Market crash coming?

[Fatimah Hester]

Good evening BPers, I'm sure everyone has been tuned in to things like the Stock market, crypto , tech millionaires & Real estate of course. I can't help but to see the large amount of self proclaimed veterans in the industry talking about how the economy is starting to mimic another crash . I'm just getting into real estate ( investing & STR's at the moment) so I only know as far as research will lead me when it comes to 2008-2009 (my middle school years, yikes) my question is :

Do you think we are going into another crash? And how badly do you think real estate will be affected this time around?

from my understanding 2008-2009 was more of a loan issue that couldn’t be corrected. I don’t think that is the case now but I’d like to get some insight from professionals who went through that time.

Thank you !

[Matthew Crivelli]

What happened in 2008 was because of sub-prime mortgages. What is happening now is a combination of many variables. We will most likely see a slow down at some point but I don't think the bubble is in real estate. I could be wrong but I feel if you wait for the bubble to pop to get into this you will miss the boat. there is no better time than now! Make it happen! 

[John Underwood]

I have heard from multiple trusted sources that this is the new normal as far as real-estate prices are concerned.

[Dylan D.]

All I see right now is signs of inflation. I think we just have to get used to everything costing more and from what I see in my area, jobs are paying more as well. 

[John Teachout]

Yup, a crash is coming. When? Who knows. There's posts similar to this one every few months and if one searches the forum posts you can go back for YEARS of this impending doom. Eventually, someone's going to be right. Run your numbers. If a deal works, buy it. If it doesn't, wait until you find one that does. Carry on!

[Bruce Woodruff]

Not an 'expert' at anything...just an old guy who's been through many boom/bust cycles....and owned many properties, all bought and sold at the best times...maybe luck, maybe not.....

Yes, a huge correction is coming, probably in the next year. Housing prices are so over-inflated it's not even funny.

I would not buy in this market....wait for the inevitable correction and then pounce.

There is no new normal.....

Real estate is like gravity.......

[Eric James]

There is a difference between a crash and a correction. It doesn't matter what anyone says. You can't predict a crash. Corrections occur regularly and you simply have to be prepared to ride them out.

[Nate Sanow]

@Chantelle Hester

I think there are crashes happening and other crashes coming it's just not real estate specific. The ROI on a property is greater than most college degrees and to me the massive amount of student loan debt is a bubble that's due to pop as another crash is happening. The crash of the middle class. With inflation and changes in employment opportunities one sadly has to chose if they will be ahead or behind. Trusting an employer to take care of you perhaps never was a good option for many, yet our culture once idolized the stable employment opportunities- but it is even less wise to depend on now.

[Nick C.]

You heard it here first: The market will crash in November of 2021. Everyone reading this please remember me as the guy who predicted the crash, then buy my book. I already have a title: "Learn how to make billions in real estate by the guy who predicted the crash". If I'm wrong, I will keep predicting until I get it right. Stay tuned. 

[Nick Robinson]

@Chantelle Hester

Prices will come down. It depends on how you look at everything but even just taking a look at interest rates. They are so low right now and Jerome Powell will have to raise them by the end of the year if we can not get inflation under control. People buy houses/investments on their payment not on the total price. So if interest rates go up the payment goes up so you can afford less of a house.

There is also a lot of bad policies and decisions being made but you can’t just sit and wait for things to happen. Pick your market, study it, run your numbers conservatively. Don’t assume appreciation or crazy rental increases. I have seen to many posts on bigger pockets of people buying houses with negative cash flow because appreciation was great last year. Invest don’t gamble.

[Jasmine H.]

@Chantelle Hester not sure if the government is going to let another crash happen. But a correction will eventually happen.

[Bruce Woodruff]

Originally posted by @Jasmine H.:

@Chantelle Hester not sure if the government is going to let another crash happen. 

The Government (any Government) is powerless to 'not let let it happen'. Oh, they can always print more money i.e. 'quantitative easing' (what a great term) but that only leads to inflation. The country is upside down and will most likely need more than a 'correction'. The RE market is definitely ready for a reset.

But we're all just guessing, even the experts are just guessing....time will tell, as usual.....

[Cristian Ramos]

To the extent that wage inflation is not transitory, that should actually support higher real estate prices as rents go up. 

As others have said, try to stick to your criteria when investing. It’s definitely harder in this market to invest, but there are deals out there.

A 2008/09 scenario is very unlikely to happen

[Daniel Molina]

@Chantelle Hester

Chantelle, that is correct that 2008 was a result of pick a payment loans that were given out to anyone that couldn’t afford them. As a result of not being able to afford those payments, the borrowers ended up in massive foreclosures. If you are asking this question in regards to real estate investing and wondering if you should buy or not, I would purchase a home if you feel you can make the payments comfortably and there’s a great financial return. As someone has said on here, these gurus who predict the crashes tend to be wrong 99% of the time and move on to another date after they are proven wrong. If you are hearing this on youtube, this topic helps them with sensationalizing their content for views.

To answer your question, it is definitely a combination of things as to why prices are high. Inflation and inventory being the biggest two factors in my opinion. The market will drop obviously at some point in time but it will not be like post 2008 where prices dipped super low. Ultimately what will happen is a fix in the market (i.e. interest rate changes). Hope this helps!