Well, in order for a market to correct inventory needs to actually move onto the market to be bought or sold.
What should happen in the next few wuarters is a wave of quick and brutal mortage defaults and deliquencies, which would then take a few months to actually take thjrough the forclosure process, move property rights to the bank, and return the property to the market to accept bids.
A second order affect of this reshufling would be the rental market shifting downwards; more houses on the market means more renters becoming buyers at cheaper prices and remaining renters having more purchasing power over remaing rent suppy.
What we have seen though are all levels of government enact mortage and rent deferalls or freezes, and offer subsidies to renters and mortage payers to help them pay their housing obligations, in many cases these programs are already avaiable for an entire year term. The path to hell is paved with good intentions, I do not know what politicians or financial advisors thought they were doing when these measures were put in place, but all these policies do is drag out the rate at which housing is returned to market, which slows but does not stop the pricing deflation.
Imagine a micro housing market where there are 1000 potential sellers in a market which was not expecting a surplus of sellers, and for every 100 extra houses supplied to the amrket the market is expected to print a 1% drop in pricing. If all those houses go on the market the same year there will be a 10% drop; if half of those houses are offered some kind of subsidization which prompts them to put off selling until next year, you'll get two 5% drops year over year. Buyers are still buyers and sellers are still sellers, but they are using policy to try and control WHEN supply and demand is moved in and out of market, which controls the RATE at which prices change - and prices already change slow for RE.
Luis Jones
whats stopping banks from just sitting on their defaults to not crash the price?
Jordan Campbell
those are men and i'd eat both their faggot assholes out
Blake Wood
Nothing stops them but that means you dont have a market anymore. If they let things freeze up entirely there's no volume for them to trade on and they're gonna lose more money than they would have by just eating a loss. Some of less is better than all of nothing.
Nicholas Green
What does the possibly of rates going negative have in your opinion?
Robert Baker
Didn't banks sit on houses from the 08 foreclosure for years and trickle the houses back to the market at a controlled rate to keep housing prices inflated?
Samuel Kelly
You underestimate the power of the Boomer generation's desire to retire and move to Florida.
Adrian Cruz
>Catalog nooooooooooooooooooooooooooo GTFO of floridaaaaaaaaaaa im sick of the fucking lawn mowers waking me up at 7am AAAAAAAAAAAAHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH
Logan Mitchell
I was trying to wrap my head around negative rates in the shower again this morning and I still don't see how it could be done without something breaking. You'd need a society with no physical cash (otherwise literally stuffing your mattress with money is a more effective investing strategy than putting it in a bank) otherwise the consumer would be able to dodge negative rates on their savings. Also when I try to play out the endgame in my head I can't figure out what makes it eventualy normalize. If you're at -1% and next decade -5% and next decade -10% what happens if the interest rate approaches -100% after a century of failed QT attempts? It's a weird concept, I don't think a society where holding currency instead of assets is a financially irresponsible decision can function very well. Might happen on the bond market but idk if they'll ever make it work at a consumer level.
Carson Johnson
The ones that could handle it yeah. Dont forget there is also a game of chicken being played between big and small banks once this starts. A small bank which knows the prices are going down in the future but needs capital to meet immediate obligations might have no choice but to push their debtors into forclosure so tehy can liquidate assets. A bigger bank can let their debtors sit on the delinquent mortage while the smaller competition cannibalizes itself, and wait for asset prices to go back up before deciing what to do with the really delinquent debtors.
