Entering text into the input field will update the search result below

The Opposite Of 2008

Ben Hunt profile picture
Ben Hunt


  • In 2008, the US housing market - together with a Fed that thought the subprime crisis was "contained" - delivered the mother of all deflationary shocks to the global economy.
  • In 2021, the US housing market - together with a Fed that thinks inflationary pressures are "transitory" - risks delivering the mother of all inflationary shocks.
  • You must get this question roughly right: Am I in an inflationary world or a deflationary world?

In late 2007, I started counting the For Sale signs on the 20 minute drive to work through the neighborhoods of Weston and Westport, CT. I'm not exactly sure why it made my risk antenna start quivering in the first place … honestly, I just like to count things - anything - when I'm doing a repetitive task. Coming into 2008, there were a mid-teen number of For Sale signs on my regular route, up from high single-digits in 2007. By May of 2008 there were 35+ For Sale signs.

If there's a better real-world signal of financial system distress than everyone who takes Metro North from Westport to Grand Central trying to sell their homes all at the same time and finding no buyers … I don't know what that signal is. The insane amount of housing supply in Wall Street bedroom communities in early 2008 was a crucial datapoint in my figuring out the systemic risks and market ramifications of the Great Financial Crisis.

Last week, for the first time in years, I made the old drive to count the number of For Sale signs. Know how many there were?


And then on Friday I saw this article from the NY Times - Where Have All the Houses Gone? - with these two graphics:

I mean … my god.

Here's where I am right now as I try to piece together what the Opposite of 2008 means for markets and real-world.

1) Home price appreciation will not show up in official inflation stats. In fact, given that a) rents are flat to declining, and b) the Fed uses "rent equivalents" as their modeled proxy for housing inputs to cost of living calculations, it's entirely possible that soaring home prices will end up being a negative contribution

This article was written by

Ben Hunt profile picture
Ben Hunt is the Chief Risk Officer of Salient Partners, L.P., a $19 billion investment management firm based in Houston, Texas. Dr. Hunt is an experienced portfolio and risk manager, as well as the author of Epsilon Theory, a popular weekly newsletter for money managers and investors that examines the capital markets through the lenses of game theory and history. Dr. Hunt received his Ph.D. from Harvard University in 1991, and he is the author or co-author of two books on international politics and applications of game theory and econometric analysis.

Recommended For You

Comments (19)

The major difference between these 2 events is this time there are not many home foreclosures since banks and lenders are not allowed to do this. Instead they will get their share when the owner decides to sell, and thus there are not many available existing homes for people to buy. New home owners have to buy new homes, and thus will be very beneficial for home builders and home material providers.
funny money monkey profile picture
Good thoughts. Great insight with the CT RE market indicator. Bought my first place about two years ago in preparation for what seemed to be inflation on the horizon.
hawkrnc_19 profile picture
One of the best posts I have read here
Thank you.
g23riel profile picture
Great article. Refreshing to not have an agenda.
Diesel profile picture
We might have both inflation and deflation at the same time. Asset prices can continue to rise while prices of everything else continues to stay the same year after year.
iowalife profile picture
Pfft. Did you mention national debt will likely hit $30 trillion in July? (with the addition of the latest COVID pkg)
Steelhead15 profile picture
I don't know what will really play out- as you point out. I do know what I feel. I feel the grim reaper is near our ship or is already on board. The Reaper will be patient. The end game is only a matter of semantics. The grim reaper will reset the playing board so the next group can play.
i just read an analysis of the latest stimulus bill...the amount of money that is about to be poured into state/local government is gigantic (6X lost tax revenues)...i have been using TBF as a way to short 20 yr treasuries
Thank you for the article. It is rare to read pieces that look from a 30,000 ft. view with no agenda.
Steelhead15 profile picture
Wow just what I have been wondering about. You put it so well that most of us won't know what is coming or when. But, we will know something is on the way. Will it be inflation or deflation. I read a lot of history and has always seemed that rich countries or empires tended to rise high and then when the growth was over, they began to die- slowly in many cases.

The death-move always seemed to me to be deflationary. To stop it many of them tried to manipulate the currency and cause inflation. Inflation seemed to buy time. BUT in the end, deflation came back and ruled the end game.

That view of mine is why I see a Guaranteed National Income WITH Healthcare For All. Deflation and many of the effects of inflation are pressing down the middle to lower income level populations. They end up poorer and poorer- less real income and less real savings. That won't really work, but it buys time and fools people.
it's why USA will become US of Venezuela
Most in the market are not used to inflation coupled with interest rate hikes. If we get that type of inflation again, say goodbye to stocks of companies without strong pricing power.
The way UBI factors-in is taxes, on said housing “boom”.
Rupert Perry profile picture
compelling read. Thank you!
kraynyak profile picture
Well done! Thank you for taking the time to share your insights sir!
I fully agree with the author. You could also add to housing inflation, energy inflation due to divestment from the oil industry, and demonization of the media and government and you get a perfect storm.
Powerful article! This lays out the big picture in real-world terms.
Very interesting insights Ben. I learned a lot witnessing the run up to 2008 in the Irish property market. Also I vividly remember being in Ontario cottage country in 2010 and there was a For Sale sign on every 3rd cottage. Everyone selling and no-one buying.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.