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A comment on FDIC Takes over Silicon Valley Bank. Parent comment

Re:FDIC Takes over Silicon Valley Bank by walrus01 on Friday March 10, 2023 @04:21PM (#35101251)
This is a symptom of the problem of middle class single family home residential real estate being treated as an unreasonably-price-increasing bubble inflated investment and not a place for people to live in.

The irrational exuberance in price increases in this segment of the market over the past 4-5 years is not sustainable.

It is not logical, sane or normal for houses that were valued at $150k five years ago to now be valued at $400k in some suburbs and metro areas.

[ Parent | on HN ]
Re:FDIC Takes over Silicon Valley Bank by s1artibartfast on Friday March 10, 2023 @05:20PM (#35102020)
It's logical or sane if you think capital investment options in New areas is going to dry up and existing assets are the best opportunity for preserving or growing your money.

How much would you spend on the house if you're only alternative is to watch your capital disappear

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Re:FDIC Takes over Silicon Valley Bank by Dylan16807 on Friday March 10, 2023 @07:58PM (#35103769)
> How much would you spend on the house if you're only alternative is to watch your capital disappear

If I'm worried about 10% or 20% disappearing to inflation, I'm certainly not paying 2x on an investment to prevent that.

[ Parent | on HN ]
Re:FDIC Takes over Silicon Valley Bank by s1artibartfast on Friday March 10, 2023 @08:15PM (#35103928)
What if it is 10% per year until it is all gone?
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Re:FDIC Takes over Silicon Valley Bank by Dylan16807 on Friday March 10, 2023 @08:38PM (#35104141)
How many people think inflation is going to go to 10% and stay there for a decade or longer? Are they enough to drive up real estate this much?
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Re:FDIC Takes over Silicon Valley Bank by s1artibartfast on Friday March 10, 2023 @09:32PM (#35104513)
Maybe not 10%, but I don't think we will see deflation anytime soon so cash will always lose value. Sometimes faster sometimes slower.

Capital needs somewhere to go as long as money keeps being printed. If there is more capital than profitable investment opportunities, it will flow into housing.

As a thought experiment to illustrate the point, imagine a world where there are no investment opportunities and the only place to store value is cash or housing. In this case, housing prices will continue to climb because money keeps being accumulated and there is no place to put it.

Of course this is a hyperbolic example, but I think our world is moving closer towards it as truly valuable Investments dry up. Certainly in the short term, and possibly in the longer term as well

[ Parent | on HN ]