Is a market downturn coming?

Question

Will we finally see a recession, and a significant downturn in the market? As scary as all this is I’m optimistic that deals may finally become easier to find. The government can bail people out and prop up the market in the short term, but that can’t last forever. I’m holding off buying for a few months to see where this goes.

Frank Wong · Answer

Lots of things need to happen before real estate is affected.  Will it? It will in some way. You can't shut down the economy or the world for 30 days and not expect to have some economic fall out. How severe? Thats the unknown. Just guesses.

Well for all the real estate Bears. This is your time right. Now do you have the set of ba** to buy or more important can you finance the deal?

Stay safe everyone.

James Mc Ree · Answer

Real estate will likely suffer, but it will be a delayed impact.  It will probably have several scenarios, such as:

Rental.  Tenant loses job and cannot pay rent.  Landlord also loses job and cannot pay mortgage.  Homes foreclosed.

House for sale.  Prospects stay away due to virus impact and many cannot buy anyway due to unemployment, loss of savings.

Increases in properties for sale further drives down prices due to competitive pressure.

...some good news for a change...

The surge in mortgage applications recently driving up rates should abate in the next few months allowing rates to drop significantly.  That will make purchases more affordable.

Fed's injection of funds into the economy should substantially stimulate it once the country reopens for business.  Look for a lot of buying once folks see we've hit bottom and are coming up.  I agree a lot of folks will be looking for stock/bond market alternatives.

I don't see a reason for the negative impacts to last once this passes.  Prices will likely be depressed for 2-3 years, but will come back as people's earnings and savings recover.  It is people's ability to buy and pay rent that drive prices.

Now should be a great time to get a deal on almost anything you need for your properties.  Check for sales.  Reach out to contractors to see if they need work.  We can help America recover by giving work to the trades.

Jay Hinrichs · Answer

Like all things real estate to me its regional.. your always going to have those that panic sell. just like your seeing in the stock market..  One thing about real estate its easier to ride through a trough than many other assets..

Matt R. · Answer

This is probably going to last a little longer than some can imagine. The global economy has been interrupted. We are facing 20% unemployment and some areas could be 50%. We are going to have to change many things until vaccine and or reliable treatments. One of the failed ebola treatments apparently has worked on corona. Perhaps this works and stop gaps til vaccine.

Presumably, the semi lockdown we are in now might last 2 years. No one living today has ever experienced what is about to occur. It a nut shell recession might not describe the fiscal damage.

My hope is the medical experts are wrong and the hedge fund managers have no idea what they are talking about. Real estate long run should still be a solid investment. Short run maybe not so great. Either way there would still be opportunities, it is just going to be a flow like water Bruce Lee deal.

Good luck!

Pat L. · Answer

Regional it will be, meanwhile we're looking to buy & buy. Then again we didn't lose any of our savings in the equities/bond mkts. I have a feeling more will be jumping into REI looking for that time tested 'sure thing' with less volatility, esp., now that it may take years to recover their losses. We have some older friends that are heavily invested in the Bond mkt & they are very concerned.

"Our investments are mainly in bonds and have decreased significantly already... we may not live long enough to see them fully recover if we believe  the doomsayers."

Meanwhile a financial advisor, who invited us to dinner a month ago, cancelled (before the restaurants closed) because he said they had to revise their strategy given the market pull back. I wonder what he's thinking this week.

Is a market downturn coming?

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