The Market Crash 🤔 or lack thereof ?

Fort Lauderdale, Florida
Real Estate News & Current Events
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The Market Crash 🤔 or lack thereof ?

Anthony Michael
Lender · Member since 2019 · 47 posts · 97 votes

We've all seen the fear mongering that's being pushed by a lot of media outlets and influences. My question is are their thoughts justified in the current housing market. Due to Bigger Pockets being very diverse one would assume that someone's market is having a downturn of home sales right ? I'm in Fort Lauderdale and stuff is still flying off the shelve. Even where my fix and flip company is in Clearwater, it's the same story there. Is Florida the outlier where a housing market correction can't happen? How's your market doing where you operate ? This is purely speculative post no suggestion anything is or will happen in the market just looking for opinions and to see what others have to share! 

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Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
4y

The market will crash on January 12th, 2025, at 3:35pm EST.

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  • Zach LemasterBusiness Member
    Rental Property Investor · Denver, CO · Member since 2015 · 2k+ posts · 3k+ votes
    4y

    @Anthony Michael

    My vote is another strong few years of REI appreciation and rental increases, albeit it may not be quite as strong as we've seen over the past two years. Simply supply and demand will dictate that, not interest rates. A quick look over the past 40 years will show that appreciation is still strong after significant interest rate increases, but most importantly the housing deficient we have nationally will continue to drive us as a seller's market.

    Podcast 604 is a must listen to expand on this topic:

    https://www.biggerpockets.com/...

    BiggerNews May: What the Media Isn’t Telling You About a “Housing Crash”
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  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    4y
    Quote from @Wes M.:

    Interesting side note -- there was a tremendous asset bubble in Japan in the early 90s. Their real estate prices have yet to recover from the bubble bursting in 1991. While certainly not an apples to apples comparison, there are some similarities to current conditions here in the US. In Japan, this era was termed the lost decade. See link to chart below for Japan's residential property prices. Several cities in their market still remain the most expensive in the world:

    https://fred.stlouisfed.org/se...


     I remember the Japanese Real estate bubble.  I was in school at the time and the Nikkei225 was over 40,000.  Today it is 26,214, it never recovered.

    1Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    4y

    Affordability has taken a big hit. Here in Phoenix I went to the REIA meeting yesterday and even the head of the REI was cautious.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Quote from @Bob E.:
    Quote from @Wes M.:

    Interesting side note -- there was a tremendous asset bubble in Japan in the early 90s. Their real estate prices have yet to recover from the bubble bursting in 1991. While certainly not an apples to apples comparison, there are some similarities to current conditions here in the US. In Japan, this era was termed the lost decade. See link to chart below for Japan's residential property prices. Several cities in their market still remain the most expensive in the world:

    https://fred.stlouisfed.org/se...


     I remember the Japanese Real estate bubble.  I was in school at the time and the Nikkei225 was over 40,000.  Today it is 26,214, it never recovered.


     And I was selling J logs to Japanese exporters  for 1200 1400  a thousand retreated to 700 to 800 and never came back. We told Timber land Owners and Timber owners this wont last cash in while you can LOL some did and made big dough others rode it all the way down they thought the prices would continue to go up. 

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Anthony Michael:

    We've all seen the fear mongering that's being pushed by a lot of media outlets and influences. My question is are their thoughts justified in the current housing market. Due to Bigger Pockets being very diverse one would assume that someone's market is having a downturn of home sales right ? I'm in Fort Lauderdale and stuff is still flying off the shelve. Even where my fix and flip company is in Clearwater, it's the same story there. Is Florida the outlier where a housing market correction can't happen? How's your market doing where you operate ? This is purely speculative post no suggestion anything is or will happen in the market just looking for opinions and to see what others have to share! 


    Nobody can predict the future.

    I started to make a list of all the things happening right now, observable by anyone, that could upset the housing market and create a real mess. I think it's important to keep an eye on what's happening in your local market, nationally, and even globally. However, you shouldn't be living in fear of things you can't control. When the wave comes, you can let it sweep you away or you can find a way to hop on a board, paddle like mad, and use that wave's momentum to propel you forward.

    You were not in control six years ago or six months ago. You will not be in control tomorrow. All you control is how you react to what is happening around you.

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  • Scott S.
    Tacoma, WA · Member since 2014 · 78 posts · 92 votes
    4y
    Quote from @Peter Mckernan:
    Quote from @Anthony Michael:

    We've all seen the fear mongering that's being pushed by a lot of media outlets and influences. My question is are their thoughts justified in the current housing market. Due to Bigger Pockets being very diverse one would assume that someone's market is having a downturn of home sales right ? I'm in Fort Lauderdale and stuff is still flying off the shelve. Even where my fix and flip company is in Clearwater, it's the same story there. Is Florida the outlier where a housing market correction can't happen? How's your market doing where you operate ? This is purely speculative post no suggestion anything is or will happen in the market just looking for opinions and to see what others have to share! 


     I have not been in real estate through a big market crash (2008); however, I believe that the rates moving up are something that will effect the first time buyer's that are right there on the cusp already. The ones that cannot really get in at the prices now and they were able to with the lower interest rates, which now they are changing and the buyer's that really wanted something that have 10% down or 20% down now really have a chance they can just be a little more picky (not a lot because inventory is not going to flood the market). The thing you need to watch is the inventory, the inventory is the one thing that will dictate what goes on and with everyone in their home sitting at a 2.75% interest rate we'll see a kind of "Cold War" stall in the market with no one moving and the only ones getting in are ones that need a home that have not bought a home yet. 

     I have been thinking about this significant rate increase and how it will impact those wanting to move or upgrade -- but don't want to lose their 2-3% rate.  I'm in this camp right now.  I'd like to sell my current home for a larger one with more space but giving up my low 3% rate for 5.5%+ would dramatically increase my expenses.  So we sit tight for now.  How will this affect inventory levels?  

    Maybe assumable fixed mortgages will make a comeback? My parents did this when they bought one of their homes in the 70's during the 10%+ rate times. They assumed the loan from the seller at their 5% rate. I'd rather have that option than a risky ARM like many are doing now.

    2Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    4y

    I don't think so. A general recession; yes and plenty of continued inflation. But there's just too big a housing shortage and we don't have the teaser rates from pre-08. So no housing crash but it might get pulled down some in a general recession.

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    1Reply
  • Johnny Drago
    Member since 2022 · 26 posts · 14 votes
    4y

    50 year loans anybody?

    1Reply
  • Philip CookPro Member
    Investor · Stevens Point, WI · Member since 2020 · 91 posts · 52 votes
    4y
    Quote from @Johnny Drago:

    50 year loans anybody?


     50 no, but there are 40 year options out there. 

    2Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    4y

    Everyone is a bit sticker shocked with interest rates at the moment, but rates are really  NOT high - they are just back to normal, maybe even a bit low!

    2Reply
  • Kyle O'Connor
    Investor · Hartford, CT · Member since 2016 · 10 posts · 3 votes
    4y

    I actually just made a thread about this. Maybe I should of loomed first lol

    I've been thinking if the looming threat of recession could be the final straw that will break the preverbial camels back to real estate prices.

    I have heard that the shut down really stretched those doing the STR model and wonder if high gas prices + inflation + ressesion would see another dry spell in vacancies. This would put pressure to either sell or convert to LTR. If there is a large increase of selling I believe this will greatly increase supply as I have heard the majority of home purchases are second homes.

    I havent really seen anyone talk about this so please let me know if I'm on to something or if I should put down the crack pipe.

    Kyle

    1Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    4y

    From yesterday's Epoch Times "“Monthly payments have increased by more than 50 percent in just four months because of higher mortgage rates,” said George Ratiu, a senior economist with Realtor.com".

    @Marcus Auerbach  While I agree that todays rates are low by historical standards, current property prices reflect those low rates and the payments associated with them.

    Personally I expect prices will be sticky on the downside but the time of annual double digit increases is coming to an end.

    1Reply
  • Michael PorchePro Member
    Rental Property Investor · Boise, ID · Member since 2017 · 220 posts · 101 votes
    4y
    Quote from @Kyle O'Connor:

    I actually just made a thread about this. Maybe I should of loomed first lol

    I've been thinking if the looming threat of recession could be the final straw that will break the preverbial camels back to real estate prices.

    I have heard that the shut down really stretched those doing the STR model and wonder if high gas prices + inflation + ressesion would see another dry spell in vacancies. This would put pressure to either sell or convert to LTR. If there is a large increase of selling I believe this will greatly increase supply as I have heard the majority of home purchases are second homes.

    I havent really seen anyone talk about this so please let me know if I'm on to something or if I should put down the crack pipe.

    Kyle



    Hey Kyle! so overall what is your goal? What are you looking to accomplish? I think that is very dependent on the local market. If you saw what happened with STR's during the heigh of covid, some places didnt do so well and A lot of places did amazing. So you got to ask the question, why are they doing amazing?



    Hey Kyle! so overall what is your goal? What are you looking to accomplish? I think that is very dependent on the local market. If you saw what happened with STR's during the heigh of covid, some places didnt do so well and A lot of places did amazing. So you got to ask the question, why are they doing amazing?
    1Reply
  • Kyle O'Connor
    Investor · Hartford, CT · Member since 2016 · 10 posts · 3 votes
    4y

    @Michael Porche I'm looking to acquire small multi and single family homes for the long turn hold. I haven't really looked into STR and am more of a conventional LTR investor.

    That being said during these times I'm more focused on "making the money when you buy" then high cash flow returns.

    1Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    4y
    Quote from @Bob E.:

    From yesterday's Epoch Times "“Monthly payments have increased by more than 50 percent in just four months because of higher mortgage rates,” said George Ratiu, a senior economist with Realtor.com".

    @Marcus Auerbach  While I agree that todays rates are low by historical standards, current property prices reflect those low rates and the payments associated with them.

    Personally I expect prices will be sticky on the downside but the time of annual double digit increases is coming to an end.

    Bob, for me the question is always "relative to what?" When you look at affordability, which is a function of income, rates and prices, we are still better than in the 1990s and 2000s, even though it has dropped a lot over the last years.

    And that is US national average; if I look at affordabilty for Wisconsin it is still excellent: a median income can still afford over one and a ahalf median houses!

    I agree with the notion that the crazy price explosions of +40% in cities like Austin have to end, because you hit income limitations. But for a city like Milwaukee that is not a concern, by a long shot.

    Here is some anectotal evidence for the last few days:

    - Wauwatosa, asking 499 on a house that should be 450k, offered 561k, agent spilled the beans and told me were 25k short

    - Brookfield: asking 799, offer 951k - agent said we were close

    - listed a Milwaukee duplex for 329k, first offer came in at 370k within hours, will probably have 10+ offers

    - my Shorewood listing: 11 offers most about 10% over asking (which we had set already high)

    - Menomonee Falls: 310k asking (underpriced, should have been 350k) they had 150 showings in 2 days and received 52 offers - I thought the agent was sarcastic

    We have gotten 4 accespted offers this week, 3 of them at least 50k over asking. I am really looking for the impact of higher rates, I am sking our active clients and I am pulling weekly data, both local and national. Mortgage applications were up again last week...

    Several of our clints have told me that they are liquidating stocks and buying real estate. I am still looking for data that shows the qualtity of money from WallStreet for my next YouTube. It is brutal for agents, writing offers is not fun when you have to compete with 10 or 20 other agents. It means that all but one don't get paid for their work.

    This morning I am reading about more water limitations along the Colorado river, literally ten minutes later I get a text from a buyer in CA who wants to move to Milwaukee because he is concerned about fresh water and  does not want his children in a situation where they have to move away from the family because they can't afford to buy their first home close to their parents.

    I really hope the market cools down a bit, we need it, this is not healthy, but so far it has not materialized..

    4Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    4y

    @Marcus Auerbach  as investors we all need to look forward, not back.  The trends are not good.

    1Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    4y

    @Bob E. agreed, but we can learn from the past. Everyone has to draw their own conclusions about the market, but for me things are looking better. I have not bought a property since January and we now see more listings (that's just seasonality) and with higher rates buyers tend to focus on what we call HGTV ready listings and disregard properties that need work a bit more work. And long term I am not worried, inflation and millennials will see to it.

    0Reply
  • Mordy Chaimovitz
    Investor · Chicago · Member since 2022 · 128 posts · 85 votes
    4y

    I told you all I would try to confirm the info I posted  earlier. Here is what my friend that works for BIG bank told me 

    they are seeing %63 nationwide dip in home sales compared to May of last year. 


    I understand your skepticism. I am just sharing what i heard.  You can choose to accept it or deny it. I did not research the data, i am just repeating what he told me. I cannot verify more then that. Sorry.

    1Reply
  • Casey Caton
    Investor · Member since 2017 · 69 posts · 65 votes
    4y

    @Anthony Michael, Some markets, like most areas of Florida, will be good so long as the local economies keep growing and are built in solid fundamentals. I like Air Force Bases personally. Other areas where there’s high unemployment, crime, and net population lost will have a tough time in the near future. I will keep buying properties in those growing areas as long as the numbers make sense, even in a worst case scenario situation. I’m sticking with that plan.

    0Reply
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