Earlier quoted context omitted.
Agreed. 19.94B locked up in NFTs atm https://defillama.com/nfts
The reserve bankers would look at stats like that and just shake their head at the money wasting away.
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The Beanie Baby Bubble of '99
101–110 of 141 posts
Re: The Beanie Baby Bubble of '99
#102Earlier quoted context omitted.
Oh, bubbles can surely happen even in the era of widespread information. Look no further than housing. A few points on housing: - real home prices have now surpassed the 2000s peak - household formation and population growth has been decelerating, while building has been accelerating. - there are 1.1 homes per household, same as the year 2000. We are not at historically low supply as some claim. Only low in terms of…
Whether or not housing prices are in a "bubble" in the sense that the prices are going to correct and drop at some point, they're not a bubble in the Beanie Baby sense of seeing 10000% price appreciation in the span of a few years. Nobody's 4-bed condo is selling for $500 million. There needs to be some acknowledgement of the gap between probably mispriced and tulipmania. Conversely, if prices correct, they're still…
I really appreciate this comment. The $1M house I bought last year at 2.75% (now supposedly valued $1.1M) might go down to $600-700k if we have some kind of major correction, but it's in a desirable area and never going to zero. I'm prepared for it to drop, but over the long term I expect to be fine. My house is a place to live for the long term, not something I'm looking to day trade. The only day I care what it's "worth" is the day I need to sell it. Thinking of your primary residence as a speculative investment seems so strange to me.
If you buy something that is comfortably affordable for you now where you're willing to stay for the long term, with a fixed rate loan, I don't see the benefit of waiting until the peak comes. I'd rather be building equity than paying rent waiting for the market to peak. People have been predicting another crash every year for the last decade, and I'm sure it will go down again at some point, but I wouldn't plan my life around anybody's ability to call the top accurately. Just buy what you can afford and get on with your life.
Re: The Beanie Baby Bubble of '99
#103The current state of NFTs etc. amazes me in the context of Beanie Babies. So many people have learned nothing. Granted the time gap means these are entirely new people making those mistakes. We have such a degraded level of discourse now that if it were used in the Beanie Baby craze there would be people arguing about whether all soft toys are evil.
> So many people have learned nothing. The more I talk to crypto/NFT people, the more I’ve realized that they’re looking at the same historical events but walking away with completely different take-aways. For example, they wouldn’t look at the Beanie Baby bubble and think of the people who invested a lot of money and had nothing to show for it after the crash. They’d look at the price charts of Beanie Babies and pat…
> Just sell before the line goes down and they’re going to be rich!
This is generally known as the greater fool theory.
Re: The Beanie Baby Bubble of '99
#104This leads to a pretty interesting comparison between plain cryptocurrencies and NFTs. Cryptocurrencies are beanie babies: Once available for a trifle, their value has ballooned based on speculation. But that already happened, you missed out on it, and it has no bearing on their future prospects. And if a bunch of people ever feel the need to cash out at once, they'll find out just how much value they really have whe…
With Beanie Babies, you actually own something. You might not be able to sell it for what you paid, but you still have something to display or give away. With NFT, you own a URL to an image, but you're relying on the NFT marketplace to maintain that. You're not buying the artwork itself, but some token related to the artwork. I think a better comparison for NFTs is a star registry. You pay a company to name a star af…
Yeah, the star registry comparison is common, and a good explanation of how NFTs work. I'm more trying to explain how their price works, and what forces drive their increases.
Bitcoins' price increase is driven by scarcity and speculation. NFTs' price increase is driven partly by speculation, but also by the appearance of speculation, a series of wash trades of increasing value that seem to outsiders to be actual people buying the item for increasing prices. The buyer doesn't know that those were all one person trading with themselves, so they expect that, even if they can't sell for a profit, they can still sell for a minor loss. Then, once they buy it, one of two things can happen: 1. They ride off the hype wave from the original seller, and build it up some more themselves, then find a bigger fool to flip the NFT to; or 2. They keep it a while, the hype wave dies down, and if they ever look to sell it they'll find the real level of demand is way below what they were expecting. Either way, the house gets its cut. It's all a gold-brick scam.
Re: The Beanie Baby Bubble of '99
#105Earlier quoted context omitted.
It is crazy how much rates have fallen. But the historical average for mortgage rates has been around 5-7%. The 70s in particular had very bad inflation that was pretty abnormal relative to history. Also important to note that rate only matters in the context of price. Rates by themselves don't provide you much info. e.g. 0% on 10 million is still expensive, just as 1000% rate on 1 dollar is pretty cheap
We'll find out in a couple of quarters or so if this inflation is "sticky" or just a temporary result of the pandemic. My feeling is that it's mostly the latter, but it's important to note that there were already inflationary trends in play prior to the pandemic - the push to return more manufacturing to the US and the resulting trade wars, for example, were going to lead to some inflation. If this inflation proves t…
We'll see. I was pretty sold on the transitory belief earlier, and while I believe there are transitory components, like car prices, I expect core/wage inflation to continue.
We had an almost 9% annualized wage gain last month using the MoM numbers. Unemployment is too low right now for core inflation pressures to abate, unless we have a recession or similar drop off in employment IMO. I think a lot of these core economic principles were forgotten due to how high unemployment went after GFC and how long it took to reach full employment once again.
It looks to me like we've entered a wage price spiral... but certainly it could play out in a number of ways. Perhaps the Fed will use falling nominal CPI YoY numbers to hide the structural inflation that has developed. That could keep rates artificially suppressed for another year, if they're able to convince markets of it.
Due to base effects, CPI is likely to peak either in Feb or March. But it would be premature to extrapolate a fall from 7 to 6%, for example, as evidence that structural inflation hasn't taken hold.
I expect inflation to persist around 4-5% longer term, absent intervention by the Fed... which still brings us to 6-7% mortgage rates.
Re: The Beanie Baby Bubble of '99
#106Earlier quoted context omitted.
I don't see the data about 1.1 homes per household in your links. What is accounted as a "home" whenever you are taking this number from? Given that the rate of home ownership is about 65% it is probably counting rentals, unless an average household owns 1.7 houses. On the other hand, https://fred.stlouisfed.org/series/COMPU1USA shows that the number of SFHs completed in 2021 finally reached levels of 1994, when popu…
Total Households: https://fred.stlouisfed.org/series/TTLHH Total Housing Units: https://fred.stlouisfed.org/series/ETOTALUSQ176N Divide one by the other to get housing units per household. You can see ratio in 2020 is roughly the same as 2000. You have to consider multifamily construction too (which can include SFH-like duplexes, or full apartment buildings). Housing is fungible to a certain extent. If rents fall, th…
Okay, so it does include rentals and the number seem pretty normal - the ratio of units to households will always stay close to 1.
And yes, the housing is fungible to an extent: the dearth of SFHs cause the price of SFHs to rocket and pushes the rest of the market up as the people who are priced out of SFHs can as well go and buy a condo or a townhouse.
Re: The Beanie Baby Bubble of '99
#107Earlier quoted context omitted.
Total Households: https://fred.stlouisfed.org/series/TTLHH Total Housing Units: https://fred.stlouisfed.org/series/ETOTALUSQ176N Divide one by the other to get housing units per household. You can see ratio in 2020 is roughly the same as 2000. You have to consider multifamily construction too (which can include SFH-like duplexes, or full apartment buildings). Housing is fungible to a certain extent. If rents fall, th…
Okay, so it does include rentals and the number seem pretty normal - the ratio of units to households will always stay close to 1. And yes, the housing is fungible to an extent: the dearth of SFHs cause the price of SFHs to rocket and pushes the rest of the market up as the people who are priced out of SFHs can as well go and buy a condo or a townhouse.
Yeah, but SFH aren't the only housing type appreciating. This theory doesn't really hold when you consider both Condos, inner city locales, rural locales etc have also experienced rapid price appreciation.
Rental or not doesn't really matter. Fundamentally people just need a place to live, and depending on locale will make the tradeoff between renting and buying. If rental stock doubles overnight, housing prices would decline too, as cost of a mortgage becomes relatively less appealing. In this sense it's fungible.
But it's true there may be some subset of people who would only buy SFH regardless of price
Re: The Beanie Baby Bubble of '99
#108Earlier quoted context omitted.
Whether or not housing prices are in a "bubble" in the sense that the prices are going to correct and drop at some point, they're not a bubble in the Beanie Baby sense of seeing 10000% price appreciation in the span of a few years. Nobody's 4-bed condo is selling for $500 million. There needs to be some acknowledgement of the gap between probably mispriced and tulipmania. Conversely, if prices correct, they're still…
I really appreciate this comment. The $1M house I bought last year at 2.75% (now supposedly valued $1.1M) might go down to $600-700k if we have some kind of major correction, but it's in a desirable area and never going to zero. I'm prepared for it to drop, but over the long term I expect to be fine. My house is a place to live for the long term, not something I'm looking to day trade. The only day I care what it's "…
Having equity can be important for:
1) Cash out refis. e.g. if you want to renovate, purchase a rental property or better yielding investment with the funds. Say you can take out cash at 2% rate, and buy a SFH rental with a 6% cap rate... you can build net worth faster (at more risk)
2) Being able to move without writing the bank a check. If you're underwater, you will have to pay out of pocket to sell, and then save a new down payment. If you don't ever plan to move, then this doesn't matter.
I consider valuation before purchasing property, rather than just whether I like it. But many don't, and that's fine too.
Commercial RE will definitely be driven by the fundamentals though, so I'm sure we will see cap rate expansion there unless rates begin to fall again. Residential can move out of line with fundamentals, for sure
Re: The Beanie Baby Bubble of '99
#109This leads to a pretty interesting comparison between plain cryptocurrencies and NFTs. Cryptocurrencies are beanie babies: Once available for a trifle, their value has ballooned based on speculation. But that already happened, you missed out on it, and it has no bearing on their future prospects. And if a bunch of people ever feel the need to cash out at once, they'll find out just how much value they really have whe…
> Cryptocurrencies are beanie babies: Once available for a trifle, their value has ballooned based on speculation. But that already happened, you missed out on it, and it has no bearing on their future prospects. And if a bunch of people ever feel the need to cash out at once, they'll find out just how much value they really have when there's nobody buying.
Can you describe the situation where nobody is buying? People may abandon Bitcoin but some sort of crytocurrency will be used by criminals. I am unable to imagine a future where Cryptocurrency does not exist. I am curious what you imagine will happen to crypto that it will be useless for criminals.
Re: The Beanie Baby Bubble of '99
#110Earlier quoted context omitted.
Okay, so it does include rentals and the number seem pretty normal - the ratio of units to households will always stay close to 1. And yes, the housing is fungible to an extent: the dearth of SFHs cause the price of SFHs to rocket and pushes the rest of the market up as the people who are priced out of SFHs can as well go and buy a condo or a townhouse.
Yeah, but SFH aren't the only housing type appreciating. This theory doesn't really hold when you consider both Condos, inner city locales, rural locales etc have also experienced rapid price appreciation. Rental or not doesn't really matter. Fundamentally people just need a place to live, and depending on locale will make the tradeoff between renting and buying. If rental stock doubles overnight, housing prices woul…
>Yeah, but SFH aren't the only housing type appreciating. This theory doesn't really hold when you consider both Condos, inner city locales, rural locales etc have also experienced rapid price appreciation.
What theory? That people who are priced out of SFH buy condos, townhomes and other type of housing? What do they do, keep renting and enjoy 30% yoy rent bumps instead?