LogFAQs > #956865214

ScazarMeltex posted...

If only we had an example of the end result of these giant bubbles. We truly have no precedent to extrapolate info from to determine how this will turn out.

I'm no economist, so take this with a pound of salt:

These price increases have more to do with the general availability of money due to COVID quantitative easing. It's why the price of every asset, including stocks and even depreciating assets like cars, are skyrocketing. Where in pre 2008 the problem was that any idiot could get a mortgage, the problem here is that rich people have so much cash available to them that they'll pay any price because interest rates are crazy low. And with that availability of cash is the fear of inflation, or at least asset inflation, which then continues to drive asset prices up as everybody dumps their cash to protect their real wealth.

Until the Fed raises interest rates, prices will not go down for housing, or for the majority of other assets. And even then, there's no guarantee houses will flood the market because we aren't expecting tons of foreclosures. These buildings aren't bought by people who can't afford them. Much of the price increases may be permanent (as they were across different asset classes the previous time we used quantitative easing), with some value loss simply due to interest rate increases. But who knows, many more people may just become landlords with what they're sitting on.

The net effect at the end of the day is probably going to be further wealth inequality. The rich get richer here, but a big economic crisis is (hopefully) avoided.

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