Jump to content
House Price Crash Forum

Federal Reserve Paper predicting house prices from the baby boom


Recommended Posts

 

figure16.gif

https://www.federalreserve.gov/pubs/ifdp/2005/847/ifdp847.htm

That somewhat famous graph predicts maybe 2% per year house price falls for decades as the baby boomers economic influence subsides in terms of their influence on demand and interest rates.

Under a zirp interest rates/3% inflation environment that doesn't require nominal falls to complete.

It's also not clear if it incorporates ongoing net immigration of 3 million over ten years and the late noughties baby boom.

So I can certainly see softness and a buying opportunity in next few years, however not sure this will be the blood curdling crash mythologised here.

Link to post
Share on other sites
7 hours ago, Si1 said:

 

figure16.gif

https://www.federalreserve.gov/pubs/ifdp/2005/847/ifdp847.htm

That somewhat famous graph predicts maybe 2% per year house price falls for decades as the baby boomers economic influence subsides in terms of their influence on demand and interest rates.

Under a zirp interest rates/3% inflation environment that doesn't require nominal falls to complete.

It's also not clear if it incorporates ongoing net immigration of 3 million over ten years and the late noughties baby boom.

So I can certainly see softness and a buying opportunity in next few years, however not sure this will be the blood curdling crash mythologised here.

That graph looks familiar 

 

uk-house-prices-2020.png.ac9942e53f2cb329beeed7620da90408.png

Link to post
Share on other sites
10 minutes ago, Si1 said:

Indeed. They both have downward shoulders after 2017

Your graph fits in with my view, no one's going to win on property over the next 2 decades. 

Might as well rent

All those, 'my btl s my pension' loons are in for a shock. 

 

BTL...privately funded social housing 

Link to post
Share on other sites
3 minutes ago, TheCountOfNowhere said:

Your graph fits in with my view, no one's going to win on property over the next 2 decades. 

Might as well rent

All those, 'my btl s my pension' loons are in for a shock. 

 

BTL...privately funded social housing 

I don't believe the model considers the post 2005 baby boom or ongoing immigration, or secular falling real interest rates. So it might not fall as low as the graph suggests.

Edited by Si1
Link to post
Share on other sites

While I do think we will see a buying opportunity due to covid and brexit, I think it's possible there'll be a bounce and just inflationary real terms falls afterwards

Edited by Si1
Link to post
Share on other sites
18 minutes ago, satsuma said:

Can’t see millennials buying up the boomer rental portfolios, they’d be too busy on tinder and doing yoga to be bothered, I wonder who is going to provide the property for them to rent.  

And they've no way of affording them !!!

A lot of the housing stock was purchased at 3x salary or using over levered equity gains from aforementioned 3x salary proprieties.

e.g. a doctor, high salary, used to be able to afford to buy a 6 bed house in a nice area.  Now doctors are in crappy flats and new builds.  IIRC new MPs, high salary, were complaining about London house prices.  Same with teachers.  

 

Link to post
Share on other sites
1 hour ago, Si1 said:

I don't believe the model considers the post 2005 baby boom or ongoing immigration, or secular falling real interest rates. So it might not fall as low as the graph suggests.

Dont forget the prices are set by interest rates and availability of credit.

at some point after inflation really kicks off they will have no option but to raise rates.  They'll be behind the curve that is for sure but as real term prices fall due to wage inflation we could see an almighty nominal price fall also.

There is no way to win right now other than having bought PMs and other investments before 2007 and maybe from2010 to 2016 ish.

This is one crazy messed up country. I dont see how this can end well.

Link to post
Share on other sites
1 minute ago, TheCountOfNowhere said:

Dont forget the prices are set by interest rates and availability of credit.

at some point after inflation really kicks off they will have no option but to raise rates.  They'll be behind the curve that is for sure but as real term prices fall due to wage inflation we could see an almighty nominal price fall also.

 

You reckon...

Link to post
Share on other sites
Just now, TheCountOfNowhere said:

When I say really kicks in, we're talking 20% a year with £ being destroyed and riots in the streets

The establishment wont end this until something really gives.

The best parallel is the railway mania, parliament was full of VI ****s, but the 2nd collapse was unstoppable.

The same will happen, people just cant see it yet.

Link to post
Share on other sites
4 minutes ago, TheCountOfNowhere said:

Dont forget the prices are set by interest rates and availability of credit.

at some point after inflation really kicks off they will have no option but to raise rates.  They'll be behind the curve that is for sure but as real term prices fall due to wage inflation we could see an almighty nominal price fall also.

There is no way to win right now other than having bought PMs and other investments before 2007 and maybe from2010 to 2016 ish.

This is one crazy messed up country. I dont see how this can end well.

It's more complex than that.

When you get some brassy bint going - I understand houses! 

They dont, as a rule.

Its wage, income, mortgage credit, age distribution, employment.

I look at my local areas, and I see a large percentage of OO over 65. And a uch smaller number of people under 45, earning 30k+. 

The rest are TCers, wholl never get a mortgage.

The numbers dont work with MMR.

Link to post
Share on other sites
5 minutes ago, TheCountOfNowhere said:

The establishment wont end this until something really gives.

The best parallel is the railway mania, parliament was full of VI ****s, but the 2nd collapse was unstoppable.

The same will happen, people just cant see it yet.

Are you TCONv1 or v2?

Link to post
Share on other sites
Just now, TheCountOfNowhere said:

The establishment wont end this until something really gives.

The best parallel is the railway mania, parliament was full of VI ****s, but the 2nd collapse was unstoppable.

The same will happen, people just cant see it yet.

https://en.wikipedia.org/wiki/Railway_Mania

 

As with other bubbles, the Railway Mania became a self-promoting cycle based purely on over-optimistic speculation.

 

Many middle class families on modest incomes had sunk their entire savings into new companies during the mania, and they lost everything when the speculation collapsed

 

Link to post
Share on other sites
10 minutes ago, TheCountOfNowhere said:

When I say really kicks in, we're talking 20% a year with £ being destroyed and riots in the streets

Ok, that would be interesting

Link to post
Share on other sites
8 minutes ago, Si1 said:

Ok, that would be interesting

Sell BTL and buy Kevlar and gold and booze and a big stick for keeping the poor back.   Conversations starting with “have you met the poor, they’re frightfully nice” will become common again and we may have a modern day version of Robin Hood.  

Link to post
Share on other sites
16 minutes ago, spyguy said:

Its wage, income, mortgage credit, age distribution, employment.

I look at my local areas, and I see a large percentage of OO over 65. And a uch smaller number of people under 45, earning 30k+. 

The rest are TCers, wholl never get a mortgage.

The numbers dont work with MMR.

The BTLers I know have no wage and can seemingly borrow massive amounts of money.

I agree with the rest though.

The whole thing is a monumental scam. 

WTF was Cameron and Osborne thinking !!!

Link to post
Share on other sites
3 minutes ago, satsuma said:

Sell BTL and buy Kevlar and gold and booze and a big stick for keeping the poor back.   Conversations starting with “have you met the poor, they’re frightfully nice” will become common again and we may have a modern day version of Robin Hood.  

Some renters are already living rent free and the &&&& hasnt hit the fan yet

Link to post
Share on other sites
35 minutes ago, TheCountOfNowhere said:

And they've no way of affording them !!!

A lot of the housing stock was purchased at 3x salary or using over levered equity gains from aforementioned 3x salary proprieties.

e.g. a doctor, high salary, used to be able to afford to buy a 6 bed house in a nice area.  Now doctors are in crappy flats and new builds.  IIRC new MPs, high salary, were complaining about London house prices.  Same with teachers.  

 

but surely they have a huge deposit on the account of being educated ?

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

  • 415 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.