Stocks, cryptos, houses: people kept buying no matter the price, even though, it was so obvious that those prices were not sustainable.
And we are finally seeing a proper correction. I think, houses are next in line.
I don't agree about houses, either. It seems unsustainable, yes, but I'm having trouble finding the broken fundamentals. It seems like the only 'fix' for prices is building more housing, and that isn't a correction.
Housing market might correct a little but you won't see a $1M Los Angeles house going down to $300k. Maybe $925k but no further than that. There is no time in human history housing crashed and never came back. It moves down a little, then goes up again. Remember 2008.
How do you feel about the recent spick in inflation? I have also been sitting on some cash for a year, and its buying power has definitely fallen. I find it now hard to see if prices will fall or wags will go up, so the cash I have will be of less relative worth.
The Fed is basically trying to control inflation by inducing a recession. Holding cash is generally ill advised during times of high inflation, but holding assets during a recession can be pretty painful as well. At least with cash, you can buy the dip if you are so inclined.
If you haven't already, take a look at I Bonds. Those are safe, and have returns tied to inflation. Also, it is probably a good idea to start thinking about how and when you might want to invest your cash. It already feels like there are some good deals out there. But if inflation persist and interest rates keep rising, I can only imagine things will get cheaper still.
[0] https://www.treasurydirect.gov/indiv/products/prod_tips_glan....
There is still a ton of air down below :-)
If you go in, do it gradually in small trades, don’t try to « time the market ».