I can’t count how many times I’ve heard people say “another 2008 is coming” over the past 5 years, yet here we are without another 2008.
In June, the percentage of subprime auto borrowers who were at least 60 days late on their bills in June was 5.62%, down just slightly from a record in February, according to Fitch Ratings.
A Fed rate cut could provide some relief. Traders are anticipating the US central bank will begin lowering its benchmark rate in September, following data showing inflation cooling. That, in turn, could allow borrowers the chance to refinance or enter the market to buy something else.
At a very fundamental level, this is nothing like 2008. What’s happening here is pretty much just an intended effect of the Fed raising interest rates, which has made car payments more expensive, so more people are unable to afford them.
2008 was a correction which flopped unnecessary companies the economy was filled with.
Printer goes brrr does not fix the economy. It only bloats it more with VC tech companies and housing speculants. Which is why the housing crisis keeps getting worse every year.
2008 wasn’t a “correction which flopped unnecessary companies,” specific (very large) finance companies that were over dependent on subprime mortgage-backed securities went belly-up, which caused a domino effect in the financial industry
“The housing crisis keeps getting worse” also doesn’t makes sense…housing in many parts of the country is unaffordable for many people, yes, that isn’t anything like what happened in 2008. Back then, millions of people signed up for subprime mortgages with a variable interest rate that they suddenly couldn’t afford when interest rates went up, and at the same time housing prices crashed, so people were left owing more money than their house was worth and couldn’t extricate themselves, so defaulted on the loans.
Nothing like this is happening in today’s real estate market, houses are just too expensive in lots of areas due to demand outstripping supply and high (fixed) interest rates which make new mortgages more expensive. Interest rates will start coming down again soon enough, and housing prices have also started levelling off or coming down in many areas.
Back before 2005 houses were like between 75k and 500k. After 2005 houses never went back to those prices. In a crash people don’t magically get to buy a bunch of houses. Instead, companies snap up anyone’s houses that seem to be below market. So the price stays and it’s unaffordable.
I honestly don’t know if I understand how any of your points string together to make an argument. “Between 75K and 500K” is such a range as to be meaningless. Home prices vary with individual housing markets in addition to the national market. There hasn’t been a “crash” since 2008, and around that time, it was pretty universally a buyer’s market, and a ton of people bought homes for themselves. The affordability issue really didn’t become a thing until after COVID, and it’s already trending back down
My parents bought their house in 1998 for 75k in Sandy San Diego near downtown. I bought mine in 2005 for 500k near sandy San Diego. I then bought a second place for 475k up in Irvine. All were 3 bedrooms, two bathrooms. The first two houses were from the1920s. The last one made in the 80’s. I hope that makes it clear. I sold my California homes and moved to rainy Seattle and was lucky to find a house for 550k in 2019. I left the California market when the Seattle market started getting too crazy too. In just these 5 years the price of my old homes according to Zillow has gone past the 1 million mark. One is 1.2 million, the other is 1.1mil. imagine that! In 5 years there’s no fuckin way I could just rebuy my old houses. So for anyone out there trying to move, do what I did and save first, buy before selling, and calculate for the worse possible outcome. That will get you a realistic baseline… think of everyone involved as little fucking money sharks, the contractor 10k, the buying agent, 30k, the bank 30k, etc etc.
If you sell, your run the real risk that your entry money goes stale and you’ll be unable to afford the house you used to live in.
Yes, houses cost way more in the most desirable metros in the entire country, that also aren’t building supply to meet demand. Your experience is not the same as the experience of the vast majority of the US. I guess overall I don’t understand your point though, or how it relates to this conversation.
The Fed raising rates only affects recent car buyers, so it can’t account for a 23% surge. What the Fed raising rates does do—and is intended to do—is cause unemployment, which inevitably results in missed car payments, and even missed mortgage payments.
The Fed raising interest rates affects lots of things directly, including the cost of home and auto loans, not just unemployment rates, which are indirectly affected
Exactly. Auto loans are relatively short-term, and you’re probably more likely to default relatively early into the loan than later, esp. since you would no longer be upside-down later on.
Lol I guess I’m out of the loop on that one. In that vein, though, the entire point of commercials for decades has been to convince you to make bad decisions
The economy must transition from fossil fuels to other forms of energy. The longer we take the worse it will be, but nobody in power feels any urgency.
Add to that the GFC of 2008 that we “fixed” by printing money, and which was followed by a global pandemic and financial slowdown that… we fixed by printing money.
Now factor in the fact that we didn’t use 2008 to tighten banking regulation, and we have just as many opaque financial instruments (derivatives, swaps) as we did back then.
And all of this as global warming kicks into absolute overdrive, likely due to a feed forward mechanism being tripped such as the methane release from Siberia and/or the clathrate gun going off.
We are well and truly fucked. This reality is noticable if you’re paying attention, and will slowly become impossible to miss (let alone ignore).
Ok doomer. Nothing you just said is anything new to any of us, and nothing you just said makes any argument for expecting another global financial crisis within the next 12 months. It just seems like that’s what you’re hoping for lol
Here we go. It’s 2008 again.
While this isn’t a positive indicator, no, this isn’t anything like what happened in 2008.
Not yet, anyway.
I can’t count how many times I’ve heard people say “another 2008 is coming” over the past 5 years, yet here we are without another 2008.
At a very fundamental level, this is nothing like 2008. What’s happening here is pretty much just an intended effect of the Fed raising interest rates, which has made car payments more expensive, so more people are unable to afford them.
Because the housing crisis keeps getting worse.
2008 was a correction which flopped unnecessary companies the economy was filled with.
Printer goes brrr does not fix the economy. It only bloats it more with VC tech companies and housing speculants. Which is why the housing crisis keeps getting worse every year.
2008 wasn’t a “correction which flopped unnecessary companies,” specific (very large) finance companies that were over dependent on subprime mortgage-backed securities went belly-up, which caused a domino effect in the financial industry
“The housing crisis keeps getting worse” also doesn’t makes sense…housing in many parts of the country is unaffordable for many people, yes, that isn’t anything like what happened in 2008. Back then, millions of people signed up for subprime mortgages with a variable interest rate that they suddenly couldn’t afford when interest rates went up, and at the same time housing prices crashed, so people were left owing more money than their house was worth and couldn’t extricate themselves, so defaulted on the loans.
Nothing like this is happening in today’s real estate market, houses are just too expensive in lots of areas due to demand outstripping supply and high (fixed) interest rates which make new mortgages more expensive. Interest rates will start coming down again soon enough, and housing prices have also started levelling off or coming down in many areas.
Back before 2005 houses were like between 75k and 500k. After 2005 houses never went back to those prices. In a crash people don’t magically get to buy a bunch of houses. Instead, companies snap up anyone’s houses that seem to be below market. So the price stays and it’s unaffordable.
I honestly don’t know if I understand how any of your points string together to make an argument. “Between 75K and 500K” is such a range as to be meaningless. Home prices vary with individual housing markets in addition to the national market. There hasn’t been a “crash” since 2008, and around that time, it was pretty universally a buyer’s market, and a ton of people bought homes for themselves. The affordability issue really didn’t become a thing until after COVID, and it’s already trending back down
My parents bought their house in 1998 for 75k in Sandy San Diego near downtown. I bought mine in 2005 for 500k near sandy San Diego. I then bought a second place for 475k up in Irvine. All were 3 bedrooms, two bathrooms. The first two houses were from the1920s. The last one made in the 80’s. I hope that makes it clear. I sold my California homes and moved to rainy Seattle and was lucky to find a house for 550k in 2019. I left the California market when the Seattle market started getting too crazy too. In just these 5 years the price of my old homes according to Zillow has gone past the 1 million mark. One is 1.2 million, the other is 1.1mil. imagine that! In 5 years there’s no fuckin way I could just rebuy my old houses. So for anyone out there trying to move, do what I did and save first, buy before selling, and calculate for the worse possible outcome. That will get you a realistic baseline… think of everyone involved as little fucking money sharks, the contractor 10k, the buying agent, 30k, the bank 30k, etc etc.
If you sell, your run the real risk that your entry money goes stale and you’ll be unable to afford the house you used to live in.
Yes, houses cost way more in the most desirable metros in the entire country, that also aren’t building supply to meet demand. Your experience is not the same as the experience of the vast majority of the US. I guess overall I don’t understand your point though, or how it relates to this conversation.
The Fed raising rates only affects recent car buyers, so it can’t account for a 23% surge. What the Fed raising rates does do—and is intended to do—is cause unemployment, which inevitably results in missed car payments, and even missed mortgage payments.
Why not? I don’t see this logic
The Fed raising interest rates affects lots of things directly, including the cost of home and auto loans, not just unemployment rates, which are indirectly affected
Exactly. Auto loans are relatively short-term, and you’re probably more likely to default relatively early into the loan than later, esp. since you would no longer be upside-down later on.
Let’s follow up on this in 12 months.
I suspect it will be worse. Much worse.
Why?
Not who you asked, but I see it within the realm of possibility because of all the commercials I saw urging people to finance a pizza.
Lol I guess I’m out of the loop on that one. In that vein, though, the entire point of commercials for decades has been to convince you to make bad decisions
The economy must transition from fossil fuels to other forms of energy. The longer we take the worse it will be, but nobody in power feels any urgency.
Add to that the GFC of 2008 that we “fixed” by printing money, and which was followed by a global pandemic and financial slowdown that… we fixed by printing money.
Now factor in the fact that we didn’t use 2008 to tighten banking regulation, and we have just as many opaque financial instruments (derivatives, swaps) as we did back then.
And all of this as global warming kicks into absolute overdrive, likely due to a feed forward mechanism being tripped such as the methane release from Siberia and/or the clathrate gun going off.
We are well and truly fucked. This reality is noticable if you’re paying attention, and will slowly become impossible to miss (let alone ignore).
Ok doomer. Nothing you just said is anything new to any of us, and nothing you just said makes any argument for expecting another global financial crisis within the next 12 months. It just seems like that’s what you’re hoping for lol
Except this time it’s Commercial real estate.
Back to the office is really a cry for help as those values plummet.
If you want to lose money as fast as possible, either buy commercial real estate or invest in CMBS.
Yeah, commercial real estate has been hot for the last 25-ish years, I think its time has come.
Just wait till the commercial real estate mortgage backed securities market says HI I MAY BE HAVING ISSUES