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That’s why I’m holding back on buying real estate.
When interest rates rise again (they will, the question is only when) everything will just drop in value. Existing bonds will get crushed, shares will get crushed because new bonds are interesting again, real estate prices will get crushed because nobody is willing to pay 1.5-3k/month for interest anymore.
The current situation with exploding debt and extremely low interest rates is slowly building a gigantic problem.
Nice roundup, I share your beliefs. Don’t know what to expect, though. I don’t believe that things will revert to normal. There might be a crash like in 2008 but then things will swiftly return to overpumped. I mean, did we even experience this 2008 crash in Switzerland?
By the way, in the Coinbase thread, I posted a link to an article from 1969 that tackles the Great Depression, it’s causes and actions taken to mitigate it. People knew many decades ago, what’s up. Yet we still believe that it’s the government’s role to fix the economy…
But the large majority favored and voted for the very policies that made the disaster inevitable: inflation and credit expansion, protective tariffs, labor laws that raised wages and farm laws that raised prices, ever higher taxes on the rich and distribution of their wealth.
Existing fixed mortgages will stay attractive to its holders. People who will struggle to keep paying their mortgage will be offered a helpful hand from the government. People will not be willing to sell their real estate for a much lower price, they will be more willing to hold on to it than to sell at a loss. Real estate development market will probably also collapse, leading to a slump in supply. What I mean is, it could play out in many ways.
I think the hope for the ones waiting is in demographics. If older people start dying out, younger people are not there to replace them, migration slows down, we could a market force that will be hard to tackle even for the government. But this could still take decades. I think real estate boom of the XX century till now has been largely fueled by demography.
Do you have any data to back up this statement? Because I think you conjured it up from fantasy land.
Worth pointing out that the austrian school of economics is an heterodox economic theory. Mainstream economics mostly disagrees with those views.
I don’t know about people buying homes but as a mountain resort, we’ve seen an increase in construction permits demands: owners have been more present on site, have probably noticed improvements they wanted to do to make the place more amenable and are doing it with money they’re not spending on other things, probably also benefitting from low mortgage interest rates.
Our (secondary) residents are usually wealthy families/individuals, so not the most affected by the pandemic.
On the other hand, we also see people who keep asking for the Gemeinde to tackle works that are under the responsibility of the land owner. Some owners are stretched very thin and end up with properties they are not able to support. My interpretation is that it’s partly due to low rates (projects have been made possible without the financial sturdiness that would have been required for them to be truly viable) and/or inheritances (people end up with a property they can’t maintain properly, yet are unwilling to sell).
A few weeks till Q1 2021 comes out, but some screenshots from Q4 2020:
Also in some Polish podcasts some real estate advisors were pointing out the same thing. High demand for real estate, prices go up.
No wonder, according to austrian/classical school, the government should stay out of the economy, which gives it no mandate to prove how “useful” it is.
Actually, that data directly contradicts his statement: Mortgage value relative to disposable income of private households.
It is not surprising that the overall risk has increased in middle of the pandemic.
Assuming that the whole post was about the US then? Any thoughts on CH?
Again, assuming “our” means US Dollar? If yes, wasn’t the dollar devalued intentionally the past few years? Not saying it the first time but when this happens “consumption of existing wealth (i.e. housing) will accelerate rather than investment in new wealth” …soooo jump in real estate is not so surprising in that context…but disturbing ? Wasn’t the most disturbing part of the last 2-4 years for me TBH …
Hmm. Your post made me think that this user is a bot and probably pasted this comment from some other forum. That’s why he’s talking about Biden. We just all got taken for a ride
I think the system even reported that he “typed suspiciously fast”, but this kind of warning comes all the time, so I don’t just delete someone’s account because of that. Who knows, maybe half of forum members are GPT-3 bots arguing between each other
Why would somebody program a bot to troll forums like that is beyond me. It’s not like he’s spamming us with some ads and links.
Here you go, the original post comes from Reddit:
I guess some people just want to create chaos by spreading conspiracy theories
Great catch! Very specific first post and a bit angry should’ve tipped me off too…well done!
I assume the bot is here because the forum software is compatible with the bot, not because of some manual targetting.
Mainly agree. I bought 7 years ago and I will not buy today. It does not make sense, specially how the system works in CH that you mainly do not pay out your property.
If you own an apartment you should have a plan B in case that the interest rates will go up.
In my case building the nest that in case that I can pay the mortgage in case of need.
Also in other markets (less regulated than the Swiss one) the bubbles explode but like the stock market prices later on will go up again, so just hold and survive the valley.
This forum is very high for some keywords in switzerland. Once you get a foothold, you can start adding links. I think a link on the bio could have been enough to get some google points