Buyers market or housing CRASH?

Lender · San Diego, CA · Member since 2022 · 137 posts · 96 votes

WOW, it is crazy how divided articles, economist, housing experts and the media are so split on this TOPIC? I am seeing people that I know or follow that study data say "it is a buyers market". I am also seeing articles, news, etc. from smart people say we are going to have a 2008 like CRASH is some markets? They seem to be talking about a hypothetical future based on guessing because I do NOT see the data supporting a housing crash.

What do you THINK?

Lets look at the DATA:

Properties on the market. As of Dec 2022 it was 970K and about 200K + were in escrow

Borrower profile: The higher the number below the easier it is to get a MORTGAGE, so HIGH is BAD.

ARM products: Many ARM loan were option arms, neg amortization loans, had teaser rates for 1 or 2 years.

Debt to income:

Foreclosures and short sales:

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

Literally been waiting on this crash since 2012. Wake me up when it finally happens.

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Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @John Morgan:

It’s all about supply and demand like everything else. The good thing about RE is it’s not rocket science. Anyone can figure it out. We have very low inventory which won’t change for a decade or more for a number of reasons. And demand for housing is very high. It’s a good time to be an investor. Not a good time to be a renter due to higher and higher rents with limited inventory.
That's the key there.

1. Real estate is not rocket science, it's even truer for the scientist.
2. It is not about "not a good time" to become a renter, but do they understand if they keep renting they will be guaranteed to be poor for the rest of their life because of inflation, not equity building,etc,etc,etc ???

Renting=poorer , as simple as that. The only way to survive is to invest, invest, invest. Invest in business, invest in yourself, invest in your education, invest so you have a good job, invest so you have good primary residence, invest in CD, invest in kids, invest in 529, invest in IRA/401k, invest syndication,etc,etc.

Investing is the only way to survive in the chaotic modern world
1 Reply
Dan Rowley
Investor · Cary, NC · Member since 2012 · 218 posts · 194 votes
3y
Of course home listings are way down. Folks (like me thankfully) who have locked in low 30yr fixed mortgage debt on their homes would not want to sell and give that up now unless they absolutely had to. the low debt service is an asset and why 'existing' home sales have fallen off a cliff.
2 Reply
John MorganPro Member
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
3y
Quote from @Carlos Ptriawan:

Quote from @John Morgan:

It’s all about supply and demand like everything else. The good thing about RE is it’s not rocket science. Anyone can figure it out. We have very low inventory which won’t change for a decade or more for a number of reasons. And demand for housing is very high. It’s a good time to be an investor. Not a good time to be a renter due to higher and higher rents with limited inventory.
That's the key there.

1. Real estate is not rocket science, it's even truer for the scientist.
2. It is not about "not a good time" to become a renter, but do they understand if they keep renting they will be guaranteed to be poor for the rest of their life because of inflation, not equity building,etc,etc,etc ???

Renting=poorer , as simple as that. The only way to survive is to invest, invest, invest. Invest in business, invest in yourself, invest in your education, invest so you have a good job, invest so you have good primary residence, invest in CD, invest in kids, invest in 529, invest in IRA/401k, invest syndication,etc,etc.

Investing is the only way to survive in the chaotic modern world
I 100% agree with you. I invest in cheap affordable rentals in Dallas/Ft Worth Texas ($1500-$2200/month range) and have almost zero turnovers because all my tenants most likely won’t ever be able to qualify or afford to buy a house. I’ve gotten to know them pretty well over time and they don’t have that mindset to “invest” in things or themselves like we do. They live paycheck to paycheck and don’t have a plan. Most don’t have savings and I have to work with them on late rent occasionally when they have that expensive car repair or miss work due to being ill etc. Most of them don’t have a plan B or C in their lives. They don’t have that grit or determination to get out of their situation to succeed financially. Instead, they keep getting hammered by inflation and rising rent over time. I pass my costs onto them with rent increases and they can barely afford rent already. My property taxes went up on average $140/month per property last year. A couple of them went up over $200/month on me due to the annual property tax appraisals. Same with my insurance now that it costs way more to build a house if it burns down. So I have to raise rent $150 or $200/month on these people barely making it now. It’s putting them deeper and deeper in debt and will never get ahead. It’s sad to see. Some work extremely hard but just can’t ever get ahead. And some just blow all their money when they get it on nice cars and things. But as a nation, I see affordable housing harder and harder to find for these people. And market rent going way up due to low inventory and rising landlord costs.
1 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
Quote from @Kenny Simpson:

WOW, it is crazy how divided articles, economist, housing experts and the media are so split on this TOPIC? I am seeing people that I know or follow that study data say "it is a buyers market". I am also seeing articles, news, etc. from smart people say we are going to have a 2008 like CRASH is some markets? They seem to be talking about a hypothetical future based on guessing because I do NOT see the data supporting a housing crash.
What do you THINK?
Lets look at the DATA:
Properties on the market. As of Dec 2022 it was 970K and about 200K + were in escrow
Borrower profile: The higher the number below the easier it is to get a MORTGAGE, so HIGH is BAD.

ARM products: Many ARM loan were option arms, neg amortization loans, had teaser rates for 1 or 2 years.
Debt to income:
Foreclosures and short sales:

Kudos to you Kenny for putting on that thinking cap, ignoring the 4-profit-media and taking the FULL data IN CONTEXT to get to the truth of it.
Unfortunately in this knee-deep BS age, it's harder and harder to identify who does forecasting and market reports for accuracy, and who does it for views and other nefarious profit centric reasons, and those doing it all with that vision of monetization of there content all placate to what the directive of message is that best drives views and monetization.
There is absolutely nothing of an '08' style crash at this time, anyone stating to such is just showing there BS, nothing more.
We have an affordability issue, 100%, although that is economy wide. We have a record disparity gap, and an all out apocalyptic assault on the middle class. These are issues without doubt, but far from relegated solely unto Real Estate. And reality is declining affordability does not create a crash, they create recessions. Recessions with inflation and shortage are stagflation.
Now we could get in territory of a "crash" BUT, it will be from federal actions and economic meddling. If lessons are not learned, and they go back into pandering for votes and inject another few hundred billion direct to base-line consumers as a "fix" for housing affordability, that's where everything changes. They are still refusing to own accountability for the inflation, we can only hope that's there messaging to save face and behind closed doors are a lot wiser. because if they are that inept, that means this year we may see it again in response to the historic housing shortage.
If they pump, let's say $500B direct to home buyers in form of let's say down payment assistance, what happens? And another $500B for rent assistance? The rent assistance isn't so bad but direct to consumers for home purchasing, it will be very bad. That will create a run-away inflation without doubt. And there now with backs against the wall. Fed presses rates in response, it breaks the economy. Fed does nothing, it's runaway inflation and economy breaks.
Hopefully intelligence prevails and stimulus comes out in form of TOP LINE stimulus, meaning direct to developers, the producers of unit creating. That is the only way it works. But it does not have the media pandering handing people checks does. So we will see what wins, pandering for votes or actual stewardship of the country.
That is the only "crash" scenario I see anywhere on the horizon.
1 Reply
Dan Garrigus
Lender · San Diego · Member since 2022 · 57 posts · 28 votes
3y
Extremely low inventory especially here in San Diego and the increase in listings needed to equalize the demand is nowhere to be found may very well be a very competitive Spring and Summer. Not to mention the buyers are far more qualified than in 2008 and with projected improving mortgage rates on 1-4 units to come later this year it will be hard to have a market crash similar to 2008.
Another thing to note is the birth rates 30-35 years ago were increasing YOY which will certainly add more buying demand overall this year than last year. So, if you take everything else out of the equation and just look at the number of potential buyers as a whole, we're expected to see an increased demand in purchases. Add in lower rates, low inventory levels, little home starts and this may be the perfect storm to another competitive home buying year after last year's cool off.
My advice is if you are planning on buying this year, Q1 is looking like it may be your best window to get the best deal.
4 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
Quote from @Kenny Simpson:

Quote from @Dan H.:

Quote from @Kenny Simpson:

WOW, it is crazy how divided articles, economist, housing experts and the media are so split on this TOPIC? I am seeing people that I know or follow that study data say "it is a buyers market". I am also seeing articles, news, etc. from smart people say we are going to have a 2008 like CRASH is some markets? They seem to be talking about a hypothetical future based on guessing because I do NOT see the data supporting a housing crash.
What do you THINK?
Lets look at the DATA:
Properties on the market. As of Dec 2022 it was 970K and about 200K + were in escrow
Borrower profile: The higher the number below the easier it is to get a MORTGAGE, so HIGH is BAD.

ARM products: Many ARM loan were option arms, neg amortization loans, had teaser rates for 1 or 2 years.
Debt to income:
Foreclosures and short sales:

My belief is you’re looking at the wrong stats. The stats that depict increasing risk of decline are the commercial MF. If they fall non commercial residential will be impacted.
Why do I have fear about commercial Mf. It is because they have shorter terms. Any one year a significant percentage of MF need to get new financing. With current rates, the existing low cap rates result in negative cash flow. This is not the negative cash flow of a SFR. a 100 unit property could have huge negative cash flow with the new financing. Who wants to buy such a property? Someone with big financial pockets that can handle this large negative until rates decline or rents increase enough to alleviate the increase in interest rates.
As for San Diego, the last numbers I saw show prices down 8% from high but winter months have a natural decline so I will use 5% decline (let’s wait to May numbers to see reality). However in high end homes, the decline is greater. I am leery of small sample size but I know of a seller that turned down $2.4m ~1 year ago that just closed at $1.65m. The high end homes have fallen significantly, but the entry homes are holding their value better.
Hill street blues: Let’s be careful out there.

I am talking about 1 to 4 units, I DO agree the high end in SD has seen a decline, but what I am as you can see many other are seeing a pick up demand from buyers, rates headed lower and inflation as well. Inventory is very low as well. The market overall is seeing homes that were recently listed priced to sell, buyers see this and that is why we are seeing 5,10,15 + offers on deals. I see it everyday with my clients, agents I know and agents around the country. Time will tell for the 1 to 4 space.
I agree with you on the MF, the debt market for MF is terrible, so many banks NOT lending at all and if they do, they don't want to lend. They are confused by what is a building worth, are rents flat or declining, lots of syndicators did bridge loans that are coming due on top of just normal loans that will come due. Banks can park money with the FED and make 5% to 6% with ZERO risk.

I realize you are talking non commercial residential (<5 units). However if commercial residential falls, it will impact all residential.
The non-commercial residential has a large percentage of long term loans. They are not for forced to refinance. However the commercial residential have shorter terms. Every year a significant percentage of commercial residential must obtain new financing. This new financing at the higher rate has a huge impact because the cap rates are so low.
If commercial residential prices fall, non-commercial residential prices will be impacted. Showing non-commercial statistics is missing IMO the biggest threat to non-commercial residential pricing.

I am in comfortable position to purchase if prices fall, but it is not something I wish for due to huge impact on those affected.
I hope you are correct and there will be no crash. However I also feel it is important to show why there may be a crash on the horizon.
No crystal ball here, but I am proceeding with extreme caution.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y
Quote from @Marcus Auerbach:

Quote from @Jeremy Horton:

I keep hearing "supply" and "inventory".
I do not understand how it's a supply issue over the past 2 years.
It is a demand issue due to monetary supply and low interest rates.
Demand moves much faster than supply

Not really, unless you reduce population in the US!
Monetary supply and low rates amplify demand, but demand is largely from the desire to own a home and that is a demographic trend. Millennials have real estate PTSD as they grew up in the 2008 years, so they fooled the industry into believing they were a renter generation.
Turns out that when they approach 35 or 40, have a spouse and kids they want to buy. That decision stands, weather rates are high or low. Many have paused in sticker shock after rates hit 7%, but we see them coming back already. It may take them longer to save up a down payment, but they will not go back to mom's basement and they will quit renting as soon as they can.

Yup those 35 to 40 YO understand rent is wasting money.. owning is where its at for many many reasons.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y
Quote from @Kenny Simpson:

WOW, it is crazy how divided articles, economist, housing experts and the media are so split on this TOPIC? I am seeing people that I know or follow that study data say "it is a buyers market". I am also seeing articles, news, etc. from smart people say we are going to have a 2008 like CRASH is some markets? They seem to be talking about a hypothetical future based on guessing because I do NOT see the data supporting a housing crash.
What do you THINK?
Lets look at the DATA:
Properties on the market. As of Dec 2022 it was 970K and about 200K + were in escrow
Borrower profile: The higher the number below the easier it is to get a MORTGAGE, so HIGH is BAD.

ARM products: Many ARM loan were option arms, neg amortization loans, had teaser rates for 1 or 2 years.
Debt to income:
Foreclosures and short sales:

foreclosure moratorium and new lender rules for dealing with delinquent mortgages are why you see what your seeing in this graph.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
2 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
3y
Quote from @Dan H.:

Quote from @Kenny Simpson:

Quote from @Dan H.:

Quote from @Kenny Simpson:

WOW, it is crazy how divided articles, economist, housing experts and the media are so split on this TOPIC? I am seeing people that I know or follow that study data say "it is a buyers market". I am also seeing articles, news, etc. from smart people say we are going to have a 2008 like CRASH is some markets? They seem to be talking about a hypothetical future based on guessing because I do NOT see the data supporting a housing crash.
What do you THINK?
Lets look at the DATA:
Properties on the market. As of Dec 2022 it was 970K and about 200K + were in escrow
Borrower profile: The higher the number below the easier it is to get a MORTGAGE, so HIGH is BAD.

ARM products: Many ARM loan were option arms, neg amortization loans, had teaser rates for 1 or 2 years.
Debt to income:
Foreclosures and short sales:

My belief is you’re looking at the wrong stats. The stats that depict increasing risk of decline are the commercial MF. If they fall non commercial residential will be impacted.
Why do I have fear about commercial Mf. It is because they have shorter terms. Any one year a significant percentage of MF need to get new financing. With current rates, the existing low cap rates result in negative cash flow. This is not the negative cash flow of a SFR. a 100 unit property could have huge negative cash flow with the new financing. Who wants to buy such a property? Someone with big financial pockets that can handle this large negative until rates decline or rents increase enough to alleviate the increase in interest rates.
As for San Diego, the last numbers I saw show prices down 8% from high but winter months have a natural decline so I will use 5% decline (let’s wait to May numbers to see reality). However in high end homes, the decline is greater. I am leery of small sample size but I know of a seller that turned down $2.4m ~1 year ago that just closed at $1.65m. The high end homes have fallen significantly, but the entry homes are holding their value better.
Hill street blues: Let’s be careful out there.

I am talking about 1 to 4 units, I DO agree the high end in SD has seen a decline, but what I am as you can see many other are seeing a pick up demand from buyers, rates headed lower and inflation as well. Inventory is very low as well. The market overall is seeing homes that were recently listed priced to sell, buyers see this and that is why we are seeing 5,10,15 + offers on deals. I see it everyday with my clients, agents I know and agents around the country. Time will tell for the 1 to 4 space.
I agree with you on the MF, the debt market for MF is terrible, so many banks NOT lending at all and if they do, they don't want to lend. They are confused by what is a building worth, are rents flat or declining, lots of syndicators did bridge loans that are coming due on top of just normal loans that will come due. Banks can park money with the FED and make 5% to 6% with ZERO risk.

I realize you are talking non commercial residential (<5 units). However if commercial residential falls, it will impact all residential.
The non-commercial residential has a large percentage of long term loans. They are not for forced to refinance. However the commercial residential have shorter terms. Every year a significant percentage of commercial residential must obtain new financing. This new financing at the higher rate has a huge impact because the cap rates are so low.
If commercial residential prices fall, non-commercial residential prices will be impacted. Showing non-commercial statistics is missing IMO the biggest threat to non-commercial residential pricing.

I am in comfortable position to purchase if prices fall, but it is not something I wish for due to huge impact on those affected.
I hope you are correct and there will be no crash. However I also feel it is important to show why there may be a crash on the horizon.
No crystal ball here, but I am proceeding with extreme caution.

This is comparing pineapples too hand-grenades.
In the SFH segment we have the simple MAJOR difference from commercial of RETAIL owner occupant impact. Commercial does not have this buyer segment luxury. That alone blows your theory out of viability.
Next, let's talk tenants. The vast majority of tenants in SFR, not only have 0 interest in apartment living but also, many have impactors that make apartment living not an option. For example we have the size fact that most tenants in SFR are out-sized for the market average apartment unit which in many cases is 2br. And than we have the pet factor, and we see today on average 73% of tenants in SFR with pet's, again many not allowed in apartment living. Any notion that apartments will have some major market decline and immediately drop rents in response, there in devouring tenant market share is again, not viable in reality terms.
Next we have the "reality check" of how things work if/when a commercial residential property goes REO. What happens is the bank takes on a management for such, they do not walk door to door and let everyone know it's done, get out. Do you have any idea the lawsuits that would follow? Not to mention banks are not fools, the value is not the bricks and wood, it's the revenue base. The banks contract out management to operate to defend the value, and than to sell it.
The real world scenario of defaulting commercial residential is that we will see the rise of JV's from those who take on such REO, value-add where available, and resell these exactly as we had become normalized in SFH segment by 2012. More-over, having fleshed out that program to great success, the banks are ready with that game-plan to pull off the shelf and implement with lightning speed.
Equity funds would be leaping in like kids in a candy store, Syndication the new "guru package" on everyone's lips, books galore on "how you too can become rich via investing in commercial REO's".
This "crash" obsession today thinking everything is just 1 step from free-fall, with 0 opportunist awaiting, is just annoying at this point. And a drop in the MFH pricing is long over-due, the current transaction points in the 4-cap range is just ridiculous.
MFH's "true" market value is, most simply stated, when a true accurate cap rate after all cap-x is accounted for in full, matches and exceeds interest rate. Matching interest rate is a 0 point, think of it that way, it's 0. And above that comes incentive for ownership, which must be at a point that coincides with risk forecasting.
So this is nothing new, MFH has been in a valuation bubble for a long time now, the only thing new is general publics awareness.
0 Reply
Ranjit Sandhu
Real Estate Broker · Rocklin, CA · Member since 2020 · 221 posts · 82 votes
3y
It all depends what part of country do you live in or trying to invest in. No one knew year ago that rates will go up from 3% to 7%. Year ago bidding war to now where I live in Roseville/Rocklin Northern CA there are many properties are available. Again some properties are going in contract in few days and some are still in market after month. There are still great deals available.
0 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
Quote from @James Hamling:

Quote from @Dan H.:

Quote from @Kenny Simpson:

Quote from @Dan H.:

Quote from @Kenny Simpson:

WOW, it is crazy how divided articles, economist, housing experts and the media are so split on this TOPIC? I am seeing people that I know or follow that study data say "it is a buyers market". I am also seeing articles, news, etc. from smart people say we are going to have a 2008 like CRASH is some markets? They seem to be talking about a hypothetical future based on guessing because I do NOT see the data supporting a housing crash.
What do you THINK?
Lets look at the DATA:
Properties on the market. As of Dec 2022 it was 970K and about 200K + were in escrow
Borrower profile: The higher the number below the easier it is to get a MORTGAGE, so HIGH is BAD.

ARM products: Many ARM loan were option arms, neg amortization loans, had teaser rates for 1 or 2 years.
Debt to income:
Foreclosures and short sales:

My belief is you’re looking at the wrong stats. The stats that depict increasing risk of decline are the commercial MF. If they fall non commercial residential will be impacted.
Why do I have fear about commercial Mf. It is because they have shorter terms. Any one year a significant percentage of MF need to get new financing. With current rates, the existing low cap rates result in negative cash flow. This is not the negative cash flow of a SFR. a 100 unit property could have huge negative cash flow with the new financing. Who wants to buy such a property? Someone with big financial pockets that can handle this large negative until rates decline or rents increase enough to alleviate the increase in interest rates.
As for San Diego, the last numbers I saw show prices down 8% from high but winter months have a natural decline so I will use 5% decline (let’s wait to May numbers to see reality). However in high end homes, the decline is greater. I am leery of small sample size but I know of a seller that turned down $2.4m ~1 year ago that just closed at $1.65m. The high end homes have fallen significantly, but the entry homes are holding their value better.
Hill street blues: Let’s be careful out there.

I am talking about 1 to 4 units, I DO agree the high end in SD has seen a decline, but what I am as you can see many other are seeing a pick up demand from buyers, rates headed lower and inflation as well. Inventory is very low as well. The market overall is seeing homes that were recently listed priced to sell, buyers see this and that is why we are seeing 5,10,15 + offers on deals. I see it everyday with my clients, agents I know and agents around the country. Time will tell for the 1 to 4 space.
I agree with you on the MF, the debt market for MF is terrible, so many banks NOT lending at all and if they do, they don't want to lend. They are confused by what is a building worth, are rents flat or declining, lots of syndicators did bridge loans that are coming due on top of just normal loans that will come due. Banks can park money with the FED and make 5% to 6% with ZERO risk.

I realize you are talking non commercial residential (<5 units). However if commercial residential falls, it will impact all residential.
The non-commercial residential has a large percentage of long term loans. They are not for forced to refinance. However the commercial residential have shorter terms. Every year a significant percentage of commercial residential must obtain new financing. This new financing at the higher rate has a huge impact because the cap rates are so low.
If commercial residential prices fall, non-commercial residential prices will be impacted. Showing non-commercial statistics is missing IMO the biggest threat to non-commercial residential pricing.

I am in comfortable position to purchase if prices fall, but it is not something I wish for due to huge impact on those affected.
I hope you are correct and there will be no crash. However I also feel it is important to show why there may be a crash on the horizon.
No crystal ball here, but I am proceeding with extreme caution.

This is comparing pineapples too hand-grenades.
In the SFH segment we have the simple MAJOR difference from commercial of RETAIL owner occupant impact. Commercial does not have this buyer segment luxury. That alone blows your theory out of viability.
Next, let's talk tenants. The vast majority of tenants in SFR, not only have 0 interest in apartment living but also, many have impactors that make apartment living not an option. For example we have the size fact that most tenants in SFR are out-sized for the market average apartment unit which in many cases is 2br. And than we have the pet factor, and we see today on average 73% of tenants in SFR with pet's, again many not allowed in apartment living. Any notion that apartments will have some major market decline and immediately drop rents in response, there in devouring tenant market share is again, not viable in reality terms.
Next we have the "reality check" of how things work if/when a commercial residential property goes REO. What happens is the bank takes on a management for such, they do not walk door to door and let everyone know it's done, get out. Do you have any idea the lawsuits that would follow? Not to mention banks are not fools, the value is not the bricks and wood, it's the revenue base. The banks contract out management to operate to defend the value, and than to sell it.
The real world scenario of defaulting commercial residential is that we will see the rise of JV's from those who take on such REO, value-add where available, and resell these exactly as we had become normalized in SFH segment by 2012. More-over, having fleshed out that program to great success, the banks are ready with that game-plan to pull off the shelf and implement with lightning speed.
Equity funds would be leaping in like kids in a candy store, Syndication the new "guru package" on everyone's lips, books galore on "how you too can become rich via investing in commercial REO's".
This "crash" obsession today thinking everything is just 1 step from free-fall, with 0 opportunist awaiting, is just annoying at this point. And a drop in the MFH pricing is long over-due, the current transaction points in the 4-cap range is just ridiculous.
MFH's "true" market value is, most simply stated, when a true accurate cap rate after all cap-x is accounted for in full, matches and exceeds interest rate. Matching interest rate is a 0 point, think of it that way, it's 0. And above that comes incentive for ownership, which must be at a point that coincides with risk forecasting.
So this is nothing new, MFH has been in a valuation bubble for a long time now, the only thing new is general publics awareness.

If your hypothesis is that a large decline in value of commercial residential will not negatively impact non-commercial residential, I do not agree.
It may not be as severe an impact, but IMO there will be impact. The resulting decline will Not be due to it being exactly the same tenant pool (but there is a larger overlap than you imply and ESA certificates are easily obtained for the pets).
0 Reply
Willie Brown
Investor · Imperial Beach, CA · Member since 2017 · 25 posts · 21 votes
3y
Doesn't look like a crash is coming, but more of correction seems plausible. Either way if you have to deploy capital there are other sectors of the economy that look more intriguing than real estate.
3 Reply
Maxwell Ventura
Real Estate Agent · San Diego, CA · Member since 2016 · 308 posts · 173 votes
3y
Quote from @Willie Brown:

Doesn't look like a crash is coming, but more of correction seems plausible. Either way if you have to deploy capital there are other sectors of the economy that look more intriguing than real estate.

Which sectors are you referring to?
1 Reply
Willie Brown
Investor · Imperial Beach, CA · Member since 2017 · 25 posts · 21 votes
3y
Energy in general. I'm holding real estate, but buying a lot of energy. Specifically uranium and coal producers. Also a nice position in crude oil tankers DHT, STNG, FRO, and NAK. Cash flow real estate will always be my favorite, but commodities are looking juicy.
0 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Willie Brown:

Energy in general. I'm holding real estate, but buying a lot of energy. Specifically uranium and coal producers. Also a nice position in crude oil tankers DHT, STNG, FRO, and NAK. Cash flow real estate will always be my favorite, but commodities are looking juicy.

You are very smart. During high rate, commodity is usually growing faster than real estate.

I have friends that bought coal miner from the lowdown of decade ago, now they're filthy rich lol
1 Reply
Adam MaciasPro Member
Real Estate Consultant · Fort Collins, CO · Member since 2022 · 291 posts · 178 votes
3y
Most keep thinking of a housing crash in terms of massive price drops. But what if the market "crashes" due to the United States becoming a renter nation. How high can home prices appreciate before you market gentrify an entire buyer pool? That's my question. If there's any kind of shift, it may not come in price drops. Even then, I think most get so hung up on a crash because they believe deals suddenly become easier to find. A buyers market is a pain in the a** compared to a sellers market in my opinion. I'm a little ticked off at interest rates going up it's been a blast finding a deal at 85% and wholesaling it to anybody. A buyers market means deals take forever in terms of DOM, buyers become ultra picky, now I got to find deals at 69% or below the ARV. A buyers market has so many other problems too.
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Kenny SimpsonBusiness Member
OP
Lender · San Diego, CA · Member since 2022 · 137 posts · 96 votes
3y
WOW, lots of great post and talking points. Keeping watching the data and hopefully NO crazy surprises on the horizon. Time as we know always tells the story or reveals the Truth. The good old government can always make things more interesting as we know. LOL :)
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