wait .. so if US homeownership rate was 69% in 2004, doesn’t that mean that 292m * .69 = 200m people owned homes? .. of the 121m units available?

    .. or does it mean that of the 121m units available, 83m were owned by Americans?

  10. I think you are a year too early , 2022 is the magic year for me, big money will take money off the table in anticipation from the 2023 rates hike which will cause the whole house of cards to fall

  11. The types of people buying houses this time around are better off financially than the dead people
    Buying homes in the 08 crash.
    “Things are different this time”

  12. Down here in Texas we are seeing a very strong demand forecast. There is great jobs with Tech companies (Tesla, Amazon HP) moving from SF to Austin and Dallas. WFH employees are relocating from SF and Seattle to texas. You can get a 5,000 sf home for 600k in great suburbs.
    As long as the jobs are here housing demand will be strong.

  13. Interesting perspective, but you’re too focused on finding the one cause and effect. Reality is when markets move, its multiple factors that move them, and human emotions was huge for this last price hike. Everyone thought they needed to get a home before everyone else. Many 2nd home purchases were being bought up, out pricing first time home buyers as well.

    Home prices will come down a bit as they already are, but there won’t be a crash. Foreclosures may increase, supply/demand may exaggerate more, prices may drop down a bit, but we won’t be seeing pre-pandemic prices again. Based on a few studies I’ve read before, sorry no source, but many buyers are in the wait and see as always, so once prices come down a bit, those buyers tend to do a balancing act.

    Good luck with your puts though…

  14. I bought a house in LA on a short sale in 2011 for $241k. 6000sq ft property. It’s now worth $950k and I just pulled out like $175k to build a rental unit on the property. At that point I’ll probably be at $1.3M.

    But here’s the thing… it’s basic as fuck, one level bare bones 3 bedroom house with a creaky floor. And the yard sucks and needs major landscaping, and I would never in a million zillion years pay $1.3M even with the rental. There is no way in fuck this property is worth that much. At least not to me. But there’s a lot of dipshits with money in this world.

    The bubbliest of the bubbles for sure. Crazy thing is, even if it pops I’m gtg. And I’ll be damned if I ever sell. Taxes after sale are insane here. Need to find a wife to get that full $500k capital gains credit

  15. Spxs is just a bad call. Unless you’re amazing at timing the near term. It’s a slow death especially how manipulated these markets are. It’s like equivalent to buying vixy calls. Your data is sound but your advice is pretty retarded. Leap puts on spy or anything if you think there’s a 1 year countdown. Further otm for more risk . Otherwise call j Powell up and ask him when he’s gonna stop propping up this bubble with padded paper 💰 and bubble wrap promises.

  16. I do agree to some extent of a bubble. However, Your population numbers are misleading. Please look at the populations that are of age to own a home for both the 2004 and 2021 numbers. Total population is a wrong figure. My friend’s baby can’t own a home…. Also, you need to look at the historically low interest rates driving demand. I have been looking for a place for 2 years. I’m always outbid above asking!!! 🤣

  17. What did I just read.

    > So basically you’ve got more supply relative to population, construction of new units is slowing down – 1.8 million starts in Jan to 1.7 million starts in March down to 1.6 million starts in May, prices are rising, and sales are slowing. Jan 6.5 million existing home sales, 993,000 new home sales. May 5.8 million existing home sales, 769,000 new home sales.

    So the **rate** of starts and sales drops down from “super duper insane” to just “super insane” and you take that to be bearish?

    >Demand: down

    Based on what? Sentiments are at 2005 levels, and in some regions at *all time highs*.

    > Is it immigrants? Nope, immigration has been falling for years.

    You sure about that?

    > So where the fuck is this crazy demand coming from?

    Not sure if you noticed, but COVID happened. People are moving from cities to suburbs. The crazy thing about people moving is that when they do it, the number of people stays the same.

  18. Rent is absolutely absurd and you called it, the data doesnt add up. Minimum wage at full time is literally rejected in lease applications. You are told you have to live on the streets or couch surf if u work full time. Its gonna explode at any moment

  19. Average home equity is 50% right now. You think there’s foreclosures looming? You truly belong on this sub.

    Home supply is half of last year with demand being the same. That explains the price increases. Without more supply, housing will NOT pop.

  20. No. Wrong. There’s a housing shortfall right now, more buyers than sellers.

    [https://www.wsj.com/articles/u-s-housing-market-is-nearly-4-million-homes-short-of-buyer-demand-11618484400](https://www.wsj.com/articles/u-s-housing-market-is-nearly-4-million-homes-short-of-buyer-demand-11618484400)

    Simple supply and demand. Nobody wants to sell right now, supply is way down. Demand is also down, but not as much as supply. This is where your shortfall comes from. This is where housing price increases come from.

    Your math of housing increases vs population increase totally ignores rental housing, which is what more people are living in nowadays. Yes, there is a larger bias toward renting rather than owning today as opposed to 2 decades ago. I think a great recession and a pandemic coupled with unprecedented student loans can help explain why that is the case.

    The fact is, there is no artificial fuckery going on. It’s not even possible to do. These are regular people selling their own homes. They aren’t getting phone calls from Winnie the Pooh telling them to raise their sales prices.

  21. Some markets like Houston are at 19% delinquent ready for foreclosure. Chicago 18%. Once the moratorium on foreclosures is lifted, the market will be flooded with houses. Drastically dropping market prices. People will owe more than their homes are worth. Not sure how far it will crash, might end up like another 2008.

    I will easily sell off if the market starts a crash like 2008. The bottom was a great time to buy. SCCO was at $9. It’s over $60 now. Sirius was around 9 cents. $6.50 now.

    A crash isn’t always a bad thing. Sell off or hold. Buy a ton at the bottom of the crash.

  22. >A 13% increase in population, a 4% decrease in homeownership rate, and a 15% increase in housing supply. Yes, that’s right, the housing supply has increased faster than the population, and the homeownership rate during that time has dropped. So where the fuck is this crazy demand coming from?

    Stopped reading here since you somehow overlooked people owning more than 1 property as rentals.

    Peak wsb retardation

  23. What you’re missing: demand is at an all time high, house production was slowed due to Covid.

    But the big difference: in the early 2000’s bubble, there was predatory lending and huge loans given to people who couldn’t affford it.

    it’s goddamn impossible to get mortgage right now. Or refinance. the requirements are staggering. The people buying have the money to buy.

  24. Lookup what the CFPB has provided as guidelines/conditions for those exiting forbearance. There are even conditions required still to allow foreclosure to occur. Most people are going to just defer payments to the back of their loan or get it modified. People need to stop waiting for a housing crash like 2008 because there won’t be one. I said it in another post but America has the most wealthy tech companies in the world (trillions in market cap). Why wouldn’t they be buying up land, homes and more for their employees or independent contractors. If you’re in America then owning a home has increased your net worth upwards of 10-20%. Even 401ks and investments… bank account balances are at all time highs. Money is flowing into investments still.

    Why do you think they are now proposing universal income? Govt realizes there is a major wage gap or wealth gap.

    Just saying but I’m bullish for overall America.

  25. This is the dumbest post I ever read. After so much pandemic money printing, the inflation is just getting started and buying property seems to be the best way to hedge against it. Even the 2008 crisis was short lived, and the market bounced back in a year or two. Housing always goes up because land is REAL VALUE. WSB is turning to shit with these dumbass posts. WTF?

  26. Hey can you get on making that housing market crash out here in Cali, I’d like to buy a decent house for less than 1.5 mil at some point. Preferably sooner rather than later.

  27. It’s actually concerning how much US land China owns. Last I heard, they have the size of Ohio purchased, and lots of it is in crop land. It’s all bought through corporations as family farmers can’t afford it. ($8k/acre in Iowa is current rate).

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