Stocks and housing CRASH

49 Replies

Anyone else feel like we are due for a little downside? It's inevitably going to happen again...history always repeats itself....just a matter of when???? Then it's buy buy buy

Why wait for something that may or may not happen in the near or distant future, before you buy, buy, buy?

Does anyone have any actual data to evaluate that might predict this?  Anyone hear of an inverted yield curve?  I've heard that is the best historical predictor?

Someone posts something similar to this weekly. Do what you feel is best to protect yourself based on your risk tolerance. 

Originally posted by @Paul Flynn :

Anyone else feel like we are due for a little downside? It's inevitably going to happen again...history always repeats itself....just a matter of when???? Then it's buy buy buy

 You have reason to be concerned since you are so close to Chicago. As an example (and there are plenty more) the pension funds of Illinois and Chicago in particular are at risk which will create pressure on the politicians to raise taxes yet higher. Chicago is likely to fail financially as a city soon and I don't think congress is in the mood to bail them out. The rest of the country is relatively stable to doing very well. 

You are probably simply picking up local concerns from people who sense that ill winds are blowing in the windy city.

Originally posted by @Paul Flynn :

Anyone else feel like we are due for a little downside? It's inevitably going to happen again...history always repeats itself....just a matter of when???? Then it's buy buy buy

 Seems someone besides me recognizes the problems Chicago has created for itself. Crash is coming to Chicago. . . just a matter of when.

America's Top Cities Swamped In Debt, Chicago Leads The Way

https://www.zerohedge.com/news/2019-05-16/americas...

Originally posted by @Paul Flynn :

Anyone else feel like we are due for a little downside? It's inevitably going to happen again...history always repeats itself....just a matter of when???? Then it's buy buy buy

By how?  And with what?  You can't buy, buy, buy unless you have ALL cash, cash, cash.  

That is frightening looking at this from a small local level. Consider the bigger picture and taxpayer liabilities on a per person basis created by the FEDERAL Gov

Don’t you know The time to make money is when there’s blood in the streets ? Can’t go your whole worried and scared , besides Santa hates wimps

You need to be in the game consistently for the long term. Great deals are found/created every day , in any market. YOU have to be determined to find them. Plus you have no idea what the market will be like when it does change. What if all of your current sources for financing disappear because of the changing economy. Then how will you buy buy buy? 

My point is if you are serious about the business and finding deals, then great opportunities will come to you in any market and that’s all that you need. 

we are already there and have been for 8 months.. market has level and you see some price reductions..

but its not a crash its a normal ebb and flow.. one cannot base the last 6 years as a normal market conditions they were white hot.. we are now just moving to stability and some motivated sellers will discount their properties..

buyers are in some cases offering less than ask etc etc.. but sales are still robust and in many markets inventory is in balance or still very low.

Bruce Norris gave a key note a few years ago in Oakland and that was his topic every one was talking bubble then. 

His statement is a market wont be in a bubble until U have 1/3 of the inventory is short sales foreclosures etc. and that simply is not the case in 90% of the markets. there are always bombed out houses that can be bought for cheap in most Major MSA urban core war zones that never changes.

until interest rates climb, dont expect a major pullback.  I would rather buy a house for 200k at 4 percent,  than a 150k house at the more historically "normal" 7 percent. I was thrilled in 2002 to buy my first house and get 6.75. Who in their right mind would lock up money for 30 years at such low rates! Now look at rates....same with cars. Nobody cares how much they cost, only the monthly payment, so 84 month loans. The only people that truly care are the cash buyers.  Who knows how long easy money lasts, but if the fed hasn't done it for the past 10 years,  normalizing becomes harder and harder.

Originally posted by @Matt Groth :

until interest rates climb, dont expect a major pullback.  I would rather buy a house for 200k at 4 percent,  than a 150k house at the more historically "normal" 7 percent. I was thrilled in 2002 to buy my first house and get 6.75. Who in their right mind would lock up money for 30 years at such low rates! Now look at rates....same with cars. Nobody cares how much they cost, only the monthly payment, so 84 month loans. The only people that truly care are the cash buyers.  Who knows how long easy money lasts, but if the fed hasn't done it for the past 10 years,  normalizing becomes harder and harder.

I agree everytime they bump rates mortgage applications go in the toilet.. and then rates fall again.

and look at car loans as you stated.. this all started back in the early 80s when I think it was Nissan who first came out with Zero % financing.. then others had to match .. of course backed into price of the car.. but now for well qualified buyers of cars rates are and have been super low for decades.. those with bad or bruised credit make up for the ones getting the low rates. 

Also how many 75k Escalades would be sold if there was no financing ? 

@Josh Rogers

Listen to podcast #311. Jay Scott talks about the inverted yield curve as well as the Buffett indicator and other clues to the oncoming downturn, but he also gives advice on how to prepare yourself to continue investing through said downturn.

"That is frightening looking at this from a small local level. Consider the bigger picture and taxpayer liabilities on a per person basis created by the FEDERAL Gov."

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Consider the bigger picture and you run into the fact that the federal government can print money, localities cannot print money, and therefore fed debt save for inflation expectations is irrelevant when analyzing state/local debt. Want to go back to the gold, or even bi-metal standard(s)? Sorry son, but it didn't work. Bryant was right; We will not crucify mankind on your cross of gold.

Economists are debating it is 2020 late or 2021. It has been 10 years since the last one. Low unemployment and ultra low mortgage interest rate makes 2019 unlikely. Hint: election year outcome will tell. Other countries will likely to experience it. This one is going to be global.

Also how many 75k Escalades would be sold if there was no financing ?

I'll bet very few. If there was no auto financing I bet traffic problems would ease a lot. LOL.

@Paul Flynn

I am also in the Chicago area and overall, I’m not necessarily sensing a crash per se. I think there is reason to be cautiously optimistic however; thus I have shifted my strategy away from long term investments. Always good to be in a cash position to snag some bargains.

Those statistics on Chicago are very misleading. There is a HUGE difference between gentrifying rapidly growing north side neighborhoods and economically troubled areas on the south and west side. 

Yes it is true taxes could go up across the board in chicago but if you are buying in gentrifying areas this is strongly mitigated. Also adding in a value add or buying right helps mitigate this. Taxes increased significantly on the last re-assessment all over the north side but it has had no affect on the sales price of 2-4 units due to low inventory they are selling for 10%+ more money then when their taxes were lower a year or two ago. 

Zoning laws in Chicago do not allow 2-4 units to be built as rentals easily in the north side neighborhoods which creates an interesting supply and demand shortage. The city will allow you to turn a 2-4 unit into a million dollar single family but not the other way around. Over the years there are less and less 2-4 units that exist. 

Even in a stock market crash/continued tax increase I do not see north side 2-4 units seeing much reduction. 

@Paul Flynn , You are right, we are due for downside & History always repeat.

But as @Matt Groth said, until interest rate climbs, dont expect major pull back.

Market is artificially inflated by keeping low interest rate. Unemployment is at 60 year low, this is best time to increase interest rate, but that will impact economy and current government like market stay inflated.

In Every recession Fed reduce 4-5% interest rate, we are not at even 4% now... not sure what will happen in next recession.

Major dilemma is to invest or not... best bet is invest where there is highest in migration, those area will be safe over longer period. Here is 2019 Census number with fastest growing metro...

I think the economy may be due for a downturn, but I don't think it's going to stem from real estate like in 2007. I think it's going to stem from the health care industry. 

@Paul Flynn not all recessions make home prices crash. Look at historical home prices

@Paul Flynn

I believe that the next "crash" whenever it comes will be fueled by the student debt crisis. These kids are graduating with the equivalent of a house payment on student debt. Coupled with the fact that many of these graduates will choose to rent rather than own makes a recipe for a significant housing downturn. Wish I were smart enough to know exactly how to capitalize on it.

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