Market Crash Signs, Now compared to 2009

[Andrew Bang]

I find investors talking about the '07-'09 Real estate crash and I remember something very different. I read articles about why it happened and think, I don’t think that was the case at all. What did the crash look like to you?

Here’s what I experienced in Phoenix. What was odd was what buyers/sellers were saying at the time, compared to what the stats show now. We know inventory was at an all time high in 2007 and prices started to decline mid 2007. But in 2007, it was still difficult for a seller to find a property. We had a family move into our neighborhood and they said they had made multiple offers on houses but kept being beat out. They were so grateful to finally be able to buy a house. Early 2008 when we realized the market was really dropping, no one knew when the bottom was, so investors were buying properties, no one was waiting for the bottom because we thought in that moment it was the bottom. So if you had money you bought a house and thought you had just got the best deal of your life. In early 2008 a friend of mine was looking at new builds, couldn’t find one, he was getting beat out, even in a dropping market. Finally got one under contract, national home builder, after agreeing to put down 20k of earnest money, non refundable. 350k purchase price. He closed on it. Most of the hard money/private money dried up by the beginning of 2008. It wasn’t until the summer of 2008 I saw the fear of buying really start, most had lost money in stocks, no private money, no non-qm loans. Money to buy properties had dried up in about 6 months.

March 2008, I spoke with a Keller Williams agent about listing a flip, he would only list if I agreed to drop the price by 10k every two weeks it didn’t sell. At the trustee auction, March 2008 to about June 2008, 10-15 people at the Auction each day. 200-400 properties being foreclosed on each day.

Summer 2008 prices were still dropping, more investors started showing up at the Trustee auction, by the end of 2008, there where over 100 people at auction each day. 2009, It was common to see 500-800 properties foreclose a day. There was one day, on a Tuesday after the weekend and a Monday holiday, that had just over 2000 homes. That was the biggest day I saw. The cheapest prices at the trustee auction were Jan 2009-March 2009.

Even at the bottom, we thought it would still go lower, so there was a fear of buying. Even so, properties still sold in 2008 and 2009 on MLS. I had better returns per flip in 2008, then I did in 2009,'10, or '11.

What was your experience in your market? What are people saying now about the crash that you didn’t see?   What can we learn from it?