Today's Market is not like 2008 - What is everyone seeing/thinking?

[Alan Asriants]

Not Comparing Today's Real Estate Market to 2008

The market crash in 2008 is not the same as what is happening today. It's crucial to understand the differences to make informed decisions.

The recession and economic meltdown in 2008 were a direct result of the housing crisis. Irresponsible lending practices and inflated prices led to a collapse.

In 2008, banks gave out loans to unqualified borrowers, underwriting practices were too lenient, and appraisers often worked with banks to close deals. Many unqualified buyers ended up in bad debt, leading to defaults and an oversupply of housing.

Today is different. Buyers are more qualified, benefiting from extremely low interest rates. The affordability of payments and responsible borrowing practices are contributing factors. Additionally, government stimulus measures have led to inflation, driving up the prices of everything, including real estate.

Why aren't prices coming down? Sellers realized that selling their homes and losing their low rates wasn't financially advantageous. This reduced housing supply, even with lower demand due to rates. In some areas, supply can't keep up, resulting in price increases.

Today's market is hyperlocal. Unlike 2008, the national market decline, today's market varies from city to city. Downtown areas may experience oversupply, while outskirts/suburbs see limited construction and increased demand, causing prices to rise.

Remember, no one can predict the future, so contemplate your decision carefully. If buying for the long term, consider that those who bought at the peak of the 2008 market are currently in a favorable position.

[Hunter Purnell]

Prices will start to come down in most areas. Prices have doubled because of interest rates and rising prices. We're just in the beginning. I don't think it will be like 2008 and is much different. But Commercial is falling fast and there will be a ripple effect. Unemployment has to rise for inflation to drop and that will cause some fire sales in the housing market as well. I personally don't think SFH will be hit as hard as 2008, but prices will drop. Homes going up 15% to 30% YoY for 2-3 years is not sustainable and to me shows a bubble even with inflation.

Overall I expect price drops. Out west its dropping fast, south isn't yet, but in my opinion it has to drop some. I would guess 20% average for the country. Some places 30-40%. Some places 0%. 

[Account Closed]

Quote from @Alan Asriants:

Remember, no one can predict the future, so contemplate your decision carefully. If buying for the long term, consider that those who bought at the peak of the 2008 market are currently in a favorable position.

Important to remember this for those investing in long-term holds.... buckle up!

[Alan Asriants]

Quote from @Hunter Purnell:

Prices will start to come down in most areas. Prices have doubled because of interest rates and rising prices. We're just in the beginning. I don't think it will be like 2008 and is much different. But Commercial is falling fast and there will be a ripple effect. Unemployment has to rise for inflation to drop and that will cause some fire sales in the housing market as well. I personally don't think SFH will be hit as hard as 2008, but prices will drop. Homes going up 15% to 30% YoY for 2-3 years is not sustainable and to me shows a bubble even with inflation.

Overall I expect price drops. Out west its dropping fast, south isn't yet, but in my opinion it has to drop some. I would guess 20% average for the country. Some places 30-40%. Some places 0%. 

 Don't forget how much money was pumped into our economy. 1 tomato costs $4 today. That money has to go somewhere and often times it is into asset classes like real estate, raw goods, and other necessities. 

I believe we are living in a new economy (post covid) and going back to what it was before wouldnt make sense. 

Commercial office space makes sense why its falling. WFH has crushed that business space. I wouldnt be surprised to see savvy developers making a killing from buying these spaces pennies on the dollar and converting them to highest and best use. 

[Karl B.]

Prices aren't coming down because inventory is still low in most markets. 

Prices will soften when inventory rises, however, due to the high interest rate there are less buyers.

[Eric Greenberg]

^^ agreed. Some areas in Philly have definitely slowed. Outside the city in prime locations are still hot fire. I got outbid last week with an offer at asking price by $2XXk over. 

[Justin Polston]

I just saw an interesting interview that focused on the math behind the assumed correction(s) versus the backlit economic factors. 

Basically the median price of a home needs to be $100k cheaper. 
Take median income level and compare it to median price of a home pre COVID etc rise in prices. 

Take median income level of the here and now and compare it to the median price of a home, and the ratios are out of whack and not sustainable. 

I just enjoyed the math and rationale. BUT, some areas needed to rise and covid jumpstarted that. Simply jumpstarted something already written into the agenda. 

BUT how many places can you name that are due for a crash from the chaotic rise? All of them. 

[Carlos Ptriawan]

Quote from @Justin Polston:

I just saw an interesting interview that focused on the math behind the assumed correction(s) versus the backlit economic factors. 

Basically the median price of a home needs to be $100k cheaper. 
Take median income level and compare it to median price of a home pre COVID etc rise in prices. 

Take median income level of the here and now and compare it to the median price of a home, and the ratios are out of whack and not sustainable. 

I just enjoyed the math and rationale. BUT, some areas needed to rise and covid jumpstarted that. Simply jumpstarted something already written into the agenda. 

BUT how many places can you name that are due for a crash from the chaotic rise? All of them. 

 Property price has no strong parallelism to income level.
But property price has the strongest parallelism to money supply and demand/supply ratio.

These are why people doesn't always get it.
Income is slowly rising due to inflation but property price increased exponentially because of money supply and demand.

Yes home price can go down 100k if house is gold, where gold is commodity that can be traded publicly.
The very reason why property can only go up is because gov. print money and it's not a commodity.