What are your housing bubble predictions for the new year? Six moths ago: “I think (conservatively) in this area we are long overdue for a 15% – 25% price correction overall, just based on inability of household incomes to keep up with housing price inflation. Sellers who do manage to make it to closing now are for the most part taking significant beatings at the table, especially for properties above $300K – $350K.”
“What will be interesting to see will be whether or not there will be structural change in location desirability from the pandemic. Will higher density urban living still be preferable to suburban / rural and continue to drive higher prices in trendy ‘downtown’ areas?”
One said, “”I expect out-of-state owners of beachfront rental property in Hawaii to continue to regret their investment decision.”
Another, “My prediction is that any prediction I could make is probably wrong. The unexpected happens. Who could have predicted in January what has happened over the last 6 months?”
From one year ago: My husband insists we buy in overpriced Ann Arbor this year, so I predict intense strife in my life. I wanted to buy in 2013 but he was a little unsure about his work. Just after that things started getting overpriced again and we’re old and I don’t want to blow the money we’ve saved by renting cheaply on an overpriced PoS shack but we have to leave our current good deal rental. It’s still cheaper to rent than buy even as high as rents are here, and there is so so much new housing coming in that despite apparent area job growth I can’t believe it is sustainable. Nothing I say works. Should I just divorce and thusly force a change of his plans lol?!”
Another said: “Albuquerquedan: I see a high tech stock correction particularly companies who chronically lose money or just barely breakeven with accounting tricks.”
The Globe and Mail. “Frothy equity markets have spurred a rush of initial public offerings, and the frenzy is helping investors gloss over one crucial piece of information: Many of the newly traded Canadian companies lose money. Sometimes, in fact, lots of it. With North American equity markets trading around record highs and interest rates next to zero, it is understandable that investors are hungry to own stocks. Yet this fervour for IPOs raises questions as to whether investors even care about profits anymore.”
“Even some stars of the 2019 IPO class have made their names without ever focusing on profit. The investor craze partly stems from a venture-capital mentality that has bled into public markets. Another culprit: ‘There’s so much money in the system,’ said John O’Connell, chief executive officer of money manager Davis Rea. There is cash everywhere these days, and money managers often want to park it in a new home.”
“For the new class of IPOs, it is too soon to know which will thrive and which will fail. With the cost of debt so affordable, companies can easily borrow money to fund new deals that give them longer lifelines – even if no profits materialize in the near-term. ‘Some will survive,’ said Bruce Murray, CEO of the Murray Wealth Group, ‘and, probably, most will lose.’”
“But convincing investors of that can feel impossible. The reason why, Mr. Murray said, is that ‘losers are quickly forgotten.’ ‘I don’t know when it ends,’ said Mr. O’Connell of Davis Rea. ‘We are in the teeth of a frenzy.’”
From Forbes. “We have all heard the phrase ‘history repeats itself!’ Yet, very few people seriously apply long-term history to manage their investments. There is no better example of this than how the majority of modern day investors, the most knowledgeable and technologically advanced in history, mishandled jaw dropping 40% stock market drops in the ‘Panics’ of 1987 & 2020, or the 50% ‘Bear Markets’ during the 1999 ‘Dot.com’ bubble and the Great Recession of 2008.”
“Regardless of the century – the story is the same. Throughout the preceding bull markets, the phrase ‘It’s different this time!’ was used repeatedly by Wall Street’s top pros and investors keep buying without ever realizing that their odds of continued success would be considered long in Las Vegas.”
“Does this sound familiar? ‘The Federal Reserve is much blamed because it made money easy’ and ‘The real fault is that too many investors are eager to grab something for nothing’ No, it wasn’t written in 1999 about tech stocks or 2007 about real estate securities. It came out of a business publication in January 1929!”