You have 6 months to liquidate your assets

[Thor Sveinbjoernsson]

I’ve been doing a lot of research lately and I wanted to share with you guys what I have found about the correlation between unemployment, delinquencies and housing prices. During the 2008 housing crisis the housing market bottomed about 2 years after the peak in delinquencies. Note that delinquencies are very much so correlated with unemployment rates (see graph on link below). Unemployment is already about twice the peak in 2008 so it is very likely that delinquencies will follow, which will lead to increased supply of housing.

See data here, gathered by stanford researches: https://web.stanford.edu/~pavelkr/jmp_slides.pdf

Conclusion: You have about 6 months to sell off your assets until the market will be flooded with fire sales and forclosures.

[Kanwar Sodhi]

From my understanding, there are appropriate programs in place to lessen the reaction like last time.

I don't think there's an exact science or formula but yes, we may seem similar numbers

[Joseph Cacciapaglia]

I set a reminder to revisit this thread after the 6 months had gone by. I'm curious, if anyone's market is "flooded with fire sales and forclosures"? Does anyone wish they took the OP's advice and liquidated their assets at that time? 

In my market (San Antonio, TX), it's still incredibly difficult to find deals, and competition for well priced properties is stronger than ever. Prices have also jumped a decent amount in the last 6 months. I had a few clients that took advantage of the panic and purchased some great deals when others weren't buying. That didn't last long though, because buyers were in full swing pretty quickly here.

I'm sure there are some markets out there that haven't fared so well, but I haven't heard of any with widespread firesales and foreclosures. Is anyone in a market like that right now? If so, what has been the main driver? If not, do you think those conditions are coming soon?

I hope this doesn't come across as an "I told you so" post. I was planning to revisit this thread regardless of which way things went. I never could have predicted that the market would be doing this well right now. I just didn't buy into the short term doomsday scenario. I believe looking at our past predictions, right or wrong, can help us make better predictions in the future. This was a great opportunity to do just that, because we had so many varying and strong opinions at the time.

Where does everyone see the market in the next 6 months?

[Joseph Hammel]

I've been busy. Had a few vacancy's where some not so great tenants bailed on me and did some rehab on those units. Bought a SFH to add to my self directed ira. Fixing to flip that. Bought a 9 unit mixed did some work and it's going well. Started a new partnership and bought a 5 unit value add for 32k. Selling a SFH I've owned for 17 yrs. (first home) was rental last 8. Doing a 1031 on it exchanging into 3 triplexes. Also buying a 4 unit mixed use. Finally getting a 20,000 ish SQ foot partially converted set of buildings that need a ton of work for 95k with seller financing! Fixing to have 65 plus units. My RN wife is ready to retire because that's a big *****how.

[Lynnette E.]

No fire sales where I am investing.  Its hard for people to even find a house to buy.  As far as the unemployment, here they got more for sitting at home watching their new big screen TVs than they would have made working.  Most businesses are having a hard time finding people who want to work, even with the unemployment bonuses gone as the folks have hope they will return.

As a side, my 17 year old son decided he wanted to get a job, and was hired on the spot after turning in his application at the first place he went to.  Worked 48 hour last week, has been at 38 + hours each week since he finished his training days.  

I am willing to say that everyone who really wants a job here can find one.  It might not be glamorous, but it will be a job.  From the ceramic tile factory, to the rubber mats for cars factory, to the tress factory to the chicken processing plant to any fast food place or store to the hospitals and care centers, they are all hiring!  

Jobs that are gone, well some stores, the small family types and smaller restaurants.  But I am still hoping they will come back.  

Some restaurants have had a hard time staying open due to lack of workers and cut their hours randomly now, but they will be open full time again once the people know there won't be any more unemployment bonuses.  

I am still waiting for that housing crisis.  I'd like to buy some rentals that are in nice condition for a change!  But I do not see that coming.

[Alexander Szikla]

Two crucial items that are missing though. 

1. There is more demand for housing / less supply of "empty" properties

2. Unlike last time where the Fed and Congress where reactive, they have been quite proactive during this crisis and the liquidity injected into the system makes 2008/09 seem like a drop in the bucket. 

[James Hamling]

Originally posted by @Joseph Cacciapaglia:

I set a reminder to revisit this thread after the 6 months had gone by. I'm curious, if anyone's market is "flooded with fire sales and forclosures"? Does anyone wish they took the OP's advice and liquidated their assets at that time? 

In my market (San Antonio, TX), it's still incredibly difficult to find deals, and competition for well priced properties is stronger than ever. Prices have also jumped a decent amount in the last 6 months. I had a few clients that took advantage of the panic and purchased some great deals when others weren't buying. That didn't last long though, because buyers were in full swing pretty quickly here.

I'm sure there are some markets out there that haven't fared so well, but I haven't heard of any with widespread firesales and foreclosures. Is anyone in a market like that right now? If so, what has been the main driver? If not, do you think those conditions are coming soon?

I hope this doesn't come across as an "I told you so" post. I was planning to revisit this thread regardless of which way things went. I never could have predicted that the market would be doing this well right now. I just didn't buy into the short term doomsday scenario. I believe looking at our past predictions, right or wrong, can help us make better predictions in the future. This was a great opportunity to do just that, because we had so many varying and strong opinions at the time.

Where does everyone see the market in the next 6 months?

 We need to drive this post back to high visibility so ALL can do just that, take a look at all these predictions that were being thrown out there, with a timeline now well past, and see the reality of who was correct and who was slinging BS. 

And just because my prediction had 99.98% accuracy is not the point, HOW I developed those predictions; math, market data, NON-biased facts, research.... OH so much research and analysis. The whole doom preaching based of tunnel vision of a singular fact removed of the entire eco-system as a whole, this is how we get panicked actions which result in financial loss. 

Remember, some people actually DID follow the doom-preachers "warnings", and that has incurred significant financial loss for doing such. I( put my $$$$ where my posts were advising, I have significant double digit returns in reward for such, and growing. 

Inventory is still decreasing, micro market corrections happening, yup, all following data indications. Emotion has NO place in business, ever!

[James Hamling]

Originally posted by @Thor Sveinbjoernsson:

I’ve been doing a lot of research lately and I wanted to share with you guys what I have found about the correlation between unemployment, delinquencies and housing prices. During the 2008 housing crisis the housing market bottomed about 2 years after the peak in delinquencies. Note that delinquencies are very much so correlated with unemployment rates (see graph on link below). Unemployment is already about twice the peak in 2008 so it is very likely that delinquencies will follow, which will lead to increased supply of housing.

See data here, gathered by stanford researches: https://web.stanford.edu/~pavelkr/jmp_slides.pdf

Conclusion: You have about 6 months to sell off your assets until the market will be flooded with fire sales and forclosures.

Thor I am confused, you said we have 6 months before a complete apocalypses; a flood of housing, collapsing rents, an economy in free fall..... 

I mean, when I corrected you with my data & fact based predictions of INCREASING rents, INCREASING cost of housing, DECREASE in housing supply, you said your this great CPA and economics whiz so I am confused...... I mean one "could" say I was correct because, well, literally everything has happened exactly as I predicted it would...... But I am sure that's a fluke, right, I mean, it must just be "coming around the corner" right...... lol. 

The good Ole fall back to every doom-preacher "oh, it, uhh, uhm, it's coming, it's jsut a little late, yeah that's it, the end is nigh....still, the end is just running a little late....."

[Thor Sveinbjoernsson]

@James Hamling

You were right, my theory was wrong. Hope you made a lot of money these past 6 months

[Sylvia B.]

So who is the bigger man? He who was right and rubs it in, or he who admits he was wrong?

[Andrey Y.]

Originally posted by @Sylvia B.:

So who is the bigger man? He who was right and rubs it in, or he who admits he was wrong?

 The dude who was wrong hasn't properly admitted it yet. So I'd vote for the "I told you so" guy.

[Ian Walsh]

I wish I had a crystal ball.  The reality is, none of us do.

[Tom Phelan]

True, but there are many who make handsome incomes and rewarding careers claiming they do have access to mythical "Crystal ball".

[Sylvia B.]

Originally posted by @Andrey Y.:

Originally posted by @Sylvia B.:

So who is the bigger man? He who was right and rubs it in, or he who admits he was wrong?

 The dude who was wrong hasn't properly admitted it yet. So I'd vote for the "I told you so" guy.

Properly admitted? What more is necessary than, "You were right and I was wrong"?

[Andrey Y.]

Originally posted by @Sylvia B.:

Originally posted by @Andrey Y.:

Originally posted by @Sylvia B.:

So who is the bigger man? He who was right and rubs it in, or he who admits he was wrong?

 The dude who was wrong hasn't properly admitted it yet. So I'd vote for the "I told you so" guy.

Properly admitted? What more is necessary than, "You were right and I was wrong"?

 He said "my idea was wrong". No, YOU were wrong. Take responsibility.

"I didn't have sexual relations with this woman, Miss Lewinsky... I indeed did.. and I'm sorry if I mislead anyone"

[Account Closed]

*pounds fists on table*  I WAS PROMISED CHEAP HOUSES!

What I want to know is if the original poster sold off all his assets! 

[Stone Saathoff]

@Joseph Cacciapaglia

I'm personally not expecting any significant ups or downs in our market over the next 6 months.

[Chris Martin]

It's been about 7 months now since the original post. The title says 'You have 6 months to liquidate your assets' and the details on this analysis are there at the OP. If you put yourself back 7 months ago, you may indeed think the title would make sense. But here's what's happened in the past year:

The graph and text are from https://tradingeconomics.com/united-states/nahb-housing-market-index. I have no affiliation, and similar data and charts are available from multiple other sources. I added a link in the text below to the NAHB site. 

"The NAHB housing market index in the US increased to an all-time high of 90 in November 2020 from 85 in the previous month, and above market forecasts of 85. The housing market has been supported by record-low mortgage rates and higher demand for suburban houses as people are moving away from big cities due to the coronavirus pandemic. The current single-family sub-index increased to 96 from 90 and the gauge for home sales over the next six months went up to 89 from 88. The prospective buyers sub-index rose to 77 from 74. source: National Association of Home Builders"

The bottom line is that persistent housing shortage continues regardless of the pandemic, the economy, the election, etc. 

[Denis Ryan]

Hey Everyone, how about we revisit this now it's a year later? The economy is still strong, but we have inflation, the moratoriums have ended and unemployment is low. How do you think it will play out now?

[Aaron K.]

@Denis Ryan I think the market will likely stay inflated for a while as rents lag price increases and we have seen some doozies.  I think RE is also being used by many as a hedge against inflation which has been restricting supply.  As the velocity of money slows as stimulus wanes and folks get back to "normal" we may see slight price dips in the farter out suburbs of markets but nothing too major most likely then a return to where markets were a few years ago from an appreciation standpoint.  I have no more of a crystal ball than the next guy though. 

[Lesley Resnick]

Famously, when JP Morgan was asked what will happen with the market in the coming year.  He said, "it will fluctuate."  I think he nailed it.  Here is my grand prediction, to add on the Mr Morgan.  

"It will not be a boring year!"

              - Lesley Resnick  - October 2021

We are in the guessing stage now.  We are so far from anything that has ever happened, there is no history as a guide.  This is not the 2009 housing crisis, its not the asian 1997 Asian financial contagion (not a pandemic), its not the 1987 stock market crash, it is not the S & L crisis of the 80s.  It is not the gas crisis of the 70s and so on.

Causes:

loose Monetary policy 

Free money not to work 

Political divisiveness and bickering I have never seen

Social bickering and tribalism

A real economic and cyber-military challenge from China  

I feel as confident making economic predictions as I do about the weather in a year.