Thoughts on the next housing crash

[Jeff Robert]

Curious as to everyones thoughts on the current macro market condition. I realize every market is different , but downturns do happen across the country, affecting all properties to some relative degree. I've put together some thoughts based on financial trends, industry chatter, and a few local examples.

We've had free money (fed rates below 1%) for nearly 8 years now. Although I feel the residential single family homes are a bit more 'protected' now than they were in 2008 due to more Fannie Mae backed loans and lender regulations, I get the feeling that commercial complexes (multi unit apartments in particular) have been built at an astounding rate for the past 7 years. It reminds me alot of 2004-2006 when you would see new housing subdivisions popping up every weekend.

My personal boots on the ground examples (Grand Rapids, MI) include seeing lots of new high end apartments being erected every month, with tons of amenities going up with rents that compete with the run-down 16 unit buildings that were built in the 1990s.

I'm curious about the BP community's thoughts on the possibility of a pending bubble burst in these multi-family apartment complexes? Is this a bad trend due to low interest rates, or is it just a reaction to the need for more apartments because of less people being able to afford their own home?

[Russell Brazil]

I agree that things do seem a bit bubbly, especially in multi-family, and residential commercial properties. However if it were easy to predict bubbles, they would never occur.

If you buy right, meaning your portfolio of properties is cash flow positive, and you plan on holding long term...then it doesnt matter if there is a bubble and it bursts, because you will be able to ride it out.  I was not investing pre-housing bubble and crash, but I have family members that were...and you know what...the ride up the bubble, then it bursting didnt affect that all that much.  The bursting of the bubble just created buying opportunities for them...and provided the opportunity for me to start investing.