Elon Musk on Housing Disaster: ‘They Dug Their Personal Graves’

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Tesla CEO Elon Musk has no scarcity of opinions to share on Twitter, from his views on cryptocurrency to claiming that Tesla inventory costs are too excessive.

The latter tweet wiped $14 billion off the corporate’s worth with simply seven phrases, so to say his opinion can transfer markets is an understatement.

Now Musk has turned his consideration to the housing bubble in response to a tweet by Dogecoin co-founder Billy Markus, who goes by the identify Shibetoshi Nakamoto on Twitter.

Predatory Lending Led to the Housing Bubble Burst?

Within the tweet, Markus claimed that cryptocurrency was initially created in response to the heavy hand of central financial institution management following the 2008 recession that led to the rampant printing of cash and bailouts.

The decentralized nature of cryptocurrency might keep away from manipulation by governments as a result of, in essence, nobody was in command of it apart from a pre-defined algorithm.

Markus additionally blamed the 2008 recession on predatory lending practices throughout that point that have been permitting beforehand unqualified patrons to buy houses with little to no cash down and low preliminary mortgage funds that ballooned over time.

RELATED: Is Distant Work Killing the American Dream?

Musk Disagrees – ‘They Dug Their Personal Graves’

Musk responded to the tweet along with his opinion that the elemental error made in the course of the 2008 recession was assuming that housing costs solely go up.

He was cautious to notice that he does not help predatory lending, however he additionally stated that lots of those self same lenders have been severely wounded or did not survive the housing market collapse. “They dug their very own graves – a lesson we must always all take to coronary heart, together with me,” he said.

In Musk’s view, the important error made by lenders that brought on them to decrease lending requirements and led to their demise was an “axiomatic error” that housing costs might by no means decline.

Classes Realized within the Present Housing Market?

With rising rates of interest and inflation hammering the present housing market, it stays to be seen if classes have been discovered from the housing disaster 14 years in the past.

An enormous run up in costs following the 2020 COVID-19 pandemic, as Distant work modified the housing market and patrons rushed in to pay no matter it value in concern that costs would solely proceed to go up.

With the current rise in mortgage charges – doubling in a matter of months – the curiosity portion of month-to-month mortgage funds has skyrocketed for brand new purchases, probably including an further $1,000 or extra and placing a dent in affordability.

This affordability disaster has introduced the rise in house costs to a screeching halt, however solely time will inform if the housing market will keep extra resilient this time round.

Hopefully in 2022, the principle lesson Musk identified from the 2008 disaster has not been forgotten – housing costs don’t at all times go up.

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This text was produced by Rich Nickel and syndicated by Wealth of Geeks.

Featured Picture Credit score: Shutterstock.

Andrew is the founding father of Rich Nickel the place he writes about all issues private finance. He has a ardour for serving to individuals pursue monetary freedom by saving cash, earning profits, and constructing wealth. Andrew paperwork his household’s journey to monetary independence by aspect hustles whereas elevating 2 youngsters on a single earnings


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