Fox Business says the housing recession is already here.

China, ME · Member since 2014 · 3k+ posts · 4k+ votes

I just saw this article https://www.foxbusiness.com/ec... and wondered whether it's typical news media hyperbole, but maybe it's not

They predicting a 20% decline in housing prices in this economy by 2023. If that's true, those who bought homes in the last several months when the market was white hot might find themselves upside down.

In fact, they say that the housing recession is here: "Painfully high inflation and rising borrowing costs have proven to be a lethal combination for the housing market, forcing potential buyers to pull back on spending. Many experts – including Shepherdson – agree the housing market is now experiencing a recession."

Good luck to all with the oncoming market changes!

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Scott TrenchPro Member

Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes

I think that the pundits are going to say what the pundits are going to say.

I don't think, however, that a drop of 20% from peak pricing earlier this year in some markets is out of the question. A great podcast episode that goes into this is this one with John Burns and Dave Meyer.

My favorite line in the episode was one where John questions whether it is unreasonabe, after two years of 20%+ appreciation in many markets, to give one year of that appreciation back.

I think that no, that is not unreasonable.

While no one can predict the future, I think that strategies that depend on market timing (depend on the market staying flat or appreciating) in the next 1-3 years, are extremely risky. I'm staying completely away from those types of strategies (but I always have, personally).

For a long-term buy and hold investor, the fact that the market may go up, may go down, or may stay flat in the next 1-3 years is irrelevant.

I buy consistently, annually, in locations that I am willing to own in for decades. I bought earlier this year, and almost certainly will buy another property in early 2023. I choose to be consistent, but not aggressive so that I can buy into any market and let the decades compound my wealth. I do the same thing in the stock market.

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Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
4y
I think that the pundits are going to say what the pundits are going to say.

I don't think, however, that a drop of 20% from peak pricing earlier this year in some markets is out of the question. A great podcast episode that goes into this is this one with John Burns and Dave Meyer.

My favorite line in the episode was one where John questions whether it is unreasonabe, after two years of 20%+ appreciation in many markets, to give one year of that appreciation back.

I think that no, that is not unreasonable.

While no one can predict the future, I think that strategies that depend on market timing (depend on the market staying flat or appreciating) in the next 1-3 years, are extremely risky. I'm staying completely away from those types of strategies (but I always have, personally).

For a long-term buy and hold investor, the fact that the market may go up, may go down, or may stay flat in the next 1-3 years is irrelevant.
I buy consistently, annually, in locations that I am willing to own in for decades. I bought earlier this year, and almost certainly will buy another property in early 2023. I choose to be consistent, but not aggressive so that I can buy into any market and let the decades compound my wealth. I do the same thing in the stock market.

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
4y
@Scott Trench
I also do not believe going back to 2020 or 2021 prices is out of the question. I believe the ones who will get hit the hardest are the STR markets as those are an amenity not a necessity and as inflation continues to roar and people start getting their new property insurance and property tax bills, there will be a lot of sticker shock and people starting to batten down the hatches.
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Jonathan BombaciBusiness Member
Real Estate Agent · Lowell, MA · Member since 2019 · 1k+ posts · 1k+ votes
4y
20% correction in some markets is certainly possible and might already be underway. Interest rates have been reducing buying power and on the investment side it has been making purchases harder due to DSCR. Giving back 1-2 years of appreciation is not out of the question. That being said real estate tends to perform well in high inflationary periods and rents are going up by leaps and bounds. We're also seeing a severe lack of inventory because no one wants to sell their house with sub 3% interest rate to buy something with a +6% interest rate. We're already feeling the effects of a softening but on the multi-family investment side of the equation there are factors at play that should help offset what the downward pressure rates are putting on pricing.
Buy cashflowing properties, hold them long-term. It’s the vanilla ice cream of real estate investing strategies but it works in every market cycle.
I think it’s the flippers that should be very conservative and nervous with what’s going on. Price of debt is going up, construction costs are still very high, and with downward pressure on pricing it could get very nasty out there this winter. A lot of people don’t realize it yet but many hard money lenders and private lenders are already gone. Many of them have lost access to their credit markets and are out of money to fund projects.
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
4y
So they are predicting an even greater collapse than the housing collapse 15 years ago? Im sure they will get a lot of clicks and will be able to get some good google PPC money on the article.
But there is literally contradictory statements in the article headline. "US home prices to decline amid high inflation." Housing prices declining and high inflation are literally opposite things. Both can not be true.

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
4y
Sounds like good news for people who have been waiting to do 1031 exchanges to nicer/newer/more expensive properties. A 20% reduction in cash/loan required would be nice.
Thank goodness most of our money isn’t in the stock market where there’s no discussion necessary about if the correction has started. It’s been a rough year for people who thought they’d retire early because of Covid and live off their 401k/ira.
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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
4y
That's the intended plan...it's what we are trying to accomplish. We are not working on getting more materials, workers, and energy into the country. Nope. We are a one trick pony with only one dude needed to execute the strategy...while the rest of the government and citizens sit around and wait for the outcome. We are like outdoor animals at the mercy of the weather. We are not fighting inflation...we are surrendering to it. We are beating the crap out of the economy and trying to shrink to greatness.
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