Housing Crash in 2018-2019

67 Replies

Does anyone for see another housing crisis like what we had back in 2007. I heard economist Harry Dent speak on this about 3 years ago in Atlanta. He predicted a housing market crash sometime between 2016-2019. 

Let me know your thoughts.

"In 2012 the "Dent Tactical Advantage ETF," symbol DENT, was de-listed having consistently under-performed the market for three years while at the same time charging an egregiously high 1.65% management fee."

"In 2012, he began writing weekly articles for the free investment newsletter Survive & prosper, now known as: Economy & Markets, which offers investment advice guided by his belief that a major economic crash is inevitable and that it will drop the DOW all the way to 3,300. As of early 2013, he has amended his predictions slightly to an expectation that the financial crash will begin between the end of 2013 and the first half of 2014"

In 2013, Dent predicted the market would crash again in the Summer of 2013 and would take a further year and a half to recover"

Lesson - Buy amazing deals and you don't have to be concerned about market timing.

well I just need it to last 45 more days before it crash's.. we sold 3 new constructions today all in one day 1.5 million worth and 17 homes or about 8 million worth since Jan 1.. out of 23 in one subdivision so just need 45 days to sell the last 6..  then well who knows the crash can start then.

That's awesome @Jay Hinrichs . Were you a Developer/Investor during the last crash? If so how did it affect your business and what warning signs, do you think, we should all be looking out for?

@James Cannon the market will likely dip between now and 2020. This will not be a crash. It will be 5-10 percent likely.

I just read a study the other day that doublying mortgage rates to 9 percent would dip the market 5 percent.

There’s way more demand then supply and it could take years for that to catch up.

Just my 2 cents

yes I was mainly a HML in the south MS AL GA TN IN SC FLA we got our teeth kicked in is what happened.. people thinks rentals are immune they are not. LOL.. I ended up owning over 200 homes personally that I made loans on .

HUGE difference is mortgage rules and the doing away with Sub Prime loans.. so that those who really don't qualify for a home or rental can't wiggle their way into borrowing money.. that one thing is the reason if we do have a settling down it will be just that.

NO liar loans.

Borrowers who actually can be full doc and underwritten with fico's that are above 640

Crooked appraisers are gone.

and basically a cleaning up of the industry.

Plus the public realizing equity in property is good thing

It's very region-specific.  Yes, could happen in some areas, but doubt anything like the last one anywhere.  Don't see it happening here at all any time in the foreseeable future.  Too much economic and job growth and relatively low inventory to keep up with said growth.

Just keep up with your local/state government and what they're doing to attract and/or keep jobs, whether companies are moving in or leaving, the average inventory on the market in the areas you invest, and also the average DOM for the properties that have sold.  Those are good indicators of where the market is and the direction it's heading. 

Originally posted by @James Cannon :

Does anyone for see another housing crisis like what we had back in 2007. I heard economist Harry Dent speak on this about 3 years ago in Atlanta. He predicted a housing market crash sometime between 2016-2019. 

Let me know your thoughts.

I can guarantee that between now and 2068 the housing market with either go up or go down.

Originally posted by @Jay Hinrichs :

well I just need it to last 45 more days before it crash's.. we sold 3 new constructions today all in one day 1.5 million worth and 17 homes or about 8 million worth since Jan 1.. out of 23 in one subdivision so just need 45 days to sell the last 6..  then well who knows the crash can start then.

 Sounds like euphoria? ...lol

Originally posted by @James Cannon :

Does anyone for see another housing crisis like what we had back in 2007. I heard economist Harry Dent speak on this about 3 years ago in Atlanta. He predicted a housing market crash sometime between 2016-2019. 

Let me know your thoughts.

 Kiyosaki has been predicting 2016 crash since a long time..these guys make a ton of money selling negative news. One day it will be true, no one knows when. Watch the interest rates closely, LIBOR rate and spreads have risen too much too fast. Gonna be an interesting 2018 for sure . . .also watch what happens to FAANG stocks, tech stocks run up has played a major role in current real estate boom. My guess is they will do the same on the way down. 

Between now and sometime in the future we will drop. Be prepared.

Seriously though, timing the market is extremely difficult. One of my grad professors said the top economists in the world are only right 51% of the time. No offense to anyone here, but no one knows when it will happen. It is best to just be ready in any scenario.

I heard it will be September of 2022 from an economist. He was very convinced and very convincing too. I guess several people have their own predictions.

I appreciate all of the insightful feedback! And even the not so insightful feedback, lol.

@Jay Hinrichs great point about Subprime loans and the "cleaning up of the industry" that alone should give us all a lot more confidence in our Real Estate Investments short and hopefully long term.   

@Ian Walsh good point, rising interest rates could definitely slow things down or lead to a return of predatory lending. Definitely something to think about and watch closely. 

Anyone who says they know when a crash is coming is not telling the truth.  Take what the pendants say with a grain of salt.  They are paid to make predictions, not be accurate.  Its like forecasting the weather.  They are most accurate when it is actually happening.      

 "I don't need a weather man to know which way the wind is blowing"

In my opinion the market is overheated in some cities, but not all.  The economy can not stay in an up cycle indefinitely.  Will there be a correction, YES.  The real question is when.  If we do not end up in a trade war, any other world conflict (Russia, Korea, etc,), the fed continues to SLOWLY raise rates, employment stays strong,  there is still growth to be had.  The only sign of the  long term weakness is the measure of,  "can the average worker afford the average house?"  In many cities the answer is no.  This means the hosing market is out of balance in those cities.  A correction (not Crash) is likely.  

Money is cheap but, credit is still a bit tight.  I am seeing a loosing of the purse stings with the mortgage lenders.  This will keep the trend going at least for the short term. 

   

Lesley Resnick, Real Estate Agent in FL (#sl3322996)
(904) 316-4306
Originally posted by @Ian Walsh :

No one knows exactly when but we will have to keep an eye on what impact rising interest rates will have.

 interest rates are already rising they just went up 25 bips yesterday to a whopping 1.75 prime rate..

and HML as you know the rates have been compressed because of competition at least on the west coast and other markets.

It is certainly all regional.. our market still lacks 20,000 houses based on need and demands..

some markets you could never build another new home and there is still plenty of housing or the housing is priced at a point were you can buy existing for still FAR less than replacement cost.. in those cities that's the out of balance.

until that pendulum swings balance and housing for the average worker stays fine.

High priced markets though in some areas especially the SF peninsula were a lot in Palo Alto is pushing 2 to 2.5 million now that is mind boggling.. these are not ultra exclusive neighborhoods or what you would think of them its just ultra demand by a population that somehow has the cash credit to pull them off.

first thing I do when I look at a market is look at Median house price.. that pretty much tells me all I need to know for investing purposes and where I need to be.

@James Cannon

There is no housing crisis in sight for at least 5 - 10 more years.

You cannot have a housing crash like 2008 with a shortage of housing inventory. It's not possible...

The only crisis right now is the shortage of new construction.

-Banks are in check as far as CDS, CDO and MBS volume.

-Government regulations aren't as toxic as they were in the early 2000's regarding housing.

-The Federal Reserve has been engaging in monetary policy but the excess cash seems to be inflating the stock market and not the housing market.

-Banks aren't making NINJ loans as it's now illegal to do so.

-Banks have much more strict underwriting standards regarding LTV and DTI than they did in the 2000s.

A lot of people speculate on yes there's a bubble or no there's no bubble. As far as it relates to a bubble that looks similar to 2008, there's no chance of that same thing happening because of just that...  None of the same things are happening.

Of course it's possible that there's another event somewhere in the near future, I just don't think it will be a real estate event.

You're a banker right? Are delinquencies and 30+ 90+ derogatory accounts not at very low levels? I just don't see the risk right now. 

Rising interest rates will likely cool the market off as part of a tightening of the supply of money, especially in the entry to mid level market. This is likely a good thing and could mitigate an overheating RE market. My $.02.

Scott

@James Cannon It's hard to predict when a crash will happen. As long as you buy using market fundamentals and are prepared financially, you should be just fine. Will be interesting to see how the year pans out with the real estate market! 

@Jay Hinrichs I always love reading your posts and agree with your remarks. I also live on the West Coast and in the Bay Area of all places. I live as far East as you can get from SF and our median home price is pushing 560K, houses are on the market for a week at most typically. My wife and I are planning to move out to the Sacramento area just to escape the pricing here.

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