Upcoming Housing Crash?
Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 632 votes
Upcoming Housing Crash?
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
5y2015 - 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/...
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- Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes5y
@Russell Brazil I was reading statistics, showing a high percentage of FHA loans were in default (incuding forbearance). Originally, I thought a high percentage of these would not re-perform. But maybe some of these folks have equity in their properties.
- Member since 2021 · 109 posts · 130 votes5y
Given an average 500k foreclosures per year, by September we will be at 750,000 homes foreclosed on that "should have happened" during normal times. 2.69 million in forbearance. Many of those people will not be able to keep up with increased payments on a loan modification. And 3% loans are still going on. When people are texting, calling and Facebook messaging you to sell and you see sales going through that make no sense, or people buying pre-construction houses and selling them for 40k more by the time they are done, a correction is coming.
- Investor · Menifee, CA. · Member since 2021 · 48 posts · 29 votes5y
@Dylan Vargas I know things have been crazy in Northern California with the fires. Southern California may not me meeting the need? That is a great point. I do not believe they are especially with multi family! I believe any market that remains $800 to $1200 a month rent will always be in demand.
- Investor · Chicago, IL · Member since 2016 · 80 posts · 90 votes5y
Typical Real Estate Cycles run about 18 years. If 2006 was the last peak that will put our next one at 2024. My investment strategy was to be cautious from 2021 -2024.
However, with the increased government spending due to Covid and the increased government spending, AKA "printing Money". Governments around the world are doing this, which historically leads to inflation. A lot of investors believe that the price of Real Estate will not go down due to inflation. You meet see a lower nominal value due to inflation but not a drop in price. I tend to favor this prediction.
So what's the worst case scenario if it's wrong, I buy a property that is cash flowing now and prices drop I still cash flow and wait for property values to recover. If it's does happen, you've locked your self into a property at todays prices and rates but your rents increase because of inflation.
I would be careful buying over the next few years but if your an investor holding real estate you have already committed your self to the life style. Market crashed shouldn't affect your current holdings. They should be seen as an opportunity to purchase under valued properties. You want to make sure that you stay in a position to take advantage of a crash while still continuing to build your portfolio.
Stay focused, study your markets and play the long game.
I always think about the advice Suzie Orman gives when asked about when to buy a stock. Buy now, buy later just keep buying!
That's probably not exactly how she said it but it's close enough.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes5y
Fun fact; all these people preaching of impending housing collapse "just around the corner", not 1 of them has ever accurately forecasted such an event ever before, not once, in their entire lifetime. Look it up. AND the vast majority, 98%+, have INACURATLY predicted collapses that DIDNT happen, most often many MANY times. Yet, people buy the fear, lap it up and run up and down the road of the internet screaming "THE END IS NEAR, THE END IS NEAR!!!!!".
Another fun fact; Those who DID accurately forecast things like the 08/09 collapse and other major market shifts, exactly 0% are forecasting a housing collapse in any future on the horizon.
Hmmmmm.... So, which do I believe....... The emotionally charged message of the sky's about to fall, again, I mean, so they were wrong the 43 previous times but, ya know, they really sound serious this time, there was fancy pie charts and big words and everything. Ooooor do I trust those who actually make a living doing investing not MARKETING about investing, who have been right 84% of time that say everything is ok..... but are really boring, no raz-ma-taz.....
In March 2020 persons on BP swore the market was about to collapse and everyone better get out now, I called them out for the snake-oil-salesman they are AND followed with this challenge that I will take ALL your properties TODAY, if your so sure of a collapse I will take EVERYTHING.
Than again, more doom preaching in May, again in July, September, Novemeber and on and on. I made my projections public on BP, look them up because I was dead on correct in calling the market. Am I Nostradamus, maybe psychic, no I am just a full time REI professional who makes it my business of knowing my business and LISTENING TO THE MATH and actual economic experts, NOT youtubers no matter who they WHERE before becoming a Youtube marketer FT.
If your so certain of the collapse, hey by all means it's at least kind'a a free country still so you do you AND I QUADRUPLE down with my challenge that I will take ALL properties, coast-to-coast. 2020 exactly 0 of those doom preachers put there properties where there mouth was, I offered full market prices back then, I even offered 110% on contract terms to given them a guaranteed "golden parachute".
I am happy to keep following what math and economics says, so much less drama.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
Originally posted by @Minna Reid:
@Jonathan Mueller I think within the next year or two, unless there are more extensions to the moratoriums. I dont usuallly listen to gloom and doomers, but what I found interesting was that in this video he actually compiled all the forbearance/late data from various sources. Numbers don't lie. I've suspected all this but have been unable to gather all the numbers before. Its harder than you think.
Numbers don't lie, but the narrative does. What the numbers don't tell you is that many of the people that are in forbearance have money to pay their mortgage. Even people who are unemployed have been collecting thousands in unemployment. There is also the reality that the economy is rebounding and people are going back to work in record numbers. Forbearance doesn't translate to foreclosure. That is where the narrative lies about the numbers.
The last housing crash took years to unfold. Most markets hit high prices in 2006 and the bottom was in 2012. Many things have changed since the crash, including better underwriting standards on loans. They also revised the process for short sales. Many of the houses that went into foreclosure during the housing crisis could have been sold under short sale. The foreclosure process itself takes 6-12+ months. Foreclosures and the mortgage forbearance program were extended through the end of June 2021. There is also a 6 month additional extension included for people already in forbearance. That means even if we are headed for a massive foreclosure situation, we are 1-2 years away from seeing that inventory. As the economy rebounds, those foreclosures could easily be absorbed by demand.
The reality is that negative doom and gloom gets the clicks. Humans are programmed to focus on danger as a survival instinct. The trouble is fixating on the negative can prevent you from capitalizing on opportunity. How many opportunities are lost "waiting for the crash"?
- Rental Property Investor · Inlet Beach, FL · Member since 2018 · 199 posts · 111 votes5y
@Minna Reid
I think Ken has some good insights.
One would expect to be ready for this potential market correction by having funds and/or investors lined up for Q4 2021 and then 2022 to scoop up these properties.
Nothing wrong with that.
However, if 2020 taught us anything, it's that the real estate market has fundamentally shifted, and we probably don't know the exact ramifications of that shift. There will never be a "return to normal" (i.e. the way it was pre-pandemic).
So in my opinion, not that I'm am expert in any way, using old methods and models to analyze a fundamentally different market may not be the best way to extrapolate or make predictions.
Sure the numbers are the numbers, but one thing I'd note is that, of his predicted inventory over the next year, if the demand remains constant, those additional homes/units will be gone just as fast as they are listed. The days on market might increase, and there might be a good chunk of those that remain undesirable or bad deals.
So don't over-leaverage, and be ready to jump on investments Q3 and Q4 2021 depending on a number of factors still to be determined.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
Originally posted by @Minna Reid:
@Eric Bilderback I didn't expect so much backlash this time actually LOL. But then again I made a very similar post on this site back in about 2007...got all the same responses.
Hmmm, your profile says you joined BiggerPockets in 2008. Whatever predictions you made then were after the market was already crashing. Housing prices peaked in 2006 and by 2008 foreclosures were double 2006 numbers. In 2008 unemployment was 7.3% which is higher than today (6.2% in February 2021).
Keep in mind, there was no forbearance during the housing crash. Unemployment benefits in 2009 were extended by $25 per week. Unemployment benefits in 2020 were extended $600 per week (then $300 and now back to $400 per week). That is anywhere from $1200 to $2400 per month extra. These two factors alone are enough to keep most people solvent, as jobs quickly come back.
Unemployment historic:
https://www.thebalance.com/une...
Foreclosures 2005-2019:
- Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes5y
Not sure you read my post. I think it is a festinating topic but I think the financial engineers and central planners are great at keeping asset prices high. If we had a free market however things would be much different. I have so much faith in the central planners I put two more properties in contract this month. I do think the price inflation is to the detriment of the poor and middle class however.
I am of the, "don't hate the player hate the game" philosophy.
- Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 632 votes5y
@Joe Splitrock I actually joined several years before. I have no idea why my profile says 2008 as I have posts older than that. The people on this site walked me through my first flip in 2006/2007 and I was here educating myself well before that. But thanks for reminding me of my age LOL... Anyway- I was also living in CT at the time. CT was one of the last to crash, way behind states like FL or NV or CA that went first. Markets are local.
I worked with distressed sellers through that whole crash. Trust me, there were plenty of loan workouts and government interference then too. Forbearance, repayment plans and loan modifications are nothing new.
A few hundred dollars in extra unemployment a week for those that qualified is not enough to prevent the market correction that is headed our way.
In fact, just like last time - the longer government continues to interfere with the housing market, the longer the correction will be.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes5y
Originally posted by @Minna Reid:
@Joe Splitrock I actually joined several years before. I have no idea why my profile says 2008 as I have posts older than that. The people on this site walked me through my first flip in 2006/2007 and I was here educating myself well before that. But thanks for reminding me of my age LOL... Anyway- I was also living in CT at the time. CT was one of the last to crash, way behind states like FL or NV or CA that went first. Markets are local.
I worked with distressed sellers through that whole crash. Trust me, there were plenty of loan workouts and government interference then too. Forbearance, repayment plans and loan modifications are nothing new.
A few hundred dollars in extra unemployment a week for those that qualified is not enough to prevent the market correction that is headed our way.
In fact, just like last time - the longer government continues to interfere with the housing market, the longer the correction will be.
To best clarify things, and to step-up from ambiguous statements, I would like it if you would clarify in full detail what you are prediction when you say "...the market correction that is headed our way."
Exactly what correction? How will it look, 5% price adjustment, 35%, 75%?
When? Exactly when, in time, or time window?
What pre-cursors, if any, will precede?
To be honest, I don't think you can answer these questions, or won't. I "predict" your answer will be more ambiguous statements such as "soon" or "right around the corner", time frames that mean absolutely nothing. Or incomplete shock statements such as there is ____ forbearance (which is a fact) followed by, and people don't have the ability to pay to catch up (which is the BS follow-up as it's NOT a fact, it's not even a guess, it's an inference and a HUGE one making layers of assumptions shilacked in BS).
Here is some facts:
Todays housing market standing is at a shortage only comparable to the end of WWII when millions upon millions of G.I.'s returned at once, instigating the biggest housing boom in recorded history to date, not only in unit volume but also in market price appreciation.
ADDITIONALLY every family dislocated by foreclosure stands a 90% chance of become...... wait for it....... RENTERS! And for the Daily Double, what is required to house EVERY new renter family........ BINGO, a property! "ding ding ding ding ding" Fun Fact; that's a ratio of 1:1.
I'm not even getting warmed up yet, every ridiculous gymnastics of data to declare "THE END IS NIGH", I have no less than 3 direct data points that clearly point out no 08/09 repeat. The shortest simplest summary is todays market to 2006 is comparing pineapples too bowling balls.
- 5yAmanda JacobellisBusiness MemberReal Estate Agent · Southern California · Member since 2020 · 95 posts · 43 votes
@Minna Reid we just aren’t seeing this in California. People have extra cash they are parking in real estate and there are not enough houses. Also an issue - development has been way down for years
I don’t see there being a lot of foreclosures because banks and government do not want them. I see a commercial crisis if any
Vacation homes are artificially inflated Right now though
Jacobellis Group531 Reviews - Investor · San Diego, CA · Member since 2016 · 265 posts · 305 votes5y
@Minna Reid
Ken is the real deal as others have said. I first learned of the infinite returns model from him years ago. Super smart guy, and I know some of his investors personally that he has made a lot of money for.
Bottom line is, whether this time the data supports a significant correction or the monetary and fiscal policies are manipulated yet again to avoid / push off a crash, the only thing that matters is that you have strong reserves and are cashflowing to weather the storm!
- 5yDylan TanakaPro MemberReal Estate Agent · Detroit, MI · Member since 2008 · 455 posts · 178 votes
We are headed for a HUGE CRASH. Unfortunately we don't know if it will be today or 10 years from now.
If you educate yourself, network with REAL investors who have a proven track record, and learn how to make money in up and down markets - real estate investing can be your key to FREEDOM. - Member since 2020 · 437 posts · 675 votes5y
For a while “Housing Crash” discussions were tied with “California Exodus” in terms of most popular and recurring themes on the forum. Now that people have realized that the Exodus was just a media hoax, it seems that Housing Crash is back as a hot discussion item. There is not much to say on that of course.
- Investor · Ontario · Member since 2015 · 486 posts · 250 votes5y
@Minna Reid I do like Ken. I have seen this video. Building new inventory was slowed like crazy during this past year. At the same time couples were stuck at home with not much to do...Massive baby boom on it's way. Population explosion for sure.
I already see couples no longer able to live with parents with the new babies crying etc. They need to buy and or rent a new place. Some real new demand here. The mellenial wave is starting to buy now. This is not talked about enough. They have all the financing as they are entering peak earning years and money is cheap. Everyone my age that I know 30ish is currently looking to buy their first home or rent bc they can't live with mom and dad anymore.
Also people have so much time on their hands to renovate current homes. The current supply has been renovated quite a bit this past year. Also we have to spend so much time in our homes now, people are willing to invest heavily to make them more liveable. With cost of materials like luber etc so high the house values in my mind anyways seem more permanent.
Supply is definelty artificially low right now. It will come back on the market and things should flatten out or even dip down. Personally I am not selling atm. Lots of macro reasons to hold real estste right now vs other fake asset classes. Does one invest in the propped up stock market for instance. The world was more or less shut down last year and it is at an all time high, why lol? super fake. Does one invest in Bitcoin? Why? it is at an all time high, has no real utility and is not environmentally friendly and won't actually be used lol. Can't hold money in cash as we have hyper inflation. Could hold precious metals but silver is being manipulated to remain low lol. Money is so cheap right now and investors can refi properties to expand. Everyone I know is buying more properties that cash flow for the next 5 years anyways.
I personally am not expanding my RE portfolio as I am not taing the bait but I can see why many are. It's not a bad play I guess.
Although there may be a dip. The dip will be less severe then in other asset classes. The dip if it happens will be neutralized by the super cheap money. Heck if it does dip I and other investors will just buy more. So much investor refi and HELOC money just waiting to buy.
- Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes5y
As baby boom goes, that is true. An OBGYN friend can not come to a reunion and said she had 3 Babies coming soon, so she had to stay close to the hospital on call. LOL.
America needs more babies, for sure. - Real Estate Agent · Irvine, CA · Member since 2014 · 68 posts · 54 votes5y
I watched a Youtube video from an economist called Steven Thomas yesterday. He is based in Orange County, CA. He said the interest rate is going to rise up to 4% this year so the real estate market is going to be more balanced. It will still be a seller's market but not as hot as right now.
- Rental Property Investor · Houston, TX · Member since 2014 · 139 posts · 140 votes4y
@Minna Reid interest rates are going up and inventory is sitting on the market longer, at least in houston. Not to mention pice cuts are happening all during hot market months.
Now what?
I'm a worried the folks up top will bring back the moratorium during layoffs. We bought a primary residence in north houston back in oct and paid $35k above asking. An agent we spoke with today said she confident she can list it $75k over what we paid with a potential of multiple offers. I'm thinking of selling because i don't feel comfortable keeping it because I'm worried about our rental properties.
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