Impending Market Crash???

Question

With every week a new house sells and set a record in its respective area, with this trend having gone on for months the big question on everyone's mind right now is, is there going to be a big correction in the market soon. I believe any correction of sorts will not happen for a while, but feel free to point out something I'm not seeing.

The Fed will continue to hold interests rates at the current level till at least 2023, (https://www.cnbc.com/2021/06/1...) meaning money is going to continue to be cheap, for flippers and landlords alike.

On top of cheap money, there is no big influx of inventory coming to market anytime soon. Yes, I've heard people talk about the tax auctions coming back which would in theory bring a large amount of cheap inventory to the market. My response to that is, if people are currently paying on average 82% of ARV on the MLS, once this cheap inventory becomes available why would it not get bid up crazy amounts to the levels people are used to paying right now.

Would love to hear what people think!!

Russell Brazil · Answer

Ive been hearing about this imminent market crash for 8 years now. Yawn.

2015 - Is this a bubble? https://www.biggerpockets.com/...

2016 - Thoughts on the next housing crash https://www.biggerpockets.com/...

2017 - Housing Bubble Crash https://www.biggerpockets.com/...

2018 - Housing Crash in 2018/2019 https://www.biggerpockets.com/...

2019 - Are we heading into the next real estate market housing crash https://www.biggerpockets.com/...

2020 - Housing Market Crash https://www.biggerpockets.com/...

Steve Babiak · Answer

@Russell Brazil - if they keep calling for a crash, eventually they will be right, just like the broken clock that has the correct time twice a day. They’ll be right because of coincidence / serendipity, not because of an accurate prediction.

Steve Babiak · Answer

IMO the lenders will work out some kind of payment arrangements with those borrowers who can afford to pay - a loan modification with a higher monthly payment or a loan modification that puts the arrears into a second mortgage that is payable on sale or at a refi or at payoff of the primary mortgage. I say this for two reasons: first, the lenders learned from ten or so years ago that to have too much inventory from foreclosure the property values will plummet; second, two years ago I bought a house where the owners had a second mortgage that was their arrears rolled into it (and they had to come to the settlement table with close to $60K to pay off, lucky for them they had received an inheritance that covered).

Those who can’t pay can’t be offered that kind of help, so those will proceed to foreclosure.

And if the lenders don’t do that on their own, I suspect that the lawmakers in DC will make that mandatory for the loans with federal backing, so that will cover a huge chunk of mortgages.

Bill B. · Answer

Don’t forget. Some people are posting about a housing crash and “Massive inflation” at the same time.

Pick a team…

Bill B. · Answer

I bet I could find 20 impending crash posts from the first half if thus year alone, easy.

Tell me the over under for 100 threads in 2020.

I assume 80-90% are starting them as a reason they don’t have to start investing. I don’t know if the other 10-20% are “sky is falling people” or people trying to feel better about properties they already sold because they predicted prices would crash 2-3 years ago and they would be buying today at lower prices.  But prices are up at least 40% in the last few years. What kind of crash are they hoping for? Are they going to be willing to invest with a 10% price correction to 2020 prices? More likely they’ll continue to wait on the sidelines until prices start going back up and then they’ll start a new forum post about the next “crash”.

Michael Dumler · Answer

@Dan Powers I agree. I don't think will see a correction in the market for at least a year or two.

As far as inventory coming to the market, a couple things to note. One factor being the forbearnce period. I don't see any reason why this would be kicked into 2022. Question is, how behind are homeownes on payment and are lenders willing to set guidelines to help?  Another piece at play is the eviction moratorium set to expire at the end of July. This gives the opportunity for landlords to finally collect rent. However, if payment is not issued, this could lead to a lot of movement in the rental category.

My prediction, home prices to peak in 2022 and then will see some leveling out.

Joe P. · Answer

Supply and demand. Low supply, high demand...high prices. All this means is deals are less plentiful and harder to find, or snapped up more quickly than you anticipate. If a deal isn't a deal, then don't make the deal. I don't personally care when a crash is happening...my criteria won't change. The market only dictates the amount of deals I could snatch up in my net.

Account Closed · Answer

I think there is simply a shortage of houses available to buy.

Todd Sullivan · Answer

@Dan Powers

In the Hudson Valley market (just north of NYC), we have seen a definite slow down of cash buyers flooding out of the city.  We are back to predominantly conventional and fha buyers fighting it out for high-priced houses.

Miraculously, I just got a sellers concession on a multi family and I’m seeing a lot more multi family buyers in the last few weeks. So yes, the market is changing, but I wouldn’t say we are near a crash at all.  It’s more like maybe the beginning of a plateau point.

Of course, here is NY the suburbs got super busy with all of the city people leaving for (literally) greener pastures outside of the city, but all in all, NYer’s are leaving the state at a pretty high rate, with a good portion going to the Carolinas and Mid-Atlantic area.

Jeremy Komer · Answer

@Russell Brazil

Every new high the chicken littles come out.

Best thing about the economy is that If you bet it will get better and bigger your usually right

Impending Market Crash???

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