What was the main cause for the 2008 stock market crash?
lack of confidence fear time
Did people who bought houses in the 70s essentially get the house for free? Was the price so low that the cost and or debt was inflated away?
You've hit upon the whole crux of the Federal Reserve's fixation on an arbitrary inflation target of 2% per annum. They are trying to inflate away your debts (not costs) and government debts to encourage current spending and investment (both financed by debt) today.However, this does NOT mean people who bought a home in the 1970s got them for free. They simply paid with those hard earned dollars from the 1970s. Through inflation and growth, median household income then was a tiny fraction of what it is today.The high inflation rates of the 1970s, from the shift to a pure fiat currency system, wiped out a lot of debt so people kept borrowing more, at least until the Federal Reserve stopped the cycle with an interest rate shock that took mortgage rates to 18%. People still bought homes, but just at much lower prices relative to their incomes. Since homebuyers paid 5–7x as much mortgage interest as today, home prices were severely depressed with extremely low home affordability.As interest rates have come down consistently for the past 35 years, home prices shot up along with ever increasing affordability. So, for those who suffered through the interest rate shock, they saw their mortgage debt get inflated away while their home prices rose sharply with the same inflation.In retrospect, it looks like everybody from the 1970s made extremely easy money on their homes. In reality, those who made huge returns were some of the toughest and boldest home buyers, who took a gamble in the midst of the biggest experiment in monetary policy in a century. If the experiment had failed, they could have easily been wiped out financially.But, for some homeowners, particularly those not on the hot coastal markets and in the Deep South, they've not experienced much price appreciation in 40 years. In those areas, homes are often still selling for exactly the same price 40 years later, effectively making a 70-80% loss on inflation adjusted dollars, ouch.
If I am waiting for next housing crash to buy a house, how long will I have to wait? Are housing crashes cyclical?
I started in real estate in 2001 before the last crash. I was and agent and investor before, during, and after that crash. I worked and still work in Colorado which was hit pretty hard during the crash, and has seen huge increases after the crash. I do not think we will see another immediate crash. I could see a slowing of the market, and even some price decreases, but not a crash.Here is why I do not see another crash coming:The last crash was built on inflated demand from loose lending guidelines.The current housing price increase is based on low supply from a lack of building.The last crash saw horrible lending practices with the bottom 1 percent of loans having credit scores in the low 500’s!The current market sees the lowest 1 percent of loans with credit scores above 600.I have much more data and sources for that data in this article: When Will there be Another Housing Market Crash? - Invest Four MoreI could see a downturn or slowing of the market, because of:Affordability. Many people are having a hard time affording rent or mortgages. If there are not enough people to buy, prices will soften.Tax plans. With the proposed tax bill, it will be much less advantageous to own a house.Interest rates. If rates rise significantly it will make it even less affordable to get a mortgage.I do not think we will see the crash we saw ten years ago, for a number of reasons. I do not think there are nearly as many bad loans. I do not think they are building nearly as much, I think there are investors by the thousands waiting for a dip in the market to start buying again. Those investors, including huge hedge funds, will not let the market dip too much.I also think it is hard to predict where the bottom is. If you are waiting for the bottom, how do you know when to buy? Here is a video I did about the housing crash.I would still be very careful about what and how you buy investments. The best way to get into trouble is too assume prices will go up forever. Why you Should Buy Rental Property for Cash Flow and Not Appreciation - Invest Four MoreHere is my last rental.Rental Property Number 19 Has Been Purchased (My 3rd Commercial Rental) - Invest Four More
Why won't the baby boomers step aside?
Because many of us are too busy supporting our college graduate kids who refuse to shop at Walmart or live in shaky neighborhoods. And some of us are simultaneously taking care of our parents as well -- you know, your Grandma and Grandpa? Or maybe you want us to retire so you can take care of ALL of us as well as yourself on your fresh-out-of-college income? Look around you. Jobs are necessary for EVERYONE. And although it's true I got my first job with only a high school diploma, guess what? I wouldn't be working now if that's all I had. I went on and got a degree just like you did. The only difference may be that I put in my time shopping at thrift stores and living in sketchy neighborhoods for years while I worked to get where I am today. And now that I'm here, I'll stay here as long as I need to. Those "years of income" that we allegedly "enjoyed" were what paid for your degree, you know.