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Comment by monocasa | Hacker News Reader

If I had to guess somewhere in the next ten years when the absurd number of boomers who have been putting their retirement savings into second and third homes all try to cash out at the same time, flood the market, and find out that it was all just Monopoly money.

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Within the next 2-3 years, there is likely to be another recession which will, if patterns follow, will be longer than the previous one. It would be bad news for a lot of boomers getting out of the market for retirement.

As someone who is on the precipice of purchasing a new home, this is my top concern and reason for potentially continuing to rent.

So naturally I am attuned to comments like this, and articles elsewhere, which talk about this subject.

Do you have any further insight into why you think there will be a recession in the next 2-3 years? Other than "it's a cycle and we're lined up for another one" ... Are there other market conditions that are making that more and more of a reality?

Rates of indebtedness, quality of debt(AAA, BBB ratings etc), stock market overvaluation, real estate overvaluation. Take your pick, conditions are very similar to 2007. Whether anything actually happens is the trillion dollar question.

Appreciated. That gives me some things to look into. Cheers

https://www.hussmanfunds.com/comment/mc180604/

This was recently posted on HN and gives a good overview of indicators to look at though it's pretty blatantly alarmist.

Reading through this now. There's a lot here and I have to admit, much of it is out of my wheelhouse. But I can get the gist of what's being said. I appreciate the link.

Makes me definitely consider putting this housing search on the back burner. In my area we've seen massive price increases in just the last 3 years. I was on a tour of a home yesterday and the agent told me that the previous home tour was with a bay area investor who had cash on hand for the home.

Hard to compete with that. And maybe it's just the wrong time to be competing at all.

I am not an investment advisor But you can approximate the returns you would get from real estate appreciation by carefully investing what you would spend on a home (down payment, taxes, mortgage etc.). Though if theres a major downturn that could also be risky.

Buy gold?

There are many indicators that one could look at, "inverted yield curve" is one, but given it's popularity if it actually flips, it might actually trigger the recession in the behaviour that follows, so you end up needing to predict the predictor. And many indicators can get into "lucky socks" cargo cult territory quickly because they happen to match up events/stats with recessionary time periods.

If you need a general introduction, Dalio provides a nice starter for thinking about it: https://www.youtube.com/watch?v=PHe0bXAIuk0

A interesting proposed measure here based upon fundamentals IMHO to me is consumption investment ratio: http://necsi.edu/research/economics/econuniversal

All I can really say is be very sceptical of anyone who says they know for sure - I'm going mostly off my reading of cycle behaviors with some hand wavy harder measures (but economics is a terrible field and even the rigorously defined measures in the end have poor real-world predictive accuracy.)

Well, I saw this the other day: https://www.washingtonpost.com/business/economy/beware-the-m...

I can't speak to its accuracy, but it's certainly a sobering read.

The rent they are earning on those properties is definitely real money.

And most of them I've seen are frittering that money away on bullshit, content in the idea that the gravy train will keep continuing ad infinitum.

Not necessarily.

I get a loan for a rent house, I'll be paying it for 30 years.

I take your rent check, pay the loan fee, and invest the rest.

The market crashed. I lose my investment. My renters lose their job. No one can afford rent that matches the minimum loan payment.

Where is the real money again?

That's a strawman argument. In any case, if you keep your money in the market, you'll almost certainly see it again.

are you suggesting i might get to buy a house or i might not because i'll lose my job?

I don't follow.

When all the boomers sell, the sudden influx of houses on the market is will lower prices so that people like me (I'm in my early 30's) won't have to pay a million dollars for a 2 bedroom condo. On the other hand would falling housing prices cause another recession (I'm no economist) cause me or other people like me to lose their jobs and not be able to afford a house anyway?

Yeah, that's the knife edge I feel like I'm on right now too.

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