But the White House disagrees and biden says it doesn't sound to me like a recession.

It seems like at this point, politicians are changing the definition of anything to suit their agenda, inflation is super high.

But they will tell, you know, it is not, we don't have an inflation problem.

It's under control.

I mean prices are rising faster than ever.

How on earth we don't have an inflation problem.

Thank God.

The fact finally admitted the problem and raising the rates to fix it.

A recession is a period of temporary economic decline during which trade and industrial activity are reduced.

Generally identified by a fall in GDP in two consecutive quarters.

So if we have two consecutive quarters where the gross national product grows by a negative percentage, then it's a recession.

And if it lasts over two years, it turns into a depression.

I remember back when Covid hit the world and travel was the president.

They accused him of everything possible, lying about everything.

He mismanaged Covid and the economy fell into recession.

But now democrats are also mismanaging the crisis and instead of taking the responsibility for their actions, they're literally changing the definition of the world recession.

Apparently they tried to change the definition in Wikipedia but they couldn't, I never thought it would come to that soon.

Numbers for Q three will come out and I wouldn't be surprised if they are going to be negative as well and inflation will most likely stay high, which means the Fed will keep hiking the rates, which means more expensive mortgage rates.

House prices already called off as the demand is vanishing.

But builders are building more homes, although they are still rising, But far from the rate they have been in the last two years.

And in many states, prices are actually declining.

Sellers no longer have the upper hand to negotiate and push buyers to over pay.

From the moment COVID-19 started to this day, median house prices grew from $322,000 to $440,000.

Even prior to the 2008 housing crush prices didn't grow that much, which has led many experts to believe that we might be on the brink of another real estate catastrophe.

Will home prices finally collapse?

Is the crush is going to be as painful as the 2008 crush will answer all of these questions and many more.

But before we do that, give this video a thumbs up.

And let's dive in The economy is one huge organism.

If one part of it suffers, it affects the rest of it.

Think of any economic crisis, it didn't just influence itself, but took down with it.

The rest of the economy.

The 2008 housing bubble is a perfect example.

The in charge world suffered from January 2008 to February 2009.

The S&P 500 fell by almost 50%.

The housing crash in the US led to the euro debt crisis crushing one economy after another.

In europe countries like Greece are still suffering from the consequences of the crisis.

Even Apple, which has nothing to do with the crisis fell by over 50%.

Trillions of dollars were wiped out of the market.

So if we want to find out what is going to happen to the housing market, we have to consider what is happening in the economy overall, after the.com bubble, when the stock market crashed, the Fed lowered the rates to 1.5% by 2002 to stimulate growth.

That's when the housing crisis began, when rates were low and regulations were losing everyone who could take a mortgage took a mortgage lending prices to dramatically rise.

Within two years, prices rose by 15%.

That's when the Fed realized that the housing market is out of control and it needs to raise the rates before it turns into a bubble.

But it was too late.

It had already turned into a bubble from July 2004 to December.

It raised the rates from 1% to over 2% by July 2005 rates were raised to 3.25%.

Within the next 12 months, they were raised to 5.25%.

That's when the market began to crumble and crushed by the end of the next year.

Let's see how that compares to what's happening now in the market.

The median house price increase from Q2 2022.

Q2 2022 by over 35%.

That's more than double the increase in the last housing crisis.

The fact is raising the rates to stop the inflation which also includes the housing market.

But house prices are still rising.

House prices will most likely One stop until inflation stops and inflation doesn't seem to stop until the Fed crushes the demand.

Since the beginning of the year, the Fed has raised the rates from less than .25% up to 2.5%.

At this rate rates can easily cross 5% within the next 12 months.

And the Fed can't instantly lower the rates until inflation will stabilize around 2-3%.

New house supplies have already returned to pre-2008 crush of course, active listing in the market, R&D.

It's back but a lot of people are still holding into their houses since prices are still rising.

And also we have decided to sell our in getting the best price possible since demand is cooling down but prices are still rising to a certain extent feni may now forecast the United States home prices will rise 10.8% in 2022.

It still remains to be seen how far they will climb next year.

But that would mean that over 50% price increase in less than three years.

Does that sound to you?

Sustainable.

A lot of analysts are saying that house prices are driven by strong demand.

But the last crisis was also fueled by strong demand as well.

Of course, there were other factors.

But remember each crisis is unique, they're not two identical crisis is bubbles are formed in different ways.

The only thing that unites them is the fact that at the end of the day, they all burst when Michael Barry shorted mortgage backed securities in 2005 and 2006, the companies that sold to him, these securities consider him a fool if you have watched the movie, the Big Short, you know how people treated him when he was ready to short whatever mortgage backed securities was available, it took almost two years for the housing market to crash.

After barry short in the market, it doesn't happen overnight.

Unlike the stock market, house prices don't jump up and down.

They usually rise by a few percent to catch up with inflation or rise dramatically and turned into a bubble and then collapse.

It's difficult to make any precise predictions at this point, but it seems like in a year or two or maybe by the end of the next year, once the Fed raises the rates high enough to crush mortgage applicants, but inflation still remains at around four or 5% at least.

We'll see house prices cracking down mortgage rates already rolls tremendously For the first time since early 19 eighties, the average 30 year fixed mortgage rate has climbed 2% points in just four month window, climbing from 3.11% in december to 5.11%.

The United States has entered into a recession, a recession where Fed doesn't have the comfort of knowing the rates, so expecting that the demand for homes will keep rising is too optimistic.

How long will the recession last?

Is another question, a question that we can't really answer since it depends on so many factors, such as when will the russo Ukrainian war end?

Will china's housing bubble burst?

How will the EU the United States largest trading partners solve its energy crisis and many more.

The Federal Reserve has taken the measures to the extreme print, Unbelievable amounts of money in 2020 and 2021, creating a huge bubble.

Now it's time to pay back, but the country is facing geopolitical risks that pushing it to tech measures that will only worsen the crisis if it wasn't, for example, for the Russia's invasion of Ukraine, the inflation wouldn't be as bad as it's today since energy and food prices globally wouldn't be rising so much.

That's it for today.