I had absolutely zero clue that there was even a housing bubble, let alone an impending crash. Bought my house in 2001, in a moribund market... only to watch it decline in value, year after year. What, housing prices somewhere in America were actually rising? That one completely escaped me. Only after there was a stock market crash, did it occur to me to observe the broader situation in real estate, realizing that yes, there too, there was a crash.Me too, except I wasn't trying to figure out how to profit from it... I absolutely knew there would be a housing crash, but I had my house, and my mortgage, so I figured it wouldn't affect me.It’s funny. 2008. I knew there was going to be a massive crash in real estate and wanted to figure out a way to profit off of it, but could not figure out how.
Because my house was relatively inexpensive, there was no risk of "losing" it. The mortgage was paid off early. But after decades of watching its price decline (there was no recovery post-2009 in my case), the idea formed in my mind, that owner-occupied residential real estate is a fraught and dangerous speculative gamble. Thus I perpetually soured on it... until 2020 came around, with the biggest real estate price rise in history (so far).
The comparison to ex-US stocks, is that we have something like 150 years of residential real estate history, much as we do with stock market history... courtesy of the same person, Robert Shiller. Prof. Shiller's data shows that housing prices more or less tracked inflation, for over a century... until they exploded in 2006, then came down (but by historical measures, not enough) and exploded even more, over the past few years.
So, going back to 2006, we find an odd compatibility between residential real estate and the US equity vs. ex-US equity ratio. Both have gone haywire! Imagine that we're sitting in our armchairs in the year 2004, prognosticating. What might we say? Would we foresee an ensuing 20 years (and counting) when both real estate became unmoored from its history, and the juxtaposition between US and ex-US equities? I'm not asserting that the two are somehow causally connected. But isn't it weird, how the two are similar?
Statistics: Posted by unwitting_gulag — Tue Jun 25, 2024 12:49 am — Replies 6169 — Views 1606356
