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Namely this passage from the wiki, is what makes me wonder:

A virtual end of inflation in the American economy, together with overbuilding in multifamily, condominium type residences and in commercial real estate in many cities. In addition, real estate values collapsed in the energy states – Texas, Louisiana, and Oklahoma – particularly due to falling oil prices – and weakness occurred in the mining and agricultural sectors of the economy.

I'm not at all familiar with S&L beyond the name and want to know more.

Namely this passage from the wiki, is what makes me wonder: > A virtual end of inflation in the American economy, together with overbuilding in multifamily, condominium type residences and in commercial real estate in many cities. In addition, real estate values collapsed in the energy states – Texas, Louisiana, and Oklahoma – particularly due to falling oil prices – and weakness occurred in the mining and agricultural sectors of the economy. I'm not at all familiar with S&L beyond the name and want to know more.

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[–] • 1 pt (edited )

The S&L problem happened because:

Regan cut the inspection agency's budget so they couldn't keep tabs on S&Ls S&Ls were allowed to invest in risky and speculative investments, and Banks didn't devalue their assets when they fell, making it look like they were worth more than they actually were.

The 2008 crash happened because:

House prices started to get stupid Banks gave loans on properties to people who couldn't afford them, or made loans that had no chance of being paid (balloon notes) Banks packaged these bad investments up, had a ratings agency mark them A+ and it worked until the bottom of the pyramid didn't pay.

Right now:

House and commercial prices are getting stupid Banks are loaning money for institutions to buy these inflated homes (and commercial properties) These inflated assets are being used to fuel other loans by using the assets as collateral (A good percentage of houses are company owned, some state as high as 1 in 7) Right now the market is really (for the housing market) liquid, meaning you can convert your property to cash, probably for a profit. Prices go up, ability of borrowers to pay or sell goes down, feedback loop, liquidity vanishes and eventually it crashes.

The housing market falls when the current bubble pops. They don't fall because the land is "worth" less, it's because everything about the loan and buying process has popped.

That's the executive summary's executive summary. There are a lot of good articles out there, I'd suggest just searching the terms and you'll find it. There's also this post https://archive.ph/LjpyD which talks about the current problem in depth.

[–] • 1 pt

There are a lot of good articles out there

Did a cursory search but it's hard to tell these days whats genuine and whats part of the filter bubble. Thanks for the quick run down though, SB.

[–] • 1 pt
[–] • 1 pt

That reddit link was legit an interesting read. It's a rare day I'm surprised by anything.

[–] • 1 pt (edited )

You can't convert your house to profit unless you don't plan to live indoors anymore. Sure, I can sell my house for over a million today, but that means nothing when I have to spend that much to replace it. In fact, I come out behind because my property taxes will go from being based on a $500,000 value to a $1,000,000 value.

Wealth locked up in a primary residence is about as illiquid as assets get. The only feasible way to leverage that wealth is to take out some kind of loan (refi or HELOC), which actually decreases your net worth.

[–] • 0 pt

YOU can't, but a corporate entity that owns a number of houses probably can, especially if the rents have been subsidizing any payments necessary to maintain the properties.

For us plebs, it's usually a zero sum game unless we die and leave it to someone else.