CRASH!!! CRASH!!!! CRASH!!!

[Tanveer Ahmed]

Hi BP, when I open any forum or social media the hot topic is upcoming housing market crash. But I don't understand what does "CRASH" means in real state. Is it like stock that will go down 30-50%? Looking at the historic data I don't see any "real estate" crash. I see sub prime mortgage and insanity in appraisal which caused(foreclosure) the market to go down in 2008. Other than that value of real estate alway treanding up slowly but surely. Now what's going on last few years is abnormal. People bidding a house way over than it's actual worth. People had unnecesaary money from stimulus, the money they didn't have to work for. I think rising interest rate will slow that down and come back to normal. In addition we are short 5 million houses. Is that some folks refering this as crash? does it make sense one day we will wake up and see on zillow our house worth 50% less than prior day?  Or I am spending too much time on social media and news outlets? 

[Scott E.]

As somebody who was a sub-prime mortgage loan officer in 2007-2008 and remained in the mortgage industry for following 14 years, I can say with confidence that this time it's different (from a quality of loan perspective)

The single biggest threat to the housing market in my opinion is if we enter a recession and these layoffs persist. We're already seeing layoffs in tech and fintech. If we continue to see layoffs across other industries and the unemployment rate starts to rise, then there are going to be a lot of people who are having a hard time affording their home (ESPECIALLY the people who got caught up in the frenzy and paid too much over the past 18 months).

I still don't foresee a crash in the market comparable to what we saw in 2008. But I do think there is risk of price decline in the short term. All that being said, I have no idea what I'm talking about. I'm not an economist, I don't have a crystal ball. I'm just a guy with an opinion.