Will the Real Estate Market Collapse in 2015?

[Wendell De Guzman]

Here's a provocative video...explaining we have a real estate bubble right now in 2014. When do you think this bubble will pop? Back in 2005 (after hurricane Katrina hit), I predicted a real estate collapse as well but I was mistaken by not predicting how severe it would be. My personal opinion is that we're also in another real estate bubble right now but as to when it will pop, no one knows.

What do you guys and gals think?

1. Do we have a real estate bubble right now?

2. When do you think it will pop if you say "YES" to the first question? and 

3. Are you going to do anything differently in 2015 vs. 2014? If so, what are your strategies to prepare for a real estate crash?

[Dean S.]

Jose,

It's an interesting point you make. Check out this article on Curbed: 

http://la.curbed.com/archives/2015/05/every_single...

It shows that even at $15/hr, it's still going to be very difficulty to buy in LA. at that wage. 

Dean 

[Adam Gratt]

We all know that REI is like a roller coaster. It is always moving up and down. The key is to have a strategy to ride out those ups and downs. Fix and Flips are good in the up side but buy and holds, (Multi's, commercial, notes...) are good on the down side if you are willing to ride it out. I know this is why a number investors don't last for too long. The ones that do last are always educating themselves. Just like that roller coaster you just hold on and brace yourself for what is coming next. Real Estate is one of those markets that even if it is going down and up over the short term it is always going up over the long term. This is why educating oneself is the greatest investment anyone can make and why BP will always be a vital part of this ride. It teaches us how to hold the hell on.

Adam

[Account Closed]

Based on the 'house price index' data, if the recent housing bubble 2006, 2007 etc. is any reliable indicator, it appears the market is still in a sort of 'rebalancing or correction mode' to align with what seems to be the historical trend. 

[Wendell De Guzman]

Originally posted by @Account Closed:

I'm trying to find a good B neighborhood to invest in, for multi families in Bakersfield, CA, and the asking prices for multis is high right now, which make cashflow hard to come by. I've seen some posts from Los Angeles investors saying they're buying with $0 cashflow and looking at the appreciation game only. SFR's are also high in my area. I don't want to be a slum lord, so we may sit this out until the market turns and buying opportunities abound.

In my mind, this has to turn soon, as energy prices are rising again, good paying jobs are hard to come by, and the oil industry is shedding people buy the thousands, which really affects our local market here.  I see tons of SFRs for sale, and not many are buying right now.  I fear we may be looking at another wave of foreclosures, which is bad for the community in some ways, but good for those of us ready to purchase screaming deals.  Thoughts?

I agree - I think for the multi-family space, we're in a bubble right now. Prices are absurd and cap rates are really low. For SFRs I think we're not in a bubble yet although in some markets like southern CA, we're probably there already.

I gave a toastmaster's speech in November 2005 warning of an impending real estate crash. I was wrong that I was 2.5 years early. So who knows when the multi-family bubble will pop. Maybe I am 2.5 years early again too. :-)