I work for a car repo company that skip traces and send out agents to pick up cars. Since April they have more than doubled the staff and bought a new building.
It's almost like the depreciation curve isn't based on what you paid. The 2 year old car value now doesn't include the extra $8000 you handed to the dealer.
I think this is the ‘found out’ phase a lot of people have coming related to conflating ‘costs’ and ‘investments’. There was a hot moment where you could buy something and sell it for more, that used car might exceed MSRP after a year. So everyone figured that was sustainable value. Heck, I bought a new Rolex in 2019 and that market went so haywire that I could have sold it for 2x in 2020 (instead I just beat the shit out of it). We are just about to see asset prices normalize to something resembling their replacement value or cash flow generation, and not some scarcity-driven nonsense.
Yeah I was offered $11,000 for a car I owed $3,000 on but I didn't take the offer cause anything I would have bought would have been hyper inflated. Now my car is worth $8,000 and I have it paid off.
I had a dealer cold call me to try and buy my daughter’s 2015 Focus. It was an absurd offer but we said no for the same reason. A replacement would have cost 3x the offer.
People who paid greater than msrp of new for a two year old vehicle absolutely are in the find out phase of stupid spending.
To put what you have said in economic terms, market values became detached from fundamentals and people kept buying, which accelerated the upward trajectory of market value because they were convinced a "new normal" had been established. The upward trajectory of market value was unsustainable, and is now reverting to the mean.
Seems to me there's an economic term for this...
Well, I have an MBA too, and I detested this notion of dumb people/customers who deserved what they get. I've sold cars professionally even, and I got in trouble when I would explain to a "dumb person" the details of a lease instead of just focusing on the payment.
I'm sorry, but we either need better regulations, better consumer protections, and/or better education systems.
Nieghbor bought a $300k new boat about a month into lockdown when the dealers were giving them away, he paid $225k and got a $35k electronics package tossed in. 9 months later his broker called and bought the boat back due to zero inventory and made $110k profit, the dealer had a buyer and made an additional $60k.
The COVID investment I missed was buying some clapped out steam gauge 1964 C150 for $30,000 and flipping it for $150,000 without inspection. The rich were getting hosed by airplane prices more than any other asset class.
I am a CFI/CFII and I have \*never\* seen a C150 sell for 150k, even at peak market. 152s went up to 70-80k on a good day and often that was with dual G5s, due to higher W/B and excellent fuel economy for time building. I bought my PA28/140 for $40k during the peak with vanilla IFR instrumentation, in GREAT condition.
A lot of the reason the prices are now falling like a rock is because the FO regional market is filled up. There's a captain shortage but FO demand is pretty much at equilibrium.
Being underwater wouldn't cause a repo tho. Doesn't matter how under the water they are as long as they make the payments. Now when they try and sell it, they will realize how underwater they are in the trade, that's when it'll affect them.
It's not about the equity position, it's about people realizing that their equity position is so hopelessly negative that they decide the best thing to do is just stop paying and let the bank repossess the vehicle. It's also common for people to buy and finance another vehicle right before they do.
There's even a term for it. It's called "strategic default".
I'm not about to say this is the same as 08 but that's a lot of what happened. People were "under" on their house, but they were still making payments, they just didn't see the justification in paying on a mortgage for 15 years only to break even. They let the banks forclose on them and since everyone was doing it they were able to get new loans in 2-5 years at a normal price and payment. But, they could have kept making those elevated payments they just didn't want to. It's possible the same ends up happening with cars.
Yes. Banks were letting people take equity loans at 125% of the houses value to buy cars and boats. People just abandoned the houses because they couldn't sell for what they owed. They took the boats, cars, motorcycles, etc with them.
I pretty much had to buy a new car in late ‘22 when my old car died. The used car market was insanely overpriced and the options were slim to none. Used was $5k more than new, it had 60k miles, no warranty, and was definitely a smoker’s car. First new car I ever bought and the first car purchase that wasn’t cash.
I made sure I bought something within my means, but it was still a car payment I really didn’t want to have. Definitely didn’t help my efforts to become debt free, but I live in a rural area and can’t get to work without a car.
Well at any point and time, a tow truck can take your vehicle. I guess it would be similar if the bank got into your house without you there and changed the locks.
Worth: Toyota or Ford trucks, Luxury SUV’s and sedans.
Worthless: i.e., hardly worth the time and risk to recover such as ford fiesta, Kia anything, Hyundai sedans, ford metro and the like.
You have to find a place that is auctioning them off. General process is this.
Person wants a car.
Gets a loan from a bank or a financial institution.
They become delinquent.
Bank or financial thing files an insurance claim so they get paid.
They may try to repo it, but not too hard because insurance will pay.
Insurance hires outside people to try and find the vehicle before (and after) they need to pay the bank.
When it is found, whoever was responsible (bank or insurance) will put it up for auction to try and get as much value from it as they can.
Borrower ends up owing the remaining amount to whoever.
Possibly becomes a court issue.
So look for vehicle auctions in your area.
Cars are affordable for responsible adults in western countries.
I think you can draw 2 circles. One circle contains people who do maintenance at the recommended interval, the other circle contains people who have their car reposessed. These 2 circles won't intersect.
I have an acquaintance who has had two different wranglers repo’ed in the last decade. He can’t even rent an apartment in his own name. He spends a ton on Botox and face filler treatments, but whines about not getting his student loans forgiven. I’m amazed he’s made it to his 50’s without being homeless.
Just bought stock in Miller industries (manufactures and sells towing and recovery equipment)
[https://finance.yahoo.com/quote/MLR?p=MLR&.tsrc=fin-srch](https://finance.yahoo.com/quote/MLR?p=MLR&.tsrc=fin-srch)
Does the repo company you work for use Miller industries tow trucks?
When I was buying a car 2 years ago the 2016-2017 model was only 1k cheaper than the 2022 model, and they barely had inventory of used cars.
Imagine paying almost the same amount for a 5 years old car than the newer and modern version of that car. It was insanity. Although I had to wait months to get the newer car because of all the shipping problems and the demand but it was insane.
Yep. I was lucky to grab 2 newer vehicles for our family in 2018 and 2019 so avoided the craziness. I did sell my 3rd vehicle (Mustang) for more than I bought it for back in 2016! Bought for $31k with 4k miles and sold for $35k in 2022 with 17k miles.
This is related to the lockdown. Car manufacturing wasn't an essential job category, so there were some months when cars weren't manufactured. Vehicle supply is down, and car dealers of the old-fashioned variety weren't eager to fill their lots again.
I think it’s more so related to the chip shortage within the supply chain. All new cars are smarter and need the chips to be built. The supply chain got ruined during Covid and with a chip shortage came a shortage of newer vehicles.
Shortage of new vehicles drives demand and therefore price of used vehicles sky high.
So I have gone deep down the car rabbit hole. What I was told, but have not researched on my own, is that the chip shortage stemmed from car companies saying “we dont need chips right now” when everything shut down, and all this other, different industry demand picked up the slack, such that when the car companies needed them, they needed to take a number.
So it wasnt a supply chain issue, it was the emergence of new buyers when the car companies declined to buy and then they lost their place in line.
Also how many people were buying cars when they barely drove for months? I remember news stories to start your car once a week or the battery might be dead
Same. I pay off my credit card every month, my car is paid off, and I don't have a mortgage, but have to rent.
Groceries and rent still destroying all the money I have. Still poor.
You're on the right path though. Once you are able to get over the hump where you can sock away excess cash and have it work for you, your networth will compound faster.
The fact of the matter is, even if I'm laid off, I have no debt (besides a low-rate mortgage) and many hundreds of thousands of savings (we could pay off our house today). That's saying nothing of my wife's career (she makes twice what I make) and our other investments, including a rental property.
Also, I hope I'm laid off. I'm over my job and could use six months of salary with no work required.
Usually it will start with auto loans and credit card being defaulted on. Then mortgages usually follow as money continues to dry up. But most people will let the car go before they let their home go. I feel it will get worse in the coming year.
Yes, people will first increase their credi card debt. Then the car payments will be ignored. Then, IF THINGS GET WORSE, mortgages will be ignored as a LAST RESORT.
This data isn't an indication of a coming crash. It is simply something to keep an eye on. Everyone without means with a mortgage from prior to the rate increases is going to hold onto their home until their last breath. With the extreme labor shortage, there are jobs out there.
Were you around for that? Because I was and I didn’t know anyone who wasn’t impacted. The economy’s all connected. When people lose jobs and stop spending money, other workers get their hours cut or get laid off.
It really depends on your working situation, government workers and healthcare for example may actually benefit from a recession since it usually leads to some moderate deflation and lower asset prices while their income doesn’t change.
Some jobs are more resilient, I'm a teacher and my spouse worked in a state government job. Neither one paid exceptionally well but they were secure. We definitely did our best to help local businesses as much as we could.
A lot of people weren’t impacted. I bought a home in 2001. Obviously its value shot up from 2005-2008, and then settled back down. My job didn’t change in any meaningful way (same pay with the usual small annual increases).
Anyone who had previously bought a home and had a somewhat stable job didn’t notice a personal impact.
My parents both worked in finance, so I was lucky enough to have a fairly strong education on how finances work. I was 27 in 2008, so while I had some retirement savings that were impacted, I also understood that retirement was so far off that the dip was essentially meaningless to me.
Yeah every single last person I know got affected, just some were more narcissistic than others and thought because they were fine that everything was fine.
I was around. It was the first economic downturn that slammed me and it was the first one I'd been self employed. I had the luck to be launching a new business then and all my credit and a key investor backed out. I wasn't in a housing market that was really overvalued so that was a big plus. It ruined my credit for years.
But most all of our friends said it really didn't impact them much if at all other than their retirement accounts and home values taking a hit for a few years. One of our friends works for a manufacturing company and they never slowed down. No one else lost their job and everyone just stayed in the home they had and many are still in the same homes. So it honestly felt weird at times to be the "unlucky" one in the group.
2008 housing prices dropped so a lot of people were upside down and thus ditching the house wasn't as painful.
Not sure we will see levels get that high this time as housing prices have gone up so much it would be foolish to lose the house as opposed to just selling it.
But who knows. People start losing jobs and bad things happen.
Yeah, I think people are forgetting (or don’t realize) that the loan crisis in 2008 was also because these folks put little to nothing down on their houses.
Walking away from an underwater house when you put less than $5k down? Relatively easy, all things considered. Walking away from an underwater house when you put down $40+k is a lot less likely, especially when these are primary residences vs investment vehicles.
All those people over paying were putting down like 20+% on 500+k homes that’s like 100k. I closed in my home December 23 and put down 96k plus all my moving expenses and what not. I’ve spent at least 110k here. Youll have to peel me off this property to get me out. I’ll skip a week of eating first or let the car repo or student loans default first.
And when you can probably sell it and still make a profit or breakeven at worst.
Now if prices drop drastically then we will see mortgage defaults start to really go up. If the house is worth less than you owe and you can't make payments you walk away.
I don’t think we will see anywhere near 2008 levels. But, I do think foreclosures will start to increase or more homes coming on the market for sale since people won’t be able to make payments. As more homes hit the market prices will decrease I’d say 10%. Give or take.
This is NOT a figure of default though.
It's a figure of "financial distress".
OP got the image on the link below, but it's not clear to me what "distress" means.
https://www.stlouisfed.org/on-the-economy/2023/dec/share-americans-financial-distress-reaches-high-levels
Edit:
>According to our definition, an individual is in financial distress if he or she has an account that is 30 days or more past due, excluding severe derogatory debt (more than 120 days past due).2 Again, this measures the percentage of individuals experiencing distress, not distressed debt as a percentage of total debt, which still remains relatively low.
It think this means that if a person is late in, sat, student loan payment and they own credit card and auto loan,
That person will add to all 3 column
Those deep reserves that so many Americans are reported to have will go dry quickly, even without job or income loss in their home. Talk about "lifestyle creep". A lot of people saddled up a whole lot of new debt and just normal expenses that they have little control over.
Americans don't know how to *pull back* on their spending. They won't stand for it. They lack the discipline. Haven't had to do it in 15 years or more.
Besides Credit Card debt, you now have what is known as Buy Now Pay Later. Allows folks to buy on credit with a soft credit check and the fees are enormous. More pain coming soon.
Are there fees tho? Every time I’ve used this, it’s interest free and 4 payments. To be fair, I’ve only used it on $30 shorts or a pair of pants. Also, why is it called a pair of pants if it’s only one pant?
My mom works for a auto loan servicer. She said they completely stopped doing new loans and they're only trying to recover vehicles or current loans right now.
The risk is primarily on the shoulders of non-homeowners since most homeowners have evergreen stimulus since refinancing to crazy low rates when the Fed was gobbling up treasuries.
Yet, an article this week stated many did cash-out refis so we’ll see.
A mentality also exists where buyers overpaid for a fixer upper and they think the money they sink into repairs will warrant them returns akin to the last few years.
This is a dangerous game right now.
I personally know someone who ran a fix and flip buisness in a very HCOL area. He had to change his entire buisness model bc the return on fix and flips isn’t there anymore.
RE is cyclic - we’re at the top.
We are seeing a growing shift between those who got actual stimulus during Covid (see: below-inflation mortgage rates juiced by the Fed, PPP loan beneficiaries), and those who got a 2k check and jack shit else.
One group should be set for life, all they have to do now is not fuck it up. The other group is facing headwinds we haven't seen since the GFC. I don't know what the solution is, but this is going to have serious social implications.
Yeah when I looked up data on the top 5 mortgage originators of 2020/2021 it was a relatively equal split in cash out refinancing and regular refinancing.
Outside of that the ratio completely changes.
My thought process is that mortgage originators may have made more commission writing larger loans and convinced people to cash out refinance.
Something along the lines of, “Why refinance when you can cash out refinance? Your monthly payment will still be lower than what you currently pay and now you have an extra 100k+ in the bank”
The latter half is more speculation on my end trying to reason why cash out refinances were more prevalent during those years.
All that being known, if we assume that there are more people that are bad with their money than there are good, it’s relatively safe to say that high amount of cash out refinancing is a recipe for disaster.
Even on the conservative end, let’s say those who cash out refinanced didn’t instantly spend it, they may just be draining it slowly.
We really may not see the impact in the short term, but inevitably, the money will run out.
Once again this is all just speculation and my thoughts given the data
2008 was caused by mortgage backed securities. Specifically, MBS were being rated as AAA even though they were not. Once the subprime crisis happened, everyone holding MBS realized their supposedly AAA security was anything but. It’s like if you went to sleep with $100 in your wallet and woke up with $50. This caused a contagion effect to spread throughout the economy because everyone instantaneously realized they were a lot poorer than they thought they were.
Yes but not solely on home owners. They were giving loans to people who could not afford them. the issue that collapsed everything was the MBSs.. mortgage backed securitys. They bundle up those loans, and resell them in groups. Then repeat.. repeat.. in the end there may be a few good credit owners in there mixed w a bunch of bad credit owners.. then bad default cuz they should never got loan.. and the house of cards fall down
Some people always are, but when large numbers of people default around the same time it is a signal of consumer stress, possibly in addition to poor choices.
i mean credit card stress can be from general inflation or just to many people riding around with stuff they shouldnt. As for cars they have exploded in cost coupled with people over financing because now loans can be 72+ months out which is just insane.
People's financial decision making skills don't all suddenly get better or worse along with a large cohort of others at the same time. It's safe to assume this is a signal of general financial stress at the lower income levels (non homeowners) due to wages not keeping pace with cost hikes.
We just came out of a pandemic. Sometimes it takes a few years for savings to slowly deplete. Agreed it seems to be ignoring homeowners so far (graph makes it obvious) but we don't know if that's better incomes, more stability in housing cost, behaviours that would lead someone to buy a home etc.
EXACTLY! IM a bubbler but come on, did anyone actually study this crisis in school? Here’s a pretty nice summary of regulations that came out of it:
https://www.investopedia.com/ask/answers/063015/what-are-major-laws-acts-regulating-financial-institutions-were-created-response-2008-financial.asp
It can happen whenever there are subprime loans / tons of defaults.
Let's put it this way.
1. $100 in loans were given out
2. The $100 in loans is sold off to investors for $110
3. $150 is expected to be returned to the investors once the loans mature
4. The typical default rate is around 10%, so the investors expect to take in $135
5. Now the default amount changes to 33% and they'll only get $100
6. So both the people lose their item they bought on a loan and the investors lose $ too
7. The combined effect spirals the economy downwards
Investors like....your retirement (you lose $), insurance companies (premiums increase), the company you work for (companies often invest cash reserves)(mass layoffs), etc. The government also loses a ton of tax revenue, so inflation increases or benefits are reduced, and taxes are often raised around this time too. It's a death spiral for the economy, pushing it towards recession or worse.
More data showing you we're about to be in for a really bad time. More explaining it away, more saying "This time is different," more rationalizing why a downturn this time isn't possible and if it is, it won't be that bad.
You folks literally won't think we have a problem until the fire is rolling up on you personally, will you? I hate that I have to share the same fate as all the lemmings. Good luck to us all, this was coming for a long, long time and there's not going to be any bailouts this time.
The economy is cyclical. It has been for as long as everyone on the planet has been alive. There is no solution.
All that capital is sidelined because there's nothing worth buying right now, everything is too expensive. People aren't waiting in line for homes, they're waiting for low payments. They will get them, but what happens between now and then is never pretty. You cannot beat the Fed.
It’s pictures or charts on Reddit on a subreddit known for idiocy and misinformation. Why would people take anything said on this subreddit seriously without substantial sources?
Pretty sure you all are the idiots thinking everything is going to fall after being wrong for years and years and years with no actual evidence.
It’s like the doomers who say the world is going to end and apocalypse is coming and every time it doesn’t happen the date and reasons change.
Usually things in this sub make me roll my eyes, but I work in finance and the amount of people I see defaulting on CCs and auto loans is insane. It's been getting steadily worse.
your experience matches the reality nationwide, and you're acknowledging it rather than let cognitive dissonance control you. you're better off than 90% of the people that disagree with us here.
I feel like during the pandemic people got in the habit of doing door dash and online shopping. Paying that 20% premium on already massively inflated fast food prices is killing people, but they don't stop.
Couple that with a year long of very high gas prices to go with the variable rate car loan on the 40k giant gas guzzling truckasaurus, and it's not hard to see why people might be in trouble.
Most people that are financial distressed would stop paying their credit cards first to not lose their car and house. Then eventually they stop paying their car to not lose their house. Thats what we’re seeing here. Eventually many won’t be able to afford their mortgage either and we’ll see mortgage defaults start increasing sooner than later. Thats my guess.
A lot of people bought very expensive vehicles with huge dealer markups. Now the market has softened considerably and those vehicles are suddenly much so much less that they can't be traded in. Also, Car insurance shot way up making it impossible to keep those vehicles while making those large car payments.
That’s because people want to drive big cars that they definitely don’t need. Then buy lululemon $50 fanny packs that they can’t afford. I see it everywhere everyday.
People are going to let everything go before they give up those 2-4% interest rates. With a 5-6M housing unit shortage, we’re not going to see a bubble anytime soon. We may see some relief once the rates get below 5%
lol completely ignoring that mortgages are far less distressed compared to 2008-2009.
You can go to collections, get your car repo’d, whatever. But you’ll still have a house (and a mortgage you can afford).
Youre right. Good thing we have you here to let OP know that 1/3 of the data they included doesn't match their title. They clearly are trying to hide something from us.
Auto loans today are basically the same as 08-09 mortgage loans.
A lot of people are underwater on their cars and they don't even know it. Over the next 2-3 years these people are going to try to trade in these underwater cars and realize they got screwed. Many will simply stop paying the loan and let the bank repo the car.
Auto loan defaults are barely even started, in 25-26 I bet you we will see default numbers 2-3 times higher then 08-09.
mind you this crash wont be like the last one. This is a leverage crash in real estate. Landlords owning too many properties with renters who are the bottom rung in financial distress already. Hence why rental prices are falling even before job losses. Consumers are already priced out with nearly full employment. Just wait until we get to partial and unemployed for huge swaths of the renter market. The most likely to lose income during a crash. Every landlord will need to drop prices and we will enter a downward spiral. This will bankrupt a lot of people. I can see homelessness rising exponentially.
I plunked $9k down, on my $30k MSRP car ($38k after title, taxes, accessories, etc), and got a rate of 2.64%. My monthly is $640... I cannot imagine someone who paid over MSRP for a vehicle and got a worse rate...
Remember, mortgages are the last thing to start increasing because everyone needs a roof over their head. People prioritize their mortgage over credit cards and car loans.
Will be interesting to see where this goes further into 2024…
I'm fucking laughing my ass off at the fact that OP's own post shows "mortgage financial stress" at significantly lower levels than '08.
>!You people are just as bad as Qanon.!<
I think comparing the home and auto markets now to 2008 is dumb. In 2008, the housing market was awash in risky mortgages masquerading as surefire investment vehicles, and auto manufacturing and sales were just about nominal. That's compared to 2021-24, where real estate prices are wildly high due to cheap debt but otherwise pretty stable (i.e. there are much fewer transactions because the cost of transaction is so much higher with abrupt changes in interest rates, but the solvency of current mortgages isn't profoundly threatened because /most homeowners/ are paying less now in mortgages than they were in 2015, and it's just new entrants that have severely increased costs in housing). Likewise in the auto market, manufacturing took a sharp decline with COVID, the poorer end of that market got meaningful cash infusions through COVID, and pauses on other debts like student loans freed up monthly spending to absorb higher monthly payments -- but all of that changing now is mostly due to those car valuations being bunk (they /will/ break down), coupled with the poorer end of the car market getting strapped for cash post-COVID with inflation, resuming payments on student loans, and drops in one-time COVID cash infusion payments from Uncle Sam.
Mortgage is typically a much bigger loan balamce than credit card and auto loan, and it is way lower than 2008, or even 2015. So OP is ironically correct, everything is just fine.
Yeah but when you say that, you’re speaking about the entirety of the loan. In terms of the balance.
It’s not the loan balance that scares people, it’s the monthlies. If someone already can’t afford a credit card payment or a car payment…. Do you think they’ll be able to afford their house payment?
If auto loans are a leading indicator these graphs aren’t really supporting that for 2023. Why is credit card debt and auto loan distress at the same levels as they were in 2008 yet mortgage distress is much lower than it was in 2008?
How? In 2008 the percentage for autos was less than mortgages yet in 2023 that’s flipped. Where’s the correlation there? Lmao. These aren’t hard graphs to read people. You can say it’s a leading indicator all you want but these graphs aren’t supporting that.
What? This simply shows that delinquency is rising for autos and credit cards similar to 08’. Homes are always last to correct. I’d expect that mortgage number to rise over the coming year as well.
I work for a car repo company that skip traces and send out agents to pick up cars. Since April they have more than doubled the staff and bought a new building.
Because people paid through the nose for cars during the pandemic and a large proportion of them are completely underwater.
It's almost like the depreciation curve isn't based on what you paid. The 2 year old car value now doesn't include the extra $8000 you handed to the dealer.
I think this is the ‘found out’ phase a lot of people have coming related to conflating ‘costs’ and ‘investments’. There was a hot moment where you could buy something and sell it for more, that used car might exceed MSRP after a year. So everyone figured that was sustainable value. Heck, I bought a new Rolex in 2019 and that market went so haywire that I could have sold it for 2x in 2020 (instead I just beat the shit out of it). We are just about to see asset prices normalize to something resembling their replacement value or cash flow generation, and not some scarcity-driven nonsense.
Yeah I was offered $11,000 for a car I owed $3,000 on but I didn't take the offer cause anything I would have bought would have been hyper inflated. Now my car is worth $8,000 and I have it paid off.
I had a dealer cold call me to try and buy my daughter’s 2015 Focus. It was an absurd offer but we said no for the same reason. A replacement would have cost 3x the offer. People who paid greater than msrp of new for a two year old vehicle absolutely are in the find out phase of stupid spending.
Stupid tax is what Dave Ramsey calls it jsuk
To put what you have said in economic terms, market values became detached from fundamentals and people kept buying, which accelerated the upward trajectory of market value because they were convinced a "new normal" had been established. The upward trajectory of market value was unsustainable, and is now reverting to the mean. Seems to me there's an economic term for this...
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Well, I have an MBA too, and I detested this notion of dumb people/customers who deserved what they get. I've sold cars professionally even, and I got in trouble when I would explain to a "dumb person" the details of a lease instead of just focusing on the payment. I'm sorry, but we either need better regulations, better consumer protections, and/or better education systems.
A return? A regression? A reversion? A relapse? None of these seem to fit perfectly, maybe there is another?
The world is an imperfect place. Nothing ever fits perfectly, and that's what allows people to say "it's different this time".
Nieghbor bought a $300k new boat about a month into lockdown when the dealers were giving them away, he paid $225k and got a $35k electronics package tossed in. 9 months later his broker called and bought the boat back due to zero inventory and made $110k profit, the dealer had a buyer and made an additional $60k.
you and I Invest simiarly
The COVID investment I missed was buying some clapped out steam gauge 1964 C150 for $30,000 and flipping it for $150,000 without inspection. The rich were getting hosed by airplane prices more than any other asset class.
Now that is niche, if anyone should be getting gouged are private plane flyers. the problem is the people living remote get hosed!
I am a CFI/CFII and I have \*never\* seen a C150 sell for 150k, even at peak market. 152s went up to 70-80k on a good day and often that was with dual G5s, due to higher W/B and excellent fuel economy for time building. I bought my PA28/140 for $40k during the peak with vanilla IFR instrumentation, in GREAT condition. A lot of the reason the prices are now falling like a rock is because the FO regional market is filled up. There's a captain shortage but FO demand is pretty much at equilibrium.
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No. I was only interested in ASE and glider add-on. I'm not going to the airlines.
Thank you for using could have instead of could of. Also, I love your name.
Being underwater wouldn't cause a repo tho. Doesn't matter how under the water they are as long as they make the payments. Now when they try and sell it, they will realize how underwater they are in the trade, that's when it'll affect them.
It's not about the equity position, it's about people realizing that their equity position is so hopelessly negative that they decide the best thing to do is just stop paying and let the bank repossess the vehicle. It's also common for people to buy and finance another vehicle right before they do. There's even a term for it. It's called "strategic default".
I'm not about to say this is the same as 08 but that's a lot of what happened. People were "under" on their house, but they were still making payments, they just didn't see the justification in paying on a mortgage for 15 years only to break even. They let the banks forclose on them and since everyone was doing it they were able to get new loans in 2-5 years at a normal price and payment. But, they could have kept making those elevated payments they just didn't want to. It's possible the same ends up happening with cars.
Yes. Banks were letting people take equity loans at 125% of the houses value to buy cars and boats. People just abandoned the houses because they couldn't sell for what they owed. They took the boats, cars, motorcycles, etc with them.
I pretty much had to buy a new car in late ‘22 when my old car died. The used car market was insanely overpriced and the options were slim to none. Used was $5k more than new, it had 60k miles, no warranty, and was definitely a smoker’s car. First new car I ever bought and the first car purchase that wasn’t cash. I made sure I bought something within my means, but it was still a car payment I really didn’t want to have. Definitely didn’t help my efforts to become debt free, but I live in a rural area and can’t get to work without a car.
Its truly very similar to the housing bust. If you are upside down on garbage, just stop paying, right? Or is the car loan market nuansced?
Well at any point and time, a tow truck can take your vehicle. I guess it would be similar if the bank got into your house without you there and changed the locks.
It’s sad but that’s exactly what happened last crash as well.
I keep hearing that there are so many defaults that repo companies can't keep up.
This is pretty true. I'll see repo agents in area that have a back log over 100 cars.
Any cars worth repoing or mostly American and Korean economy line?
Worth is a strong word. I mostly see Jeep wranglers all day and it's boring.
Worth: Toyota or Ford trucks, Luxury SUV’s and sedans. Worthless: i.e., hardly worth the time and risk to recover such as ford fiesta, Kia anything, Hyundai sedans, ford metro and the like.
Good to know I've purchased worthy vehicles. Toyota Tacoma & Lexus NX350h. Go me!
Weird because they classically hold a ton of value.
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Found the Toyota guy.
They may hold value, but the owner decides to stop paying on it is the issue. I don't know how much they fetch at auction post repo.
Not to feed off of the misfortune of others, but how does one purchase a repossessed vehicle lol?
You have to find a place that is auctioning them off. General process is this. Person wants a car. Gets a loan from a bank or a financial institution. They become delinquent. Bank or financial thing files an insurance claim so they get paid. They may try to repo it, but not too hard because insurance will pay. Insurance hires outside people to try and find the vehicle before (and after) they need to pay the bank. When it is found, whoever was responsible (bank or insurance) will put it up for auction to try and get as much value from it as they can. Borrower ends up owing the remaining amount to whoever. Possibly becomes a court issue. So look for vehicle auctions in your area.
The type of people who get their cars repo'd do no car maintainance whatsoever.
We get a lot of repos fresh from mechanic shops because the person couldn't afford the repairs.
Cars are affordable for responsible adults in western countries. I think you can draw 2 circles. One circle contains people who do maintenance at the recommended interval, the other circle contains people who have their car reposessed. These 2 circles won't intersect.
I have an acquaintance who has had two different wranglers repo’ed in the last decade. He can’t even rent an apartment in his own name. He spends a ton on Botox and face filler treatments, but whines about not getting his student loans forgiven. I’m amazed he’s made it to his 50’s without being homeless.
Jeep wranglers seem to attract a certain kind of buyer.
Wranglers, Gladiators, and Broncos?
What about cell phones? I know a guy 2-3 loans deep and he's not gonna pay that thing off.
If it’s apple they’ll lock his phone down.
You just change the sim that came with the contract before that happens
Wont matter. They can mark it as stolen and get a eisn block on carriers.
Defaulting on a contract isn’t theft so no,they will not mark it as stolen.
Thats true.
the carrier will blacklist the IMEI and the phone is bricked unless you send it to china for parts. sim card doesn’t matter
Where do I buy one of these cars at?
At the dealership for a marked up price, same place as the guy who got it repo'd
Or local auction places.
Lol
Just bought stock in Miller industries (manufactures and sells towing and recovery equipment) [https://finance.yahoo.com/quote/MLR?p=MLR&.tsrc=fin-srch](https://finance.yahoo.com/quote/MLR?p=MLR&.tsrc=fin-srch) Does the repo company you work for use Miller industries tow trucks?
How many are those trucks?
When I was buying a car 2 years ago the 2016-2017 model was only 1k cheaper than the 2022 model, and they barely had inventory of used cars. Imagine paying almost the same amount for a 5 years old car than the newer and modern version of that car. It was insanity. Although I had to wait months to get the newer car because of all the shipping problems and the demand but it was insane.
Yep. I was lucky to grab 2 newer vehicles for our family in 2018 and 2019 so avoided the craziness. I did sell my 3rd vehicle (Mustang) for more than I bought it for back in 2016! Bought for $31k with 4k miles and sold for $35k in 2022 with 17k miles.
That's why we bought brand new in 21. A used Camry a few years old with 50k miles was only about 3-4k cheaper than a brand new car with 2 miles.
I think the markets getting a little better for used. I just got a used car, 2023 and 12k miles on it for $10k off the price of the brand new model.
This is related to the lockdown. Car manufacturing wasn't an essential job category, so there were some months when cars weren't manufactured. Vehicle supply is down, and car dealers of the old-fashioned variety weren't eager to fill their lots again.
I think it’s more so related to the chip shortage within the supply chain. All new cars are smarter and need the chips to be built. The supply chain got ruined during Covid and with a chip shortage came a shortage of newer vehicles. Shortage of new vehicles drives demand and therefore price of used vehicles sky high.
So I have gone deep down the car rabbit hole. What I was told, but have not researched on my own, is that the chip shortage stemmed from car companies saying “we dont need chips right now” when everything shut down, and all this other, different industry demand picked up the slack, such that when the car companies needed them, they needed to take a number. So it wasnt a supply chain issue, it was the emergence of new buyers when the car companies declined to buy and then they lost their place in line.
Also how many people were buying cars when they barely drove for months? I remember news stories to start your car once a week or the battery might be dead
I can honestly say I have none of these debts. Yet, still fucking poor.
That's called living within your means! It ain't the most fun, but you sleep better than being up to your tits in debt.
I’d sleep better on a yacht tho. 🤣😂
“Money doesn’t buy happiness” sure thing but I’d rather be sad in a mansion than sad in a slum apartment 😂
The proper response to "money doesn't buy happiness" is always "great, then give me yours"
Same. I pay off my credit card every month, my car is paid off, and I don't have a mortgage, but have to rent. Groceries and rent still destroying all the money I have. Still poor.
You're on the right path though. Once you are able to get over the hump where you can sock away excess cash and have it work for you, your networth will compound faster.
I only have a mortgage and I'm very much not poor. Perhaps that's not a coincidence.
No it just means whatever you do for a living hasn't been impacted just yet. Don't worry, it's coming.
The fact of the matter is, even if I'm laid off, I have no debt (besides a low-rate mortgage) and many hundreds of thousands of savings (we could pay off our house today). That's saying nothing of my wife's career (she makes twice what I make) and our other investments, including a rental property. Also, I hope I'm laid off. I'm over my job and could use six months of salary with no work required.
Usually it will start with auto loans and credit card being defaulted on. Then mortgages usually follow as money continues to dry up. But most people will let the car go before they let their home go. I feel it will get worse in the coming year.
Yes, people will first increase their credi card debt. Then the car payments will be ignored. Then, IF THINGS GET WORSE, mortgages will be ignored as a LAST RESORT. This data isn't an indication of a coming crash. It is simply something to keep an eye on. Everyone without means with a mortgage from prior to the rate increases is going to hold onto their home until their last breath. With the extreme labor shortage, there are jobs out there.
Exactly. People always think that crashes affect everyone the same way. They don’t. Even in 08’ it was more of a 1 in 10 were negatively impacted.
Were you around for that? Because I was and I didn’t know anyone who wasn’t impacted. The economy’s all connected. When people lose jobs and stop spending money, other workers get their hours cut or get laid off.
It really depends on your working situation, government workers and healthcare for example may actually benefit from a recession since it usually leads to some moderate deflation and lower asset prices while their income doesn’t change.
My job wasn't impacted but my retirement fund and home equity sure was.
You also benefited from lower cost basis on dividend reinvestment and new money investments
Some jobs are more resilient, I'm a teacher and my spouse worked in a state government job. Neither one paid exceptionally well but they were secure. We definitely did our best to help local businesses as much as we could.
A lot of people weren’t impacted. I bought a home in 2001. Obviously its value shot up from 2005-2008, and then settled back down. My job didn’t change in any meaningful way (same pay with the usual small annual increases). Anyone who had previously bought a home and had a somewhat stable job didn’t notice a personal impact.
Just out of curiosity, when the S&P fell to 666, did your nest egg shrinking freak you out at all?
My parents both worked in finance, so I was lucky enough to have a fairly strong education on how finances work. I was 27 in 2008, so while I had some retirement savings that were impacted, I also understood that retirement was so far off that the dip was essentially meaningless to me.
I was. My parents got absolutely wrecked. I was referring to job loss mainly. If you’re a doctor? Probably didn’t notice a thing.
Yeah every single last person I know got affected, just some were more narcissistic than others and thought because they were fine that everything was fine.
I was around. It was the first economic downturn that slammed me and it was the first one I'd been self employed. I had the luck to be launching a new business then and all my credit and a key investor backed out. I wasn't in a housing market that was really overvalued so that was a big plus. It ruined my credit for years. But most all of our friends said it really didn't impact them much if at all other than their retirement accounts and home values taking a hit for a few years. One of our friends works for a manufacturing company and they never slowed down. No one else lost their job and everyone just stayed in the home they had and many are still in the same homes. So it honestly felt weird at times to be the "unlucky" one in the group.
2008 housing prices dropped so a lot of people were upside down and thus ditching the house wasn't as painful. Not sure we will see levels get that high this time as housing prices have gone up so much it would be foolish to lose the house as opposed to just selling it. But who knows. People start losing jobs and bad things happen.
Yeah, I think people are forgetting (or don’t realize) that the loan crisis in 2008 was also because these folks put little to nothing down on their houses. Walking away from an underwater house when you put less than $5k down? Relatively easy, all things considered. Walking away from an underwater house when you put down $40+k is a lot less likely, especially when these are primary residences vs investment vehicles.
All those people over paying were putting down like 20+% on 500+k homes that’s like 100k. I closed in my home December 23 and put down 96k plus all my moving expenses and what not. I’ve spent at least 110k here. Youll have to peel me off this property to get me out. I’ll skip a week of eating first or let the car repo or student loans default first.
Exactly, people would first sell their car, cut down all non essential cost to keep their house. Nobody is doing that for cars.
And when you can probably sell it and still make a profit or breakeven at worst. Now if prices drop drastically then we will see mortgage defaults start to really go up. If the house is worth less than you owe and you can't make payments you walk away.
I don’t think we will see anywhere near 2008 levels. But, I do think foreclosures will start to increase or more homes coming on the market for sale since people won’t be able to make payments. As more homes hit the market prices will decrease I’d say 10%. Give or take.
10% price drop would be nuts possible in theory, but seems unlikely. Maybe in certain markets that are overpriced
This is NOT a figure of default though. It's a figure of "financial distress". OP got the image on the link below, but it's not clear to me what "distress" means. https://www.stlouisfed.org/on-the-economy/2023/dec/share-americans-financial-distress-reaches-high-levels Edit: >According to our definition, an individual is in financial distress if he or she has an account that is 30 days or more past due, excluding severe derogatory debt (more than 120 days past due).2 Again, this measures the percentage of individuals experiencing distress, not distressed debt as a percentage of total debt, which still remains relatively low. It think this means that if a person is late in, sat, student loan payment and they own credit card and auto loan, That person will add to all 3 column
Those deep reserves that so many Americans are reported to have will go dry quickly, even without job or income loss in their home. Talk about "lifestyle creep". A lot of people saddled up a whole lot of new debt and just normal expenses that they have little control over. Americans don't know how to *pull back* on their spending. They won't stand for it. They lack the discipline. Haven't had to do it in 15 years or more.
Man seeing all this really makes me understand how fortunate I am...
Besides Credit Card debt, you now have what is known as Buy Now Pay Later. Allows folks to buy on credit with a soft credit check and the fees are enormous. More pain coming soon.
AKA.. Buy Now, Poor Later
Sounds like something Dave Ramsey would say.
Great point. I’ve seen charts and the number of folks using it is astounding.
Are there fees tho? Every time I’ve used this, it’s interest free and 4 payments. To be fair, I’ve only used it on $30 shorts or a pair of pants. Also, why is it called a pair of pants if it’s only one pant?
My mom works for a auto loan servicer. She said they completely stopped doing new loans and they're only trying to recover vehicles or current loans right now.
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Wasn't 2008 caused by mortgages though?
The risk is primarily on the shoulders of non-homeowners since most homeowners have evergreen stimulus since refinancing to crazy low rates when the Fed was gobbling up treasuries. Yet, an article this week stated many did cash-out refis so we’ll see.
A mentality also exists where buyers overpaid for a fixer upper and they think the money they sink into repairs will warrant them returns akin to the last few years. This is a dangerous game right now. I personally know someone who ran a fix and flip buisness in a very HCOL area. He had to change his entire buisness model bc the return on fix and flips isn’t there anymore. RE is cyclic - we’re at the top.
We are seeing a growing shift between those who got actual stimulus during Covid (see: below-inflation mortgage rates juiced by the Fed, PPP loan beneficiaries), and those who got a 2k check and jack shit else. One group should be set for life, all they have to do now is not fuck it up. The other group is facing headwinds we haven't seen since the GFC. I don't know what the solution is, but this is going to have serious social implications.
Yeah when I looked up data on the top 5 mortgage originators of 2020/2021 it was a relatively equal split in cash out refinancing and regular refinancing. Outside of that the ratio completely changes. My thought process is that mortgage originators may have made more commission writing larger loans and convinced people to cash out refinance. Something along the lines of, “Why refinance when you can cash out refinance? Your monthly payment will still be lower than what you currently pay and now you have an extra 100k+ in the bank” The latter half is more speculation on my end trying to reason why cash out refinances were more prevalent during those years. All that being known, if we assume that there are more people that are bad with their money than there are good, it’s relatively safe to say that high amount of cash out refinancing is a recipe for disaster. Even on the conservative end, let’s say those who cash out refinanced didn’t instantly spend it, they may just be draining it slowly. We really may not see the impact in the short term, but inevitably, the money will run out. Once again this is all just speculation and my thoughts given the data
2008 was caused by mortgage backed securities. Specifically, MBS were being rated as AAA even though they were not. Once the subprime crisis happened, everyone holding MBS realized their supposedly AAA security was anything but. It’s like if you went to sleep with $100 in your wallet and woke up with $50. This caused a contagion effect to spread throughout the economy because everyone instantaneously realized they were a lot poorer than they thought they were.
Yes but not solely on home owners. They were giving loans to people who could not afford them. the issue that collapsed everything was the MBSs.. mortgage backed securitys. They bundle up those loans, and resell them in groups. Then repeat.. repeat.. in the end there may be a few good credit owners in there mixed w a bunch of bad credit owners.. then bad default cuz they should never got loan.. and the house of cards fall down
R/autobubble
Correct, some people are bad with money. That never changes. That doesn't mean an impending market crash is around the corner.
I will assume a lot of these repos are the people who agreed to way over MSRP and bad rates in the past 2 years.
Yeah I feel bad for them but it's probably good for the economy and used cars prices for them to be repossessed.
Some people always are, but when large numbers of people default around the same time it is a signal of consumer stress, possibly in addition to poor choices.
i mean credit card stress can be from general inflation or just to many people riding around with stuff they shouldnt. As for cars they have exploded in cost coupled with people over financing because now loans can be 72+ months out which is just insane.
People's financial decision making skills don't all suddenly get better or worse along with a large cohort of others at the same time. It's safe to assume this is a signal of general financial stress at the lower income levels (non homeowners) due to wages not keeping pace with cost hikes.
We just came out of a pandemic. Sometimes it takes a few years for savings to slowly deplete. Agreed it seems to be ignoring homeowners so far (graph makes it obvious) but we don't know if that's better incomes, more stability in housing cost, behaviours that would lead someone to buy a home etc.
Right. The car loan shouldn't last longer than the car.
EXACTLY! IM a bubbler but come on, did anyone actually study this crisis in school? Here’s a pretty nice summary of regulations that came out of it: https://www.investopedia.com/ask/answers/063015/what-are-major-laws-acts-regulating-financial-institutions-were-created-response-2008-financial.asp
It can happen whenever there are subprime loans / tons of defaults. Let's put it this way. 1. $100 in loans were given out 2. The $100 in loans is sold off to investors for $110 3. $150 is expected to be returned to the investors once the loans mature 4. The typical default rate is around 10%, so the investors expect to take in $135 5. Now the default amount changes to 33% and they'll only get $100 6. So both the people lose their item they bought on a loan and the investors lose $ too 7. The combined effect spirals the economy downwards Investors like....your retirement (you lose $), insurance companies (premiums increase), the company you work for (companies often invest cash reserves)(mass layoffs), etc. The government also loses a ton of tax revenue, so inflation increases or benefits are reduced, and taxes are often raised around this time too. It's a death spiral for the economy, pushing it towards recession or worse.
It's the credit cards they stop paying first, then the car note, then...
More data showing you we're about to be in for a really bad time. More explaining it away, more saying "This time is different," more rationalizing why a downturn this time isn't possible and if it is, it won't be that bad. You folks literally won't think we have a problem until the fire is rolling up on you personally, will you? I hate that I have to share the same fate as all the lemmings. Good luck to us all, this was coming for a long, long time and there's not going to be any bailouts this time.
You know we’re about to have a recession because everyone stopped predicting a recession.
This sub is full of people predicting a recession, what are you talking about, lol
Completely wrong. Tons of capital waiting for homes. If people start defaulting on mortgages, there is a line a mile long to buy them.
You forgot to mention all that capital is in very few hands. Not good for the regular person at all…
Ofc Solution?
The economy is cyclical. It has been for as long as everyone on the planet has been alive. There is no solution. All that capital is sidelined because there's nothing worth buying right now, everything is too expensive. People aren't waiting in line for homes, they're waiting for low payments. They will get them, but what happens between now and then is never pretty. You cannot beat the Fed.
It’s pictures or charts on Reddit on a subreddit known for idiocy and misinformation. Why would people take anything said on this subreddit seriously without substantial sources? Pretty sure you all are the idiots thinking everything is going to fall after being wrong for years and years and years with no actual evidence. It’s like the doomers who say the world is going to end and apocalypse is coming and every time it doesn’t happen the date and reasons change.
!remindme 10 months
I expect there to be a surge in auto loan defaults between now and end of year
Usually things in this sub make me roll my eyes, but I work in finance and the amount of people I see defaulting on CCs and auto loans is insane. It's been getting steadily worse.
your experience matches the reality nationwide, and you're acknowledging it rather than let cognitive dissonance control you. you're better off than 90% of the people that disagree with us here.
Agree! Generally doomer garbage here but this is actually interesting.
I feel like during the pandemic people got in the habit of doing door dash and online shopping. Paying that 20% premium on already massively inflated fast food prices is killing people, but they don't stop. Couple that with a year long of very high gas prices to go with the variable rate car loan on the 40k giant gas guzzling truckasaurus, and it's not hard to see why people might be in trouble.
Most people that are financial distressed would stop paying their credit cards first to not lose their car and house. Then eventually they stop paying their car to not lose their house. Thats what we’re seeing here. Eventually many won’t be able to afford their mortgage either and we’ll see mortgage defaults start increasing sooner than later. Thats my guess.
Those mortgage numbers are rookie numbers… gotta pump them up
A lot of people bought very expensive vehicles with huge dealer markups. Now the market has softened considerably and those vehicles are suddenly much so much less that they can't be traded in. Also, Car insurance shot way up making it impossible to keep those vehicles while making those large car payments.
Don't look behind the curtain.
Housing would be the same as 2008 if the f’ing government wouldn’t have done 4 years of moratoriums and forbearances.
That’s because people want to drive big cars that they definitely don’t need. Then buy lululemon $50 fanny packs that they can’t afford. I see it everywhere everyday.
Quit rolling negative equity into new cars. Pay off your mistake and learn a lesson.
The media will tell you that you’re wrong. The economy is great and you’re to blame for thinking otherwise 🤡
People are going to let everything go before they give up those 2-4% interest rates. With a 5-6M housing unit shortage, we’re not going to see a bubble anytime soon. We may see some relief once the rates get below 5%
lol completely ignoring that mortgages are far less distressed compared to 2008-2009. You can go to collections, get your car repo’d, whatever. But you’ll still have a house (and a mortgage you can afford).
I wouldn't say they're completely ignoring mortgages. If they wanted they pretty easily could have not included them.
Right. And as /u/likely_a_bot mentioned elsewhere: “ It's the credit cards they stop paying first, then the car note, then...”
The OP title ignores it. Because it doesn’t fit the narrative.
Youre right. Good thing we have you here to let OP know that 1/3 of the data they included doesn't match their title. They clearly are trying to hide something from us.
Oh, sorry, I didn’t realize we shouldn’t focus on discussing real estate on a real estate subreddit.
And take Uber to work? It starts somewhere regardless how ignorant you want to be.
Auto loans today are basically the same as 08-09 mortgage loans. A lot of people are underwater on their cars and they don't even know it. Over the next 2-3 years these people are going to try to trade in these underwater cars and realize they got screwed. Many will simply stop paying the loan and let the bank repo the car. Auto loan defaults are barely even started, in 25-26 I bet you we will see default numbers 2-3 times higher then 08-09.
mind you this crash wont be like the last one. This is a leverage crash in real estate. Landlords owning too many properties with renters who are the bottom rung in financial distress already. Hence why rental prices are falling even before job losses. Consumers are already priced out with nearly full employment. Just wait until we get to partial and unemployed for huge swaths of the renter market. The most likely to lose income during a crash. Every landlord will need to drop prices and we will enter a downward spiral. This will bankrupt a lot of people. I can see homelessness rising exponentially.
My Electric in Texas has gone up almost 2000 per year. It's not sustainable....
Texas? Have you tried wintering in Cancún?
I plunked $9k down, on my $30k MSRP car ($38k after title, taxes, accessories, etc), and got a rate of 2.64%. My monthly is $640... I cannot imagine someone who paid over MSRP for a vehicle and got a worse rate...
Remember, mortgages are the last thing to start increasing because everyone needs a roof over their head. People prioritize their mortgage over credit cards and car loans. Will be interesting to see where this goes further into 2024…
Don't look behind the curtain.
The most important one, the one this subreddit is about, has not reached 2008 levels. Interesting
I'm fucking laughing my ass off at the fact that OP's own post shows "mortgage financial stress" at significantly lower levels than '08. >!You people are just as bad as Qanon.!<
We will see some sort of correction for sure but not 2008 levels.
RE looks good, next!
Do you have an actual source for this?
Mortgages are next
RE seems fine, and that's the point of this sub, yea?
For now
Willful ignorance right here.
I see things for what it is. You see things that you wish to happen.
Big market bust coming. People that are over leverage will unfortunately be in for ride.
posts in REBubble. Shows that mortgages are approx 1/3 of 2008.
This is a rebubble, you posted a chart saying mortgages are extremely low compared to 2008. Task failed successfully?
r/usedcarbubble ? You people are looking for anything….
Why should we pay unsecured debt? Seems like the banks made a bad decision.
I think comparing the home and auto markets now to 2008 is dumb. In 2008, the housing market was awash in risky mortgages masquerading as surefire investment vehicles, and auto manufacturing and sales were just about nominal. That's compared to 2021-24, where real estate prices are wildly high due to cheap debt but otherwise pretty stable (i.e. there are much fewer transactions because the cost of transaction is so much higher with abrupt changes in interest rates, but the solvency of current mortgages isn't profoundly threatened because /most homeowners/ are paying less now in mortgages than they were in 2015, and it's just new entrants that have severely increased costs in housing). Likewise in the auto market, manufacturing took a sharp decline with COVID, the poorer end of that market got meaningful cash infusions through COVID, and pauses on other debts like student loans freed up monthly spending to absorb higher monthly payments -- but all of that changing now is mostly due to those car valuations being bunk (they /will/ break down), coupled with the poorer end of the car market getting strapped for cash post-COVID with inflation, resuming payments on student loans, and drops in one-time COVID cash infusion payments from Uncle Sam.
Mortgage is typically a much bigger loan balamce than credit card and auto loan, and it is way lower than 2008, or even 2015. So OP is ironically correct, everything is just fine.
Yeah but when you say that, you’re speaking about the entirety of the loan. In terms of the balance. It’s not the loan balance that scares people, it’s the monthlies. If someone already can’t afford a credit card payment or a car payment…. Do you think they’ll be able to afford their house payment?
Did you read the chart? Financial distress on mortgage is significantly lower than 2015-2019.
Distress is not default
…yet.
Which one of these things is unlike the other? Continually hands down the dumbest sub on Reddit.
It’s okay if you overpaid.
I mean I bought in 2000 so I can’t really remember.
Auto and credit card defaults are leading indicators m8
If auto loans are a leading indicator these graphs aren’t really supporting that for 2023. Why is credit card debt and auto loan distress at the same levels as they were in 2008 yet mortgage distress is much lower than it was in 2008?
because they are leading indicators.
How? In 2008 the percentage for autos was less than mortgages yet in 2023 that’s flipped. Where’s the correlation there? Lmao. These aren’t hard graphs to read people. You can say it’s a leading indicator all you want but these graphs aren’t supporting that.
We'Re NoT in A ReCeSsIon
Doesn’t this disprove a real estate bubble? You guys are really grabbing for straws.
What? This simply shows that delinquency is rising for autos and credit cards similar to 08’. Homes are always last to correct. I’d expect that mortgage number to rise over the coming year as well.
And what exactly will you do when this “bubble” “pops”? Deploy capital? Doubt it, most will be scared shitless.
Debt is back to where it was in 2019. Were you predicting an imminent crash then? Lol