- Jul 5, 2014
- North Shore, MA
I think you just have to look at the corporate bond bubble - which started to deflate during Covid - so the Fed just bought corporate junk bonds.Ok I have a question. Let’s say there another credit cycle crash in the markets in the next few months predicated upon huge debt defaults of homes to student loans.
What would that do to home prices and more specifically land prices in the aftermath?
Rates are already near zero. There are no such things as balloon loans with high variable interest rates lensed with zero money down. I’m curious what you guys think may happen because I am currently looking at land and a new build. One thing I am sure of is that materials may very well cost more and more making a new build unattractive. If we face a deflationary collapse commodities will also crash. If inflations takes off then things could surely increase with a weaker dollar.
They'll do the same whatever begins to crash - student loans can't really default so they don't have to do anything there, but if you get a wave of mortgage defaults, they'll just protect Wall St. by buying MBSs, so the contagion will be contained. In normal times you'd get a real estate correction or crash, but that won't happen with the stock market at record highs - there's so much money in the system, that any real estate on the market that's desirable gets bought up before it can drop in price.
Now if the stock market were to crash like in March, that would be a problem - if that happens, the Fed will just buy S&P500 ETFs and stop the crash. People might say that's not legal - well, so is buying corporate junk bonds, but nobody in Washington is complaining.
This is why I decided to go all in on gold and silver miners 3 years ago - because all roads lead to massive Fed printing, and one way or another, more dollars means gold goes up.
So to answer your question, I don't think real estate can crash, and it is at risk of going way up as the printing machine goes into high gear, so I wouldn't wait if you want to buy.