Are Headed for Another Housing Bust?

[John Manta]

Hello, I was told by a banker we are headed for another housing bust but I don't have hard numbers to view so I would appreciate if you guys could give me some input..

[Account Closed]

Hey @John Manta I think the most common response you'll find here is no one really knows. A big contributor was the subprime lending taking place leading up to the 08 crash. We aren't anywhere near those lending practices but I will say that somethings I'm keeping my eye on are household debt numbers ( nearing the same levels as 08), 50% of students not paying back student loans and FICO loosening the way they calculate credit scores...all of these are a bit worrisome to me. BUT the big take home is looking at the numbers in your area. 

If you are thinking out investing in a buy and hold property..you need to buy right (~2% deal) ..the thing is these deals are very hard to come by with speculators coming into the market. Whats happening right now in my area and a lot of places around the country, is new investors are willing to buy bad deals, or deals with very small margins driving up the price on investment properties.

My current stance is, if you can by highly discounted (20%-30% under market value) and have reserves for a correction, a property could work as an investment. A correction may drop property values by 20% but if you buy discounted, you won't be underwater.