[Troller]

"Only one in four real estate investors in Europe believes that the current market cycle will peak soon and that the initial rate of return on real estate will start to rise again. The overwhelming majority of respondents (75%) do not expect a turnaround until 2019."

http://europe-re.com/real-estate-investo...2019/64018

[Australia Sucks]

I read the article in your link Troller. To me its a bullish sign that investors are bearish/conservative. If the majority of investors were raging bulls that would be the time to get worried.

[Kid Twist]

Any new predictions? I've seen this coming up here and there, recently.

[Repo]

Many people are expecting a decline in the US around 2019 or 2020, maybe not a "crash", but a decline of sorts.

Recovery the last few years has been slower and gradual than previous recoveries, but non-mortgage consumer debt is increasing rapidly. Banks are already bumping up their reserves for credit cards losses, as delinquency rates are on the rise. Consumer delinquency is on the rise, despite the fact that overall employment isn't that bad. The simplified idea is that when job growth slows, delinquencies will already be on the rise, prompting a pullback in lending further agitating the decline.

Of course that is a ways off and there are things that can be done that can change our trajectory.

[Troller]

High end real estate is crashing. Mostly targeted at wealthy foreigners for money laundering. This segment of real estate will have come down to national levels affordability. Chinese who sustained most of this market dried up. Since they are being scrutinized heavily. I heard Jinping spends his life in undergound tunnels because of fears of being killed. Chinese officials have to disguise liquor on water bottles. Since they are not allowed to drink expensive booze.
I don´t think luxury real estate is a falling knife. It will stop falling when nationals can afford it. Was overpriced from foreigners. The profit margins of developers will be reduced. But houses will still be sold.

Low and mid real estate will probably continue going up. Since the banks will more and more ease the requirements for loans. As soon as 100% financing home loans starts being advertised we are in the peak of the bubble. As for now there´s still time to inflate the bubble a little more.

Central banks actions are also to consider specially: End of QE, raising rates and fractional banking. There seems to be in motion for the 2019/2020 event. Will see.

I check this bear blog from time to time:
http://thehousingbubbleblog.com/index.html

[Laska]

A crash in the stock market may come at the same time as housing or the dollar, but they can come independently as well. The reason why the huge expansion of credit hasn't resulted in profound inflation yet is because there isn't enough economic growth to put it to productive use.

[semibaron]

The next major crash probably will be the last one for a very long time, because it will have such severe effects on the world economy.

This is because of 2 simple reasons:
1.) High national debt - governments simply won't have the financials to stabilize the economy
2.) Interconnected world - Let's say any random country in the EU or Japan collapses under its debt load / aging population. For example Italy.
Italy fails -> the fire spreads to Spain -> France -> Germany -> the whole world

Just because of this, central banks and governments will do everything to prevent or postpone the next crash as long as possible. Preventing the next crash means to keep interest rates low (so interest payments on national debt keep low). When interest rates are low, insurances and bank savings don't yield any meaningful ROI. Consequently people will continue to invest in the housing- / stock- / cryptocurrency market.

Interest rates will stay low until the next crash happens. Because all market actors are working to prevent the next crash, it is still years or decades ahead.

[Australia Sucks]

Like I said before, I still think possibly 2018 or 2019 will be a mid cycle slowdown (i.e. mini crash) but the real crash is still a long way away. Of course you can never be sure of what will happen in the future and its just my opinion.

In Australia the real estate boom has already started to shift from Sydney and L:Melbourne to the smaller cities just as I predicted. The boom still has a long time to run.

[semibaron]

(10-22-2017 04:58 AM)Australia Sucks Wrote:  

In Australia the real estate boom has already started to shift from Sydney and L:Melbourne to the smaller cities just as I predicted. The boom still has a long time to run.

Same in Germany. 2nd and 3rd tier cities are now the top investing destinations.

[Kid Twist]

(10-22-2017 04:58 AM)Australia Sucks Wrote:  

Like I said before, I still think possibly 2018 or 2019 will be a mid cycle slowdown (i.e. mini crash) but the real crash is still a long way away. Of course you can never be sure of what will happen in the future and its just my opinion.

In Australia the real estate boom has already started to shift from Sydney and L:Melbourne to the smaller cities just as I predicted. The boom still has a long time to run.

I generally agree with this. The zerohedge article on long term index investing and why it is a sort of fool's propaganda is interesting, given the graphs and arithmetic on the dips, time, and resets that may occur depending on when you get in or out.

As he states, I agree with a 30% pullback. I'm with Aussie Sucks in that a really big one might come down mid next decade, which is incidentally when most boomers in the US also hit the peak age for health issues, pension issues, and SSA problems which are all tied.

[christpuncher]

^ It's unlikely that slow and expected demographic shifts will have anything to do with economic or stock market upheavals.

You can't just go and buy retirement home or healthcare stocks because "boomers are retiring". JNJ trades at 25x earnings for a reason...

[Kid Twist]

(10-23-2017 05:17 PM)christpuncher Wrote:  

^ It's unlikely that slow and expected demographic shifts will have anything to do with economic or stock market upheavals.

You can't just go and buy retirement home or healthcare stocks because "boomers are retiring". JNJ trades at 25x earnings for a reason...

I see where you are going, BUT they can bring up crises (pension crisis) happening all around, all at the same time

Do you deny that the probability of a crash increases with increasing gov't debt, whichever type or all types?

[DVY]

I think returns will be about 4-6% over the next decade compounded. Not great. Not bad.

A lot of cheap debt has been floated so it makes sense to buy back stock at 6% roi and sell debt for 3%.

This isn't financial engineering per say so much as good business.

I love taking cheap long term debt and punching it into a roi plus small return. Your talking about clean arbitrage.

I recently purchased a house and after the down payment I'm cash flow neutral if I were to rent it out (small + actually ). I'd rather hold a property than paper so there is little choice ATM. Yields in the bank are anemic (below inflwtion)....so it's between a rock and hard place. I'll take real estate (inflation neutral) + 1-2% any day instead of holding cash

[Cane Toad]

Financial markets are driven by the same fundamentals around the world ie; risk v return, supply v demand, cyclical in the long term, random in the short term, subject to entirely unpredictable shocks and irrationality etc.

The bottom line is that they are unpredictable (unless you have insider knowledge - but that's a different thing).

However, it is fairly certain that the current low interest rate environment has driven up certain asset values as a result of easier debt financing (think Australian property) and the reason for the low interest rate environment has been the lack of growth drivers in the world economy over the past years.

If we trust the cyclical nature of economics, then growth will return (probably starting to happen now) which in turn will drive interest rates up.

Rising interest rates are going to be a problem for highly geared asset investors (aside from any other shocks), so risk adverse investors will start to move out of asset classes most at risk.

The money will move into growth areas, typically shares. This is already happening eg; the US markets are already very high.

So looking towards the future, it looks like shares will be a good bet as interest rates rise (interest rates being a good indicator of growth).

However, the only certainty is that when we wake up one morning and read about the next collapse...half of us will have been right, and the other half will have been wrong.