Here we go. It’s 2008 again.
Except this time it’s Commercial real estate.
Back to the office is really a cry for help as those values plummet.
If you want to lose money as fast as possible, either buy commercial real estate or invest in CMBS.
Yeah, commercial real estate has been hot for the last 25-ish years, I think its time has come.
Just wait till the commercial real estate mortgage backed securities market says HI I MAY BE HAVING ISSUES
Considering the ridiculous loan terms I’ve seen, I’m surprised that this hasn’t happened sooner. The cars can’t possibly be worth that much money.
Unfortunately when you need transport, it more often than not becomes worth whatever the price they charge is. A lot of unfortunate people fall into awful loans because they lack viable transport options otherwise. Rto hasn’t helped at all either.
Agreed. I wish people in general were more confident in repairing their cars, because that’s a great way to put off a big purchase. However, I just mentioned to a coworker a repair I did (which saved me like $800-1000), and they were shocked and didn’t understand how I could do it (basically ripped apart the dash and sent the odometer chip to a repair place; if I didn’t suck at soldering, I could’ve saved another $70 or so).
But most aren’t, or they don’t have space to do it even if they had that confidence. And the result is getting sucked into paying 10% interest over a 7-year term in 2020/2021 because your car broke down at just the wrong time and parts aren’t generally available.
However, the silver lining is that the more people that default, the better the used car market will get, so there will be more options for people who can’t afford new cars. So I think it’ll even itself out, it just might take a year or two to stabilize. I’m in the market for a car, and honestly, the options suck. The cars I want are out of stock, and the cars that are readily available are available for a reason. I’ve never financed a car (newest car I bought was 8 years old), but it’s looking like that’s the best option right now. So, I’m holding off and just maintaining our aging cars (both >15yo), but that’s not a realistic option for a lot of people.
Here we go…
Good news for the used car market. Lots of new inventory about to become available.
Bad news for American car manufacturers, who are already struggling while they’re in limbo between ICE and EV and can’t commit to either, but certainly will help to correct used car prices.
House repos are probably up there too
There’s data for that. At least as of Jan, it has largely stabilized (as in, rate of forclosures isn’t increasing), and it’s way below pre-2008 levels. The foreclosure rate seems to track pretty closely with rate increases, and that’s held steady for about a year now, and there’s talk of a small decrease.
So I don’t think house repos are related at all to the trigger for the headline. I’m guessing a lot of the car repos are due to paying way too much for an EV (the used EV market is really attractive right now) or luxury ICE (average purchase price Is way above modest new car prices), and then losing a job (lots of tech layoffs recently). I’d like to see more details, but I highly doubt regular working class cars are getting repoed.
This is good for public transport? Right? Please tell me it’s so.
Sniff sniff, I smell recession
Eh, I think this will just reinvigorate the used market and push prices of new cars down. I doubt the car market would trigger a recession.
Oh it’s so much more than the just the car market. Housing is too expensive as well. And so many other goods and services. I don’t know anyone that’s not in crazy debt
The home foreclosure rate is way below where we were at around 2008. It is trending up, but slowly. Consumer debt is high, but debt to income is in a pretty consistent range.
The problem with 2008 wasn’t high foreclosure rates (that was just the trigger), it’s that the foreclosure risk wasn’t properly baked into lending rates. So banks thought they had less risk than they did, and that was due to greed (i.e. banks selling loans in buckets that masked the risk). Since then there have been a lot of changes in how risk is managed, so I highly doubt we’ll see a similar cascading failure. We may see higher foreclosure rates due to high borrowing rate shock, but that shouldn’t translate to a recession, it would just hurt bank profits in the short term. At least that’s the theory.
So if banks don’t start failing, we shouldn’t see a big disruption to employment, therefore no major recession. At least that’s my take.
As for anecdotes, most of the people I know aren’t in crazy debt. Looking around the neighborhood generally doesn’t match what’s going on more broadly.
Best economy ever! @pingveno@lemmy.ml
How’s Evergrande been these days?
Last I checked Evergrande never got government bailouts, and Chinese economy is successfully reorienting away from real estate towards high tech. That’s what happens when you have a functional government that represents the interests of the working class in charge. Oh, and people in China now have record high household savings while burgerlanders are starving https://www.wsj.com/livecoverage/stock-market-today-dow-jones-bank-earnings-01-12-2024/card/chinese-household-savings-hit-another-record-high-xqyky00IsIe357rtJb4j
Chinese economy is successfully reorienting away from real estate towards high tech
functional government
Speaking of functional government, provinces rely on land use sales of various lengths. Many of them heavily overborrowed to build out infrastructure in anticipation of future land sales that are now lower or non-existent. And meanwhile, the real estate crisis is still quite active.
If the Chinese government was so special, it should have learned from the US’s issues with companies that posed a systemic risk with inadequate oversight. Instead, they let Evergrande and others become way too large with too little oversight. They should have taken a cue from the financial regulators in the US, which identify systemically risky companies and imposes onerous regulations. Then at the height of the real estate bubble, Xi introduced a new set of policies that immediately popped the bubble instead of trying to ease it down. Too often, Xi in particular seems to work on principles like “people should invest wisely” instead of “if I introduce this policy, it will cause problems.” The good news is that China does seem to be listening more lately, but it’s already done damage.
Speaking of functional government, provinces rely on land use sales of various lengths. Many of them heavily overborrowed to build out infrastructure in anticipation of future land sales that are now lower or non-existent. And meanwhile, the real estate crisis is still quite active.
If that actually happened then we’d be seeing economic blowback from that. Instead, we’re seeing Chinese economy steadily growing year on year. Seems like the actual material reality just doesn’t match the propaganda you’ve been guzzling.
If the Chinese government was so special, it should have learned from the US’s issues with companies that posed a systemic risk with inadequate oversight.
In fact they did, and that’s precisely why China didn’t suffer a crash the way US did in 2008.
Instead, they let Evergrande and others become way too large with too little oversight.
The difference is that they let companies like Evergrande fail, and have the rich investors eat the losses, many of whom were international. This avoided impacting regular working class people and destabilization of economy the way we saw happen in US.
Then at the height of the real estate bubble, Xi introduced a new set of policies that immediately popped the bubble instead of trying to ease it down.
What the Chinese government did clearly worked effectively. As a side note, it’s absolutely hilarious that you think that Xi makes all the decisions about a country of 1.4 billion people personally. This shows an incredibly infantile understanding of how a government works.
Too often, Xi in particular seems to work on principles like “people should invest wisely” instead of “if I introduce this policy, it will cause problems.”
My dude, that’s literally how capitalist enterprises are supposed to work. People get to play with investing money, and if they make stupid investments then they eat the losses. It’s not the responsibility of the government to protect rich people from making stupid decisions about spending their money. The job of the government is to protect the working majority, which is precisely what the CPC did in this scenario.
The good news is that China does seem to be listening more lately, but it’s already done damage.
I have no idea what you’re even referring to here.
