Housing crash deniers ???
Most Popular Reply
Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votesThe market may correct, but I firmly believe there won't be a crash. The reason is simple, equity.
Before 2008 people with no income could get liars loans and buy much more real estate than they could afford. We heard stories of cleaning ladies buying multiple million dollar homes. When home prices starting falling, the whole thing collapses like a house of cards because nobody had any equity. They couldn't sell and get out. We had cascading foreclosures creating a downward spiral.
Recently, prices have been surging. Given the laws passed after the Great Recession, appraisals and lending is highly restricted. Appraisals have not been keeping up with prices and lenders won't lend above appraised value. We sold a house in 2021 and in one day had 20 offers. Several of them had acceleration clauses stating they would pay more than anyone else up to $X. Both of them waived any financing contingency because they KNEW the house wouldn't appraise for what they were offering. They had to make up the difference with cash. Those people have a ton of equity in their homes. If they had to sell, they might take a haircut, but they aren't going to get foreclosed.
There is no house of cards here to come tumbling down.
2904 Replies
- Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @Greg R.:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Take a look at 76244….I’m seeing multiple single family homes rent for $2500 and purchases at current prices are 3k mortgage with 20 percent down.
This market is on 3 sigma deviation, it has to reduce 40-50k in general or 8-12% from the current price to enter long-term normal appreciation line.
Too many CA folks moving to Texas ;-)Ok, so median values in Dallas are currently 399k. So another 50k decrease in values brings us to 349k. When we look at peak of the bubble values at 490k, that's almost a 30% decrease in values. So is 140k and 30% decrease in values from the peak not a crash?
not really a crash because for 2 years market is melting up 3-4 sigma deviation, it's abnormal growth. it's just reverting to a mean.
The problem when gov is printing money is --> people have too much money (in Fed calculation it's like 5x pre-covid), so people usually use that excess capital to invest in real estate, the victim in this case is Texas market. - Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes4y
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Take a look at 76244….I’m seeing multiple single family homes rent for $2500 and purchases at current prices are 3k mortgage with 20 percent down.
This market is on 3 sigma deviation, it has to reduce 40-50k in general or 8-12% from the current price to enter long-term normal appreciation line.
Too many CA folks moving to Texas ;-)Ok, so median values in Dallas are currently 399k. So another 50k decrease in values brings us to 349k. When we look at peak of the bubble values at 490k, that's almost a 30% decrease in values. So is 140k and 30% decrease in values from the peak not a crash?
not really a crash because for 2 years market is melting up 3-4 sigma deviation, it's abnormal growth. it's just reverting to a mean.
The problem when gov is printing money is --> people have too much money (in Fed calculation it's like 5x pre-covid), so people usually use that excess capital to invest in real estate, the victim in this case is Texas market.That’s why I’ve been careful to call for a 20-30 percent median home value drop from peak so James can’t use the political “gotcha” by trying to weasel out and claiming that when it happens it wasn’t a “crash”
many on here think a 20-30 percent drop from peak can’t happen because it “will be worse than 2008”.
asset prices are going to revert back to mean until fed changes course, then @James Hamling will be right. - So you're saying that bringing us back to pre covid prices, plus "normal" appreciation that would have been realized instead of the bubble is a correction. But if prices sink below that, then we're no longer experiencing a correction.
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Take a look at 76244….I’m seeing multiple single family homes rent for $2500 and purchases at current prices are 3k mortgage with 20 percent down.
This market is on 3 sigma deviation, it has to reduce 40-50k in general or 8-12% from the current price to enter long-term normal appreciation line.
Too many CA folks moving to Texas ;-)Ok, so median values in Dallas are currently 399k. So another 50k decrease in values brings us to 349k. When we look at peak of the bubble values at 490k, that's almost a 30% decrease in values. So is 140k and 30% decrease in values from the peak not a crash?
not really a crash because for 2 years market is melting up 3-4 sigma deviation, it's abnormal growth. it's just reverting to a mean.
The problem when gov is printing money is --> people have too much money (in Fed calculation it's like 5x pre-covid), so people usually use that excess capital to invest in real estate, the victim in this case is Texas market.
Is that correct? - Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @Greg R.:
So you're saying that bringing us back to pre covid prices, plus "normal" appreciation that would have been realized instead of the bubble is a correction. But if prices sink below that, then we're no longer experiencing a correction.Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Take a look at 76244….I’m seeing multiple single family homes rent for $2500 and purchases at current prices are 3k mortgage with 20 percent down.
This market is on 3 sigma deviation, it has to reduce 40-50k in general or 8-12% from the current price to enter long-term normal appreciation line.
Too many CA folks moving to Texas ;-)Ok, so median values in Dallas are currently 399k. So another 50k decrease in values brings us to 349k. When we look at peak of the bubble values at 490k, that's almost a 30% decrease in values. So is 140k and 30% decrease in values from the peak not a crash?
not really a crash because for 2 years market is melting up 3-4 sigma deviation, it's abnormal growth. it's just reverting to a mean.
The problem when gov is printing money is --> people have too much money (in Fed calculation it's like 5x pre-covid), so people usually use that excess capital to invest in real estate, the victim in this case is Texas market.
Is that correct?nope nope.... not pre-covid, it has to adjust to Q4 2021 price or Jan 2022 price for long term growth to be sustainable.
If we're going to pre-covid level, that would be below inflation line, not possible, that would be a super crash. - Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
That’s why I’ve been careful to call for a 20-30 percent median home value drop from peak so James can’t use the political “gotcha” by trying to weasel out and claiming that when it happens it wasn’t a “crash”
many on here think a 20-30 percent drop from peak can’t happen because it “will be worse than 2008”.
asset prices are going to revert back to mean until fed changes course, then @James Hamling will be right.correct , and we're like buying time here. If gov. action to pivot is faster than predicted, then we see no crash or just a neutral market.
20-30% percent drop peak is possible if 1 or 2 FOMO buyers buy the latest house overbidding by $300k. For example if last ten housing data sampling is like this:
$900k , $910k, $920k, $915k,$930k,$945k,955k,$980k,$975, $1,300,000
Then there's an "ilussion" that it seems everyone in that market has equity/peak market of $1,300,000 ; while actually that market has $970k as median price and ........that's exactly what happened today, market is experiencing "irrational exuberance" by the FOMO buyers. - Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes4y
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Take a look at 76244….I’m seeing multiple single family homes rent for $2500 and purchases at current prices are 3k mortgage with 20 percent down.
This market is on 3 sigma deviation, it has to reduce 40-50k in general or 8-12% from the current price to enter long-term normal appreciation line.
Too many CA folks moving to Texas ;-)Ok, so median values in Dallas are currently 399k. So another 50k decrease in values brings us to 349k. When we look at peak of the bubble values at 490k, that's almost a 30% decrease in values. So is 140k and 30% decrease in values from the peak not a crash?
not really a crash because for 2 years market is melting up 3-4 sigma deviation, it's abnormal growth. it's just reverting to a mean.
The problem when gov is printing money is --> people have too much money (in Fed calculation it's like 5x pre-covid), so people usually use that excess capital to invest in real estate, the victim in this case is Texas market.That’s why I’ve been careful to call for a 20-30 percent median home value drop from peak so James can’t use the political “gotcha” by trying to weasel out and claiming that when it happens it wasn’t a “crash”
many on here think a 20-30 percent drop from peak can’t happen because it “will be worse than 2008”.
asset prices are going to revert back to mean until fed changes course, then @James Hamling will be right.Wait..... what? So, your saying I am going to be wrong, and then will imitate an adorable little woodland creature, and then, I will be right? Is this a Thanos snap thing?
- Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes4yNo, I’m saying the fed is going to bring housing back 20-30 percent from peak, and then they will pivot and unleash money into the system like you have been saying. I never disagreed with the housing thesis Long term. So yes, you will be wrong about the values not dropping 20-30 percent, but you will get bailed out by the fed by holding on long term.
Quote from @James Hamling:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Take a look at 76244….I’m seeing multiple single family homes rent for $2500 and purchases at current prices are 3k mortgage with 20 percent down.
This market is on 3 sigma deviation, it has to reduce 40-50k in general or 8-12% from the current price to enter long-term normal appreciation line.
Too many CA folks moving to Texas ;-)Ok, so median values in Dallas are currently 399k. So another 50k decrease in values brings us to 349k. When we look at peak of the bubble values at 490k, that's almost a 30% decrease in values. So is 140k and 30% decrease in values from the peak not a crash?
not really a crash because for 2 years market is melting up 3-4 sigma deviation, it's abnormal growth. it's just reverting to a mean.
The problem when gov is printing money is --> people have too much money (in Fed calculation it's like 5x pre-covid), so people usually use that excess capital to invest in real estate, the victim in this case is Texas market.That’s why I’ve been careful to call for a 20-30 percent median home value drop from peak so James can’t use the political “gotcha” by trying to weasel out and claiming that when it happens it wasn’t a “crash”
many on here think a 20-30 percent drop from peak can’t happen because it “will be worse than 2008”.
asset prices are going to revert back to mean until fed changes course, then @James Hamling will be right.Wait..... what? So, your saying I am going to be wrong, and then will imitate an adorable little woodland creature, and then, I will be right? Is this a Thanos snap thing?
Ok, so is that consensus amongst this group? Median sold prices decreasing to, but not exceeding the median sold values of Q4 2021 constitutes a "correction". Median sold prices decreasing past levels of Q4 2021 is a "crash". The degrees of a crash could vary, but past Q4 2021 is a crash.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes4y
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
That’s why I’ve been careful to call for a 20-30 percent median home value drop from peak so James can’t use the political “gotcha” by trying to weasel out and claiming that when it happens it wasn’t a “crash”
many on here think a 20-30 percent drop from peak can’t happen because it “will be worse than 2008”.
asset prices are going to revert back to mean until fed changes course, then @James Hamling will be right.correct , and we're like buying time here. If gov. action to pivot is faster than predicted, then we see no crash or just a neutral market.
20-30% percent drop peak is possible if 1 or 2 FOMO buyers buy the latest house overbidding by $300k. For example if last ten housing data sampling is like this:
$900k , $910k, $920k, $915k,$930k,$945k,955k,$980k,$975, $1,300,000
Then there's an "ilussion" that it seems everyone in that market has equity/peak market of $1,300,000 ; while actually that market has $970k as median price and ........that's exactly what happened today, market is experiencing "irrational exuberance" by the FOMO buyers.All I hear is "blah blah blah... James was right, blah blah blah.... we gotta argue on how James was right, blah blah blah....." lol.
Look, I'm not always right, I mean, there was this one time, back in the 90's....... lol.
- Definitely not right. I think in the coming months you will be making excuses as to why your initial prediction was wrong, but somehow try to justify it. 😂
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
That’s why I’ve been careful to call for a 20-30 percent median home value drop from peak so James can’t use the political “gotcha” by trying to weasel out and claiming that when it happens it wasn’t a “crash”
many on here think a 20-30 percent drop from peak can’t happen because it “will be worse than 2008”.
asset prices are going to revert back to mean until fed changes course, then @James Hamling will be right.correct , and we're like buying time here. If gov. action to pivot is faster than predicted, then we see no crash or just a neutral market.
20-30% percent drop peak is possible if 1 or 2 FOMO buyers buy the latest house overbidding by $300k. For example if last ten housing data sampling is like this:
$900k , $910k, $920k, $915k,$930k,$945k,955k,$980k,$975, $1,300,000
Then there's an "ilussion" that it seems everyone in that market has equity/peak market of $1,300,000 ; while actually that market has $970k as median price and ........that's exactly what happened today, market is experiencing "irrational exuberance" by the FOMO buyers.All I hear is "blah blah blah... James was right, blah blah blah.... we gotta argue on how James was right, blah blah blah....." lol.
Look, I'm not always right, I mean, there was this one time, back in the 90's....... lol.
- Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @James Hamling:
All I hear is "blah blah blah... James was right, blah blah blah.... we gotta argue on how James was right, blah blah blah....." lol.
bull vs bear in the housing market ...
- Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @Greg R.:
Definitely not right. I think in the coming months you will be making excuses as to why your initial prediction was wrong, but somehow try to justify it. 😂Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
The bigger question is what would happen to 30YRFRM when Fed increases FFR to 4% this upcoming November or December.
And then what will happen to markets? - Member since 2022 · 485 posts · 216 votes4y
Ehh I think people are not factoring in that even with inflation reducing we will still see some decent inflation next few months. not convinced we'll see all markets go back to Q4 2021.
Additionally, it would be shocking to me if the Median home price in DFW falls to $350k. It's so far below the median national housing price in a market that maybe had some crazy jumps but is only going to grow.
Time will tell on all this though and in even in the next few months we should be a lot closer on a directional trajectory.
- Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes4yI think the 10 year treasury at 4.20 percent now is starting to price that in fully. 7-8 percent mortgages seem likely next 3-4 months.
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Definitely not right. I think in the coming months you will be making excuses as to why your initial prediction was wrong, but somehow try to justify it. 😂Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
The bigger question is what would happen to 30YRFRM when Fed increases FFR to 4% this upcoming November or December.
And then what will happen to markets? - Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes4yGood catch!
Quote from @Greg R.:
Look at Dallas (a lot of the data isn't reported as DFW). Peak of the bubble median SOLD price was 490k in May. In September the median SOLD price has dropped all the way down to 399k.Quote from @Account Closed:
Quote from @Greg R.:
You're missing DFW. Look at peak of the bubble prices in DFW from May compared to Sep data. it's an 18% decrease.Quote from @Account Closed:
Quote from @Greg R.:
I haven't seen any data suggesting that DFW & Cali price decreases are slowing down. I'm seeing the exact opposite.Quote from @Michael Wooldridge:
Quote from @Greg R.:
Quote from @Michael Wooldridge:
Quote from @Greg R.:
Quote from @Michael Wooldridge:
Quote from @Bruce Woodruff:
Quote from @Michael Wooldridge:
And DFW and Cali are slowing down on price decreassWhat data do you have to support this claim?
It's already been posted in this thread. Look at Redfin. Flatlining. Cali same deal. Not going to rehash it because we need to see if October continues - frankly if you look at May as a deviation (and it was compared to every other city) DFW is more flat than Austin.
This is the Top 10 losing value
"Following are the cities where housing markets are cooling fastest."
https://www.biggerpockets.com/...I buy along the I-35 corridor so I track that as well. Each market is it's own world and I didn't see DFW on the "Fastest Dropping List".
- Member since 2022 · 485 posts · 216 votes4y
Ok this is the monthly data for Dallas. Until the April/May jump Dallas was on strong growth but in line with a lot of the country. But in a 60 day period it literally jumped 20%. Nothing about that is normal in such a short span. It’s odd any way you slice it and I’d love to see another major city that jumped 20% in two months.
Anyway Dallas is what it is you pull that unusual jump away and it tracks with most of the data we are seeing else where. But any way you slice this Dallas will likely be an outlier. The trends don’t even match what was seen in Cali or Austin.
- Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @Michael Wooldridge:
Ok this is the monthly data for Dallas. Until the April/May jump Dallas was on strong growth but in line with a lot of the country. But in a 60 day period it literally jumped 20%. Nothing about that is normal in such a short span. It’s odd any way you slice it and I’d love to see another major city that jumped 20% in two months.
Anyway Dallas is what it is you pull that unusual jump away and it tracks with most of the data we are seeing else where. But any way you slice this Dallas will likely be an outlier. The trends don’t even match what was seen in Cali or Austin.
These are differences for median price homes between Dallas and SF between May to Oct, data is unadjusted for seasonality.
Dallas May $335k-->Oct $320k (dropped 4%)
SF May $1.617k-->Oct $1.465k (dropped 9.5%)
I guess my calculation is not that far when asking Dallas has to drop 4% more to reach normal appreciation
line. - Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @John Carbone:
I think the 10 year treasury at 4.20 percent now is starting to price that in fully. 7-8 percent mortgages seem likely next 3-4 months.The bigger question is what would happen to 30YRFRM when Fed increases FFR to 4% this upcoming November or December.
And then what will happen to markets?I am betting we're very near the bond yield parabolic rise; as 2-year and 30-year bond has not much different yield ... it would be fun to watch
30 YRFRM collapsing from one very high point. - 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votesI for one, would call a 30% decline from the peak a crash.....
Quote from @Greg R.:
We may all have our own definition, but that would suffice as mine.... - Member since 2022 · 485 posts · 216 votes4y
Quote from @Bruce Woodruff:
I for one, would call a 30% decline from the peak a crash.....Quote from @Greg R.:
We may all have our own definition, but that would suffice as mine....It will be fun to revisit this in a few months. Most of the states that didn't have massive foreclosures - Cali, Las Vegas (i know city but it's basically the whole state), FL, Arizona - outside of those really painful states in 08 none of them got close to 30%.
Considering how high inflation will be by the time we are done this year. You are essentially talking about 40% swing. I don't see that.
But honestly by the end of the year we really should know trajectory. So only a bit more to wait. - Member since 2019 · 7k+ posts · 4k+ votes4yI for one, would call a 30% decline from the peak a crash.....
Quote from @Greg R.:
We may all have our own definition, but that would suffice as mine....It will be fun to revisit this in a few months. Most of the states that didn't have massive foreclosures - Cali, Las Vegas (i know city but it's basically the whole state), FL, Arizona - outside of those really painful states in 08 none of them got close to 30%.
Considering how high inflation will be by the time we are done this year. You are essentially talking about 40% swing. I don't see that.
But honestly by the end of the year we really should know trajectory. So only a bit more to wait.I like to learn about price anomalies as well. One thing I did notice from this inflation era is, the most expensive area/houses in Cali is actually rebounding faster than the typical middle-class neighborhood zip code. This means luxury home buyers/areas didn't feel much changes when when interest rate hikes.
It seems inflation affects FTHB more. If this is the case in other regions too, then the niche market may behave differently even for the same city.
In DFW case, if luxury home never drop in value, while middle class house is declining.....then we know the reason. And we will know why median home price is not dropping.
Watch for that. - Member since 2022 · 49 posts · 46 votes4y30% is a pretty bad bear market. Crash would depend on time frame. In the stock market a crash is normally within a few days or weeks. Housing is slower, but crash requires abrupt change.
Quote from @Bruce Woodruff:
I for one, would call a 30% decline from the peak a crash.....Quote from @Greg R.:
We may all have our own definition, but that would suffice as mine....
30% over three months, definitely a crash. Over one year, probably a crash. If it takes two years? Harder to call it a crash.
Hiowever, you do need to dig a little and figure out if it’s the “median house” or “median house sold.” If the houses on market simply shift down (because upper end sits tight) that’s not really prices dropping.
We shall see. I think a national average of 15% nominal drop, 25% real drop, is more likely, but we’ll see. - Member since 2018 · 4 posts · 1 vote4y
Quote from @Shiela R.:
Hi @Greg R. I'm new to BP but not new to REI. OF course, no one knows what the market is going to do exactly. But by studying economic trends and considering market cycles, I do believe certain markets are going to slow significantly. Some may even crash. I'm already seeing it in certain areas with price reductions and DOM increasing. However, I take issue with your question in that there is no national REI market forecast just as there is no national weather forecast. I mean, here in CO it is not uncommon for it to be sunny and clear skies in the front yard but raining in the backyard;) Just as it's not uncommon for one property to sit on the market where another still is sold with a bidding war.
We must be experts in the markets we are investing in. I do believe there will be some reckoning with those not using the sound principles of investing - particularly buying right aka buying at a discount. And you are correct in that so many (60%+/- is coming to mind but can't recall the source) do live pay check to pay check. If you just listen, the Fed raising rates and increased inflation, reduced consumer spending is building a recession. And that will be an opportunity for the rest of us.
We're already in a recession
- Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @Alex Hochberger:
30% is a pretty bad bear market. Crash would depend on time frame. In the stock market a crash is normally within a few days or weeks. Housing is slower, but crash requires abrupt change.Quote from @Bruce Woodruff:
I for one, would call a 30% decline from the peak a crash.....Quote from @Greg R.:
We may all have our own definition, but that would suffice as mine....
30% over three months, definitely a crash. Over one year, probably a crash. If it takes two years? Harder to call it a crash.
Hiowever, you do need to dig a little and figure out if it’s the “median house” or “median house sold.” If the houses on market simply shift down (because upper end sits tight) that’s not really prices dropping.
We shall see. I think a national average of 15% nominal drop, 25% real drop, is more likely, but we’ll see.Just realized this week. Fed , especially coming from Yellen, has now a mechanism to put a delay to any crash in stock market and bond market by having automatic backstop liquidity injection.
I've been wondering for ages why VIX and MOVE vol index is moving so low during this condition.
It's pre-mediated by Fed that they want to reduce their asset slowly (and buyback in the background)
So if Fed say no to bond/stock crash we may expect the same, no crash in the housing market either. - Member since 2019 · 7k+ posts · 4k+ votes4y
Feels still like 2019 LOL, at least for landlord
