Will housing crash in 2026 or has it already crashed? Expert called last two crashes.

Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes

This guy called the last two crashes, says there will be one in 2026 too. https://www.thisismoney.co.uk/money/mortgageshome/article-12...

But we have the lowest demand since the 90's, even lower than the 2008 crash. Prices in Seattle dropped 20% since rates went up. Did we already see a crash in 2022 and start a new 18 year cycle?

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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

Quote from @Jack B.:

This guy called the last two crashes, says there will be one in 2026 too. https://www.thisismoney.co.uk/money/mortgageshome/article-12...

But we have the lowest demand since the 90's, even lower than the 2008 crash. Prices in Seattle dropped 20% since rates went up. Did we already see a crash in 2022 and start a new 18 year cycle?

No one can predict if we will have a crash because there are too many macroeconomic issues.

If the government keeps printing trillions a year then yeah we will not have a crash.

Let me tell you what I am seeing and people can make their own assumptions:

1. Asset based lenders / lender to lender financing (those who provide financing to companies for equipment, operations, etc. They will not touch real estate. They have stopped lending to real estate or even lenders who lend on real estate)

2. Commercial is worse than what the media is telling you. This includes self storage and multifamily. People do not understand how impactful commercial is on the banks. This is a big big deal.

3. A large percentage of small businesses are defaulting on rents and their loans.

4. The job market is seeing multiple applicants per opening. Why? because the only jobs that were hired in last six months were auto unions back to work, government workers and healthcare workers. Other sectors are shedding jobs.

5. Incomes are not keeping up with the cost of housing. It is down from 38% to 32% but its still abnormally high.

6. In order to calm inflation, housing needs to soften as it comprises 30%+. So if housing stays strong, so does inflation and rates will remain higher. Fed will not cut rates if the economy is still "steaming along". Eventually the inflation and high rates is going to have ramifications.

Note this is not in every location nationwide, as some pockets are more resistant and some are less resistant.

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Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
2y
Garbage. Do you see a crash every 18 years in this chart?
If demand is low, it is only in your part of Seattle.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Jack B.:

This guy called the last two crashes, says there will be one in 2026 too. https://www.thisismoney.co.uk/money/mortgageshome/article-12...
But we have the lowest demand since the 90's, even lower than the 2008 crash. Prices in Seattle dropped 20% since rates went up. Did we already see a crash in 2022 and start a new 18 year cycle?

No one can predict if we will have a crash because there are too many macroeconomic issues.
If the government keeps printing trillions a year then yeah we will not have a crash.
Let me tell you what I am seeing and people can make their own assumptions:
1. Asset based lenders / lender to lender financing (those who provide financing to companies for equipment, operations, etc. They will not touch real estate. They have stopped lending to real estate or even lenders who lend on real estate)
2. Commercial is worse than what the media is telling you. This includes self storage and multifamily. People do not understand how impactful commercial is on the banks. This is a big big deal.
3. A large percentage of small businesses are defaulting on rents and their loans.
4. The job market is seeing multiple applicants per opening. Why? because the only jobs that were hired in last six months were auto unions back to work, government workers and healthcare workers. Other sectors are shedding jobs.
5. Incomes are not keeping up with the cost of housing. It is down from 38% to 32% but its still abnormally high.
6. In order to calm inflation, housing needs to soften as it comprises 30%+. So if housing stays strong, so does inflation and rates will remain higher. Fed will not cut rates if the economy is still "steaming along". Eventually the inflation and high rates is going to have ramifications.
Note this is not in every location nationwide, as some pockets are more resistant and some are less resistant.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Chris Seveney:

Quote from @Jack B.:

This guy called the last two crashes, says there will be one in 2026 too. https://www.thisismoney.co.uk/money/mortgageshome/article-12...
But we have the lowest demand since the 90's, even lower than the 2008 crash. Prices in Seattle dropped 20% since rates went up. Did we already see a crash in 2022 and start a new 18 year cycle?

No one can predict if we will have a crash because there are too many macroeconomic issues.
If the government keeps printing trillions a year then yeah we will not have a crash.
Let me tell you what I am seeing and people can make their own assumptions:
1. Asset based lenders / lender to lender financing (those who provide financing to companies for equipment, operations, etc. They will not touch real estate. They have stopped lending to real estate or even lenders who lend on real estate)
2. Commercial is worse than what the media is telling you. This includes self storage and multifamily. People do not understand how impactful commercial is on the banks. This is a big big deal.
3. A large percentage of small businesses are defaulting on rents and their loans.
4. The job market is seeing multiple applicants per opening. Why? because the only jobs that were hired in last six months were auto unions back to work, government workers and healthcare workers. Other sectors are shedding jobs.
5. Incomes are not keeping up with the cost of housing. It is down from 38% to 32% but its still abnormally high.
6. In order to calm inflation, housing needs to soften as it comprises 30%+. So if housing stays strong, so does inflation and rates will remain higher. Fed will not cut rates if the economy is still "steaming along". Eventually the inflation and high rates is going to have ramifications.
Note this is not in every location nationwide, as some pockets are more resistant and some are less resistant.

lord just let me finish my last 25 new builds then you can crash the market :).. we are slower but we are selling and have not really had to lower prices but a few grand on a few models. the fix flip refi model is still working well for us. And land deals are going quite well also. but thats just our little tiny slice of market segments.

I agree with fund of funds slowing down or going out of bizz like Peer st. And commercial lending is kind of stopping on its own at least out our way were sellers want 5 caps rates are 7 so not much moving until commercial comes down a bunch.
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Jack B.
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Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
2y
Quote from @Greg Scott:

Garbage. Do you see a crash every 18 years in this chart?
If demand is low, it is only in your part of Seattle.

I find it interesting the chart has no source like other charts that paint a different picture do.

No, it's not just my part of Seattle, we are the 6th most expensive housing market in the country, not Detroit or "SE Michigan" where you can buy a house for the price of a car. Interest rates have a bigger impact where houses are a million and up...

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
2y
Quote from @Jack B.:

This guy called the last two crashes, says there will be one in 2026 too. https://www.thisismoney.co.uk/money/mortgageshome/article-12...
But we have the lowest demand since the 90's, even lower than the 2008 crash. Prices in Seattle dropped 20% since rates went up. Did we already see a crash in 2022 and start a new 18 year cycle?
The 1990 property crash? Property values declined on average $1500 that year.
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
I think we see the correction happen when rates are lower, surprisingly. I know every economic belief of lower rates= higher asset prices. I just think the higher taxes, insurance, cost of house upkeep will make the guy who locked in at 3.5% more amenable to sell at 5% than having to come sub 4%. We're not that far from 5%, we're one little cliff like fall in a domino(probably one we don't see) to create a big rate cut and unlock a lot of sellers.
By then, I don't believe the buyers or "demand' is truly qualified to defeat the inventory increase. Much like we've mentioned on this board quite a few times, if rates do come down in a harsh fashion it's for a net negative underlying reason. Likely going to be impact the average Rupert & Rachel trying to buy, therefore, killed buying ability with the unlocked inventory. We are also at such shortages(not as bad as a 2 years ago), but bad enough that supply shortage being the sentiment on housing price strength is no longer a bullish sentiment. Infact, in any almost and every case there'll be an increase in inventory making it very bearish.
2026 is not a bad year to predict that correction, but way too hard to tell. I do think something hits the fan this year, I just don't believe it's what we are seeing on the horizon(commercial RE, regional banks) it'll be something we're totally missing.
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Eric James
Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
2y
When prices increase well above inflation (Case Shiller index) they adjust back down. And current prices are way above that level. Exactly when that correction will happen is difficult to say. But it will happen.
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Jack B.
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Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
2y
Quote from @V.G Jason:

I think we see the correction happen when rates are lower, surprisingly. I know every economic belief of lower rates= higher asset prices. I just think the higher taxes, insurance, cost of house upkeep will make the guy who locked in at 3.5% more amenable to sell at 5% than having to come sub 4%. We're not that far from 5%, we're one little cliff like fall in a domino(probably one we don't see) to create a big rate cut and unlock a lot of sellers.
By then, I don't believe the buyers or "demand' is truly qualified to defeat the inventory increase. Much like we've mentioned on this board quite a few times, if rates do come down in a harsh fashion it's for a net negative underlying reason. Likely going to be impact the average Rupert & Rachel trying to buy, therefore, killed buying ability with the unlocked inventory. We are also at such shortages(not as bad as a 2 years ago), but bad enough that supply shortage being the sentiment on housing price strength is no longer a bullish sentiment. Infact, in any almost and every case there'll be an increase in inventory making it very bearish.
2026 is not a bad year to predict that correction, but way too hard to tell. I do think something hits the fan this year, I just don't believe it's what we are seeing on the horizon(commercial RE, regional banks) it'll be something we're totally missing.

VEEERY interesting take. I could only see a harsh decline in rates if the economy goes into recession. Most indicators apparently say that's less and less likely, sub 30% at this point.
I can see rates slowly declining to a more normal 5 or 6% and the housing market going up but in a slower fashion than we saw in 2021. I remember my primary residence rate in 2014 being 4.375, so 5% is not far off from what a normal rate would be or out of the realm of possibility. People got used to cheap rates in 2008-12 and 2020-21 but that was due to trying to prop up the economy. Those rates are NOT normal, so we should still see appreciation strongly even at 5% rates. I remember seeing double digit gains on my houses even in 2014...
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Jack B.
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Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
2y
Quote from @Eric James:

When prices increase well above inflation (Case Shiller index) they adjust back down. And current prices are way above that level. Exactly when that correction will happen is difficult to say. But it will happen.
How index showed barely above inflation appreciation before 2000, I don’t think that’s the case anymore.
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Corby GoadeBusiness Member
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
2y
I've heard this one somewhere before. Is it time for me to be scared NOW? Just looking for some justification for not taking control of my life and taking action, seems like this should do the trick.
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Wendy PattonBusiness Member
Real Estate Consultant · Clarkston, MI · Member since 2009 · 853 posts · 349 votes
2y
The thing we know for sure is that the rate of increasing values with higher interest rates just isn't sustainable without salary's keeping up (and they aren't). There will have to be a correction or big slow down when that line of affordability goes below the cost of housing line. There still seems to be demand and lack of inventory, which is holding the market up.
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y
@Wendy Patton
just curious... how do we know that 'for sure'? i do think prices will not increase anything like the past few years, but i just don't see why they 'have to' come down. higher education, healthcare, housing prices... they're all a much larger percentage of income now. but i just don't see why they would fall.
now to be clear, might prices stay flat or even come down 5, 10, 15% in certain markets? sure. but that would just be down a fraction from the huge run up since 2008. i guess we can call that a correction. in no way is it a crash.
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Wendy PattonBusiness Member
Real Estate Consultant · Clarkston, MI · Member since 2009 · 853 posts · 349 votes
2y

@Nicholas L. no one knows for sure what will happen, however, it's basic economics - if housing is unaffordable it will have to make a correction - and I didn't say pricing WILL go down, I said "there will be a correction or a big slow down" - something would have to change. I have been in real estate since 1985 and I remember an older friend of mine warning me, "Wendy, be careful, real estate goes in cycles"....well, I didn't believe him as it had always gone up for me until 2005-2008 time frame...... do i think it will crash like that? likely not. I hope that answers your question to my post.
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
2y
Quote from @Jack B.:

This guy called the last two crashes, says there will be one in 2026 too. https://www.thisismoney.co.uk/money/mortgageshome/article-12...
But we have the lowest demand since the 90's, even lower than the 2008 crash. Prices in Seattle dropped 20% since rates went up. Did we already see a crash in 2022 and start a new 18 year cycle?
Are you counting all the times a crash was predicted, that didn't happen? Hitting a baseball safely 3 out of 10 times might get you into the HOF in MLB, but that same percentage of guessing the onset of a crash doesn't give you credibility.
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Wendy PattonBusiness Member
Real Estate Consultant · Clarkston, MI · Member since 2009 · 853 posts · 349 votes
2y
Also, another point to consider: what the real estate signs for changes..... I missed these on the last cycle:
And note - when a market is down there is MORE opportunity to make money as a real estate investor - not when the market is up. With this said, there are always deals in any market, but there are more details in a down market.
1. Time on market - this is already increasing in most markets
2. Building starts - this lags a bit with the market
3. Multiple offers - this is already less then it was in the last few years
4. Foreclosure rates - they are on the rise
5. Unemployment - I think it's fairly low now so that is a positive
6. Demand - right now there is still strong demand compared to inventory - I think there would be more movement if rates were lower as there are so many people not moving because they have a 2.5% rate and don't want to increase that.
7. Inventory - a balanced market is 5 to 7 months of inventory. Right now we are still lower then that - causing a sellers market - watch as this increases to look for opportunity
and there are more but do some research to learn about these indicators so you can be prepared for not IF the market changes, but WHEN it changes.
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Wendy PattonBusiness Member
Real Estate Consultant · Clarkston, MI · Member since 2009 · 853 posts · 349 votes
2y

@Joe Villeneuve agree lots of people have predicted a crash - and for years now, but the indicators are something to watch and just keep an eye on....2024 still looks good...
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y
@Wendy Patton
yes, thank you for the additional information. and i want to be clear - in no way am i saying that a correction will not happen. i am saying:
-I don't know what will happen.
I just get skeptical when people say that if some arbitrary threshold is reached, then something has to happen.
I believe that the cost of housing as a share of income in California is more than double that of other states. But that very much is not forcing the price of housing down there. Maybe it will. But it hasn't so far.
2 Reply
David Avery
Flipper/Rehabber · Phoenix Arizona · Member since 2020 · 1k+ posts · 686 votes
2y
Property Value is King.
Predictions are not.
7 % is still pretty good over the past 60 years.
8 million more people just came into our country.
Facts are reality.
Real estate market is going to be good for 28 months and 10 days.
Powerball numbers will be ......
just joking!
Phoenix market (real estate)
Is very good 👍
2 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y
@David Avery
do you follow Jason Hartman? he's had some great content tying together the economy, demographics, housing, etc.
he thinks that the market will be fairly strong (with local corrections possible, of course) until the late 2030s / early 2040s due to the demographic pressure. then... it will all depend on immigration.
i just read that South Korea's birth rate has fallen below 1! don't invest there.
1 Reply
David Avery
Flipper/Rehabber · Phoenix Arizona · Member since 2020 · 1k+ posts · 686 votes
2y
Nicholas , I just started to get back on BP.
Due to 2 botched spine surgeries.
I have not been following Jason Hartman.
i will start looking into his remarks.
I have almost 50 years of construction experience and pretty good RE experience as well.
Mentor is my Bread and Butter right now.
I am very concerned about 8 million people taking a lot of low end blue collar jobs from
US citizens.
2 Reply
Andrew HoganPro Member
Rental Property Investor · Indianapolis, IN · Member since 2016 · 559 posts · 463 votes
2y
@Jack B.Will it be warm today?

Real estate is hyper local :)
Econ 101, Follow the Supply/Demand imbalances

4 Reply
Andrew HoganPro Member
Rental Property Investor · Indianapolis, IN · Member since 2016 · 559 posts · 463 votes
2y
Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Jack B.:

This guy called the last two crashes, says there will be one in 2026 too. https://www.thisismoney.co.uk/money/mortgageshome/article-12...
But we have the lowest demand since the 90's, even lower than the 2008 crash. Prices in Seattle dropped 20% since rates went up. Did we already see a crash in 2022 and start a new 18 year cycle?

No one can predict if we will have a crash because there are too many macroeconomic issues.
If the government keeps printing trillions a year then yeah we will not have a crash.
Let me tell you what I am seeing and people can make their own assumptions:
1. Asset based lenders / lender to lender financing (those who provide financing to companies for equipment, operations, etc. They will not touch real estate. They have stopped lending to real estate or even lenders who lend on real estate)
2. Commercial is worse than what the media is telling you. This includes self storage and multifamily. People do not understand how impactful commercial is on the banks. This is a big big deal.
3. A large percentage of small businesses are defaulting on rents and their loans.
4. The job market is seeing multiple applicants per opening. Why? because the only jobs that were hired in last six months were auto unions back to work, government workers and healthcare workers. Other sectors are shedding jobs.
5. Incomes are not keeping up with the cost of housing. It is down from 38% to 32% but its still abnormally high.
6. In order to calm inflation, housing needs to soften as it comprises 30%+. So if housing stays strong, so does inflation and rates will remain higher. Fed will not cut rates if the economy is still "steaming along". Eventually the inflation and high rates is going to have ramifications.
Note this is not in every location nationwide, as some pockets are more resistant and some are less resistant.

lord just let me finish my last 25 new builds then you can crash the market :).. we are slower but we are selling and have not really had to lower prices but a few grand on a few models. the fix flip refi model is still working well for us. And land deals are going quite well also. but thats just our little tiny slice of market segments.

I agree with fund of funds slowing down or going out of bizz like Peer st. And commercial lending is kind of stopping on its own at least out our way were sellers want 5 caps rates are 7 so not much moving until commercial comes down a bunch.

Best of luck partner! I know you'll do it! 🙏💪
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
Unemployment is a skewed metric. And I think if we re-evaluate properly unemply is closer to the mid 4s.
The metrics to really gauge are median income per household, available in fill lots, debt levels, and the business life cycle. Right now all are going to the wrong direction, creating that YoY increase in house pricing. I think when one goes the right direction, we'll start seeing the correction. The business life cycle of debt has to be adjusted here by Q3 24, latest Q4 2024. The start of that is usually when asset prices will actually reduce. It's all spec, but let's see.
The RTP has to tighten, there's no way this will sustain. Just how is anyone's guess, I think rent goes up and house prices come down a bit. There is a peak to pricing in the short-term and I don't think we've seen yet, and when it comes we'll see house prices be flat to negative YoY and see rent trend slightly up.
It's funny he says prices will increase by 20% before 2026(article is from Aug 23). At least 20%, so by the time the crash happens your house has already appreciated 20%-30% and the crash will neutralize it? I tend to disagree, I think that frothing is in session now and the reversion to the high end of the means is going to take place sooner than his view. Housing is a long, long mechanism to unwind so it very well could be right.
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
Quote from @Nicholas L.:

@David Avery
do you follow Jason Hartman? he's had some great content tying together the economy, demographics, housing, etc.
he thinks that the market will be fairly strong (with local corrections possible, of course) until the late 2030s / early 2040s due to the demographic pressure. then... it will all depend on immigration.
i just read that South Korea's birth rate has fallen below 1! don't invest there.

Immigration has been the forefront for the past 15 months, it's going to be more decisive sooner than that time period. It'll be a decisive factor on America here no later by the end of the decade.
Partner at my old firm mentioned 15 months ago, immigration will be the new fight and some of the other stuff will die off. I think that view is correct.
2 Reply
Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
2y
Quote from @Jack B.:
No, it's not just my part of Seattle, we are the 6th most expensive housing market in the country, not Detroit or "SE Michigan" where you can buy a house for the price of a car. Interest rates have a bigger impact where houses are a million and up...
FWIW, I don't actually own any rental property in Michigan. I own property all over the country, including some expensive markets.

I still disagree with your premise. Every year since 2012 I've been hearing the next housing crash is just a few months away. If you study history, it is not a phenomenon that occurs regularly, at least not compared to the lifespan of a human being.
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