2017-18 Housing Bubble?

Mountain View, CA · Member since 2017 · 6 posts · 2 votes

I understand it is impossible to know how big or when a housing bubble will happen, but just curious to see other people's thoughts on subject. In the event of a bubble, what would your strategy be? Is it smart to try to invest now while interest rates are low or to wait until housing prices goes down and deal with higher interest rates? Would places like the Silicon Valley be affected?

All opinions and perspectives are welcome! Just my random thought for the day

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Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
9y
Depends on your market, but overall I would say we have between 5-7 years left. A peak happens on average every 17-18 years, since the early 1800's. Our last peak was 2006 so if history repeats then we are looking at 2023-2024 for our next peak.
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Mike Russo
Investor · Batavia, IL · Member since 2014 · 50 posts · 6 votes
9y
I started another post about the bubble question. In the Chicago suburbs where I live and invest, prices have risen significantly in the last two years but I think it is due to lack of supply...not a bubble. Very few single family homes are being built here. There is no open land to build. I'm not comfortable paying $200 sq ft for something that cost $150 sq ft two years ago. My question is, what would cause prices to drop here? I don't see another 2008 housing bust on the horizon. I appreciate your thoughts.
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Aaron Mazzrillo
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
9y
Originally posted by @Matt K.:

I did see in your post that you said specifically the Bay Area and I did comment on your post with a more generic response because people will read yours and my comments and automatically apply them to their own area regardless of how specific we talk. The pros on here understand that real estate markets are regional, and can even be broken down into specific areas, but this place is crawling with uneducated investors. I could talk all day long how my rentals in one specific area are killing it and yours just down the street, across the railroad tracks in the next "other" school district might be sitting vacant for weeks/months.
Same goes for buyers. They'll line up to buy anything under $350K in the Inland Empire. You'll see bidding wars and above asking offers, (and then you'll get whacked in the knees by the appraiser). You go over $400K and your house might sit empty with no showings. Well, if I only work one price range in one market, I may never feel the effects of any bubble. My grandmother grew up on a large farm. When I asked her how it was living through the Great Depression she said, "What depression? We always had work to do and food to eat."
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Greg Downey
Lender · Springfield, MO · Member since 2015 · 379 posts · 180 votes
9y
dollar cost averaging. Buy good deals at all times. Sometimes (like now) the deals aren't that fat. Sometimes they will almost all be fat (2009-2011). @David Song said it right. Inflation will eat more of your money than a good but not "himerun" of a deal
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Patrick Moody
Investor · Rockwall, TX · Member since 2013 · 19 posts · 7 votes
9y
One thing that I learned at a seminar was to look at seller concessions. They claim that was a very short term leading indicator. The logic makes sense to me. When there are multiple offers you just take the best one, so you can be picky. As the buyers start to dry up, sellers start to "help" with closing costs, etc. Once buyers start to see that, offers can be lower and the market starts to turn.
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Steven Greenhill
Real Estate Agent · New York, NY · Member since 2017 · 66 posts · 26 votes
9y
Originally posted by @Joe Kim:

There is definitely a bubble in California and big coastal metros. The question is when it will pop or go on a slow deflation -and then POP.
Due to mortgage tightening, relative positive job growth, good consumer confidence, I don't think the bubble will burst in 2017 or 2018. Unless there is some major disaster -war, banking crisis, huge natural disaster, etc... I think the market will flatten
I for one have stopped buying. I don't want 10, 20, 50 units. I'm looking for more quality than quantity at this point.
But if another recession hits, I want to have access to lots of capital to buy those great deals.
Three ways
#1 save for the future. There is a time to buy. There is a time to sell. And time to just hold. Not everyone has TIME to keep active. I'm a "passive" investor with a very heavy full-time job.
#2 pay down primary mortgage/HELOC, and then create a much bigger HELOC so that I have "debt equity" to use for future purchases
#3 Sell underperforming properties in my portfolio (Already sold 5 and looking to sell one more) and pay off more debt.
Everyone is different. Some people have lots of time and little money. Others have money but little time. Each strategy is different based on people's current state.
LA/OC/SD is still down from 2006.... nor-cal is of course up
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Shari Posey
Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
9y
Originally posted by @David Song:
We are not in a real bubble now, maybe in a few more years things might change. IMO.
Most new owners need to put down a minimum of 20% down.
In my transactions 10% down is more common and almost all transactions require two-incomes to qualify. I think there is a saving grace of a large percentage (maybe 30%??) that put more than 20% down. I think we are in the beginning of a bubble but as you said, it might be a couple of years before we get a down turn. I hope that prices stop going up so fast and just level out.
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