Ask HN: What is the main argument for a housing market crash?

How did that work in 2008?

Every area will be slightly different, but I don't think it's realistic to say prices will never go down. Over the long term it will continue to increase, but there will be periods of volatility.

The Government is not a monolith. The rates are driven by the Fed decisions, and the Fed is subject to a congressional Act that establishes a dual mandate (inflation and unemployment). The Fed does not care about the budget deficit, or at least not in a direct way, as they care about the inflation indicators (like CPI). The US Treasury does not care about the deficit either. They simply have to enact what the Congress says. If the Congress is ok with a $5 trillion deficit per year, the US Treasury will raise the required debt at whatever prevailing rates are out there. The Congress does not pass the budget bill in a vacuum, they start with a proposal coming from the Executive.

So you have 4 actors, the Fed, the US Treasury, the Congress, and the President. Only the first one can manipulate the rates, and that one has only an indirect interest in how the long term debt of the Government looks like.

Why does the debt prevent rates from going up? The Fed as already signaled an appetite for increasing rates multiple times this year.

Aren't bonds sold at a fixed interest amount for x number of years?

In that case, why would a higher interest rate affect the ability to pay historical debt?

Not exactly. Most people require mortgages. The original owners might be underwater on their mortgage. People who can make it work generally aren't going to sell for a loss. The people who can't make it will be foreclosed, providing some affordable options but probably not enough.

So yes, prices will move with demand, but it won't be quite as simple due to the debt instruments involved. Essentially, prices will drop due to the lack of demand from a lack of affordable debt. Just my hunch.

So how do you feel about buying a used car right now? (i.e. buy one at this moment, after 40% YoY appreciation, because who knows what tomorrows price will be) And if it's not good advice for used cars, why is it good advice for a house? After all, there's a fixed supply of platinum for catalytic converters and they're not making any more of it!

My opinion is that the current housing surge is being driven by people who need more space for screaming children and home offices and are willing to pay whatever they need to for it. I know it's why my brother bought a house he thought was $250k overpriced - just to keep his wife happy during Covid.

These factors and the state of Covid WFH are, IMO, not permanent though. Time will tell. If we're never headed back to the office maybe these prices are here to stay.