Unpopular Opinion: There's no big downturn looming over us

[Allan Smith]

I've been hearing it for about 4 years. "This year is the big correction" "Any day now, we'll be buying houses for 40 cents on the dollar" "longest bull run in decades has to end soon" Let me elaborate and I'll finish with my point.

The economy is fairly strong. The fundamentals are there, though there are some weaknesses, people are interpreting history incorrectly. The 2008 crash was an anomaly in it's extreme nature. The 4 downturns/recessions before that were far less severe and weren't directly caused by real estate. I guess because it's so recent and fresh, and because REI has become a trending career so the majority have joined in since 2008, everyone is interpreting 2008 as a typical cycle.

I'll wager the bold statement that we have at least 5 years of reasonable appreciation. I'll even say that it could be a couple decades before another brutal, global 2008-like crisis. Now, that being said:

• I do think we'll have a small dip in the next 5 years, but not a "liquidation sale" type of dip. More of a stagnation. This has been common in the last few cycles.
• This is of course market-dependent, but I think overall most Metropolitan areas will weather fine. Hot hot markets are already correcting, but again, it's gradual, not this big crash everyone keeps talking about.
• Builders are behind, and as long as housing supply is low, houses will retain value inherently until we catch up. I suspect this supply problem is not going anywhere for a while, mostly due to government regulation making it harder and harder to get an affordable house up. 2008 had a glut of over-construction in most markets, and I'm not seeing that today. 

Why does this matter at all? Well, I know a lot of people (including myself) are being extra conservative in evaluating deals and waiting for the "clearance sale" in the meantime. Folks, you are missing out on free net worth growth by not getting in the above-average appreciation game. I always buy on fundamentals, but I'm okay with skinnier deals now because so far my portfolio's appreciation has kept sneaking up on me conveniently. 

Would you rather have 5% appreciation on a $200k house or an extra $200/mo on cash flow? $10k or $2400? Maintain cash reserves to weather you through the storm of increased vacancy, but I'm believing that the next downturn will be gentle compared to 2008.