2008 financial crisis seems similar to whats happening now. Can I get some help with the logic below?
I want to start by saying im not an econ major, I only invest in the salt & pepper 500 and my house I live in is also an asset I guess.
Backstory and my general understanding:
Back in 2008, the cost of houses were at an all time high. The cost of these houses were due to an increase in capital in the form of bad loans leading up to 2008. Eventually these loans increased their interest rates, since they were variable rate, and it was unaffordable for most people. Then the crash happened since they cant afford it.
Current situation:
Over the past decade or so, houses have been going up in value like they do. General inflation has this effect on everything. During the covid era everyone was able to buy houses or refinance at 3% with FIXED loans. So there is not an easy way to pinpoint when everyone goes broke at the same time.
Current thoughts to expand on:
Inflation has been insane the past few years. Compared to the last decade, fuel, groceries, everything is up. So even though people have a locked in mortgage rate, the cost of living is skyrocketing. Someone smarter than me might be able to figure out what "breaking point" will happen for people to be unable to afford even their fixed mortgages. People are already spending less on food, opting for cheaper grocery stores, and cutting their budget as we enter this K shaped economy.
Is there some kind of specific consumer price index that would be able to compare to the wage growth to figure out when this will break? From a quick search, energy costs are up 14.7%.
Is there something obvious that I'm missing in trying to make these conclusions?