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!!!”