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Comment by tehlike | Hacker News Reader

The thing with subprime mortgages is, noone saw it coming. How do you know some other forces are at play in todays market? Forces that may not be true in the blink of an eye?

Not saying it is gonna burst, and i see the factors, but theyw ere there in 2008 too.

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I lived in Vegas at the time. I saw it for the obvious problem that it was. I told everyone in the area that the bust was going to happen, but everyone was blinded by the money they were making. The shock people had was both amusing and disturbing at the same time.

Funny somewhat related story; just as the downslide started in that market we made an offer on a house 50k below asking. The owner, an investor, laughed at us. After the bust, we had already moved away at that point, we saw the house finally sold for something like 100k to 150k less than our low-ball offer.

Another somewhat related funny story; went to an open house and told the realtor I was worried over falling house values before deciding to buy. We were told house values don't fall. Didn't bother to point out to her that the for sale sign out front had a "reduced" sticker on it.

I have more, but I don't won't to be a bore.

I hear the same sentiment from realtors these days. Everyone drank the bay area real estate doesnt ever drop koolaid, in the long run, it might be true, in the short run, they probably have no clue, just busy selling their business.

I hear "low inventory, high demand" all the time, and while it is true, the part that most people ignore is, it is still possible that older buyers still have a ton of profit, while recent buyers can be under water

People absolutely saw it coming. I remember Geithner making comments to the effect of "we aren't ready yet!" when the bubble finally broke. The Fed was already making plans to shore up the affected banks, but hadn't yet built up the funds to do so effectively.

But then it depends on which timescale we're talking about.

When did they notice, and why did the housing prices go up and away years leading to 2008?

It's a long timeline, but I'd say things started getting specific late 2006:

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

In December 2007 in Australia I saw a presentation on the coming collapse of the US subprime housing market - in a lunchtime seminar given by a (tech) colleague for interests sake.

Basically, everybody wanted to ride the gravy train and nobody wanted to be the killjoy that pulled the brakes before it flew off of the cliff. There was a lot of money to be made and nobody thought they would be the ones left holding the bag.

The movie The Big Short explained this pretty well.

I suggest reading the book as well.

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