House Prices are Falling - Bitcoin is Rising - What to do?
What will you do in this upcoming market?
Lets say you need a place to live. We all know that sleeping on the street is not very comfortable, so we selfishly want a place that has a roof, and insulation, and a heater. Oh so much to ask for.
So, you are standing there with some crypto burning a hole in your pockets. The bull market has really gotten going, and everything is up.
On the other hand, the housing market is going down, Down, DOWN.
The houses for sale are piling up on Zillow, the prices are plummeting!
But the rental prices are moving like molasses.
If this was any normal time, you could get a mortgage with a payment lower than the current rents.
But, things are not normal. What do you do?
More houses on the market.
There are already places in The US where it is cheaper to buy a house than to rent. And so, if you had the money, or the credit, it would totally make sense to buy. Except, that this time is not normal. Every month you can wait, the better your position will be.
We are in a silent recession. People are losing jobs left and right. There are tons of jobs left unfilled, that are almost economically unviable to work at. (It costs more to do the job, than to not do the job. time, gas, opportunity costs) These people will not be able to afford a house, even with a lowered price.
Soon, the govern-cement will acknowledge the recession (which may be a depression by that time).
More houses on the market as people try to make themselves solvent, or to sell before the house prices crash more. Foreclosures are also coming.
The people who can qualify for a mortgage are getting fewer and fewer, while more and more houses are going to flood onto the market.
House prices are going to fall off a cliff.
However, rents take forever (it seems) to follow.
No one ever wants to drop rents.
If you drop the rent for one renter, then the rest of your renters will want a cut too. This will seriously impact your bottom line, so you really want to avoid this.
Many landlords have mortgages that are based on the stated amount of rent they should get. If these guys lower their rent, they are in breach of contract, and may have to pay the mortgage back immediately.
The first thing that happens is landlords start offering deals. 2 free months if you sign a lease, or some other kind of move in bonus.
After that, when the rental stays open for too long, people start lowering the price. And then people start moving to take advantage of lower rent. And then more rents get lowered…
So, it takes a while for rent prices to drop.
Bitcoin go up!
Either we are in the bull market, or we are one crash (correction) away from the official bull market.
Those who have bunches of cryptos are going to find they have a lot of "wealth". Of course, the on-ramps and off-ramps are being shut down, but there are still avenues.
One thing you can do is trade some of your cryptos for a house. (the Infernal Revolting Syndicate has declared bitcoin a commodity, so you should be able to trade it for other assets.)
But, at what point will it be a good deal to trade?
House prices go down, Bitcoin go up
So, when it is advantageous to trade your crypto for a house?
The best time would be when we are near the peak for the crypto bull run, and near the bottom for the housing market. However, the bull run usually lasts about a year, while the last housing crash took a few years to get to the bottom.
And what if you need a place to stay now?
Well, unfortunately, the numbers we are dealing with are insane. The price of bitcoin may 10x this run. The price of homes can easily drop 50%. And the value of the dollar might go quickly to 1/∞ (aka, nothin)
What do you do with this info? How do you make a decision?
Well, the best way is to start plotting house prices in the area you want to live in, in bitcoin.
Whether you want a $100,000 house, or a $1,000,000 house, it makes more sense to your brain to change them into bitcoin.
2.2 bitcoin or 22.2 bitcoin respectively.
Then you watch this number drop and drop, then you trade when the number is low enough for you. This depends on amount of crypto you have in your bags, and your current need.
(And the decision about paying too much for rent? It doesn't matter in the long run. The amount is minuscule in comparison to how much you will lose as the house price goes down.)
If we just look at the bull run, those houses go from 2.2 → 0.22 & 22 → 2.2 bitcoin.
If we just look at the housing crash, those houses go from 2.2 → 1.1 & 22 → 11 bitcoin.
Together, the $100,000 house drops from 2.2 bitcoin, down to .11
and that $1,000,000 house drops from 22 bitcoin down to 1.1 bitcoin.
It will pay hugely if you wait. If you could afford it now, you will be much more able to afford it a year from now. If you can't afford it now, your tiny bags may be all you need in the near future.
These values i am using are not conservative, nor are they pie in the sky.
Me, myself, i believe that suburban houses are going to zero. (but this may take 10 years)
I also believe that bitcoin may become unobtanium. No one will be selling bitcoin for dollars. (and this means you will have to negotiate the house price in bitcoin)
Thus, you may get a much cheaper bitcoin price than what i have shown.
The other input into these formulas is, how much cash do you have? If cash is going to zero (hyperinflation) rather quickly, then putting it into any asset, including falling assets like a house, will be a good move.
And, of course, if you have a mortgage, later this year, i would negotiate a pay off. Because the banks are going to be hurting, and a lot of them would really like more bitcoin. So, you may find you can negotiate a really good deal.
I would like to hear what you think. Are these numbers too bullish? Too low? Are you waiting for 0.1 bitcoin to buy a house? Will it be even better during the next having cycle?
It seems like the longer you wait, the better off you will be. But there is something to be said for owning the roof over your head.