Is a huge real estate crash coming soon?

[Nate Armstrong]

Is a massive real estate crash on the horizon? Experts are divided, but what do you think—are there warning signs suggesting caution for potential buyers and investors?

[V.G Jason]

Quote from @Andrew Syrios:

Quote from @V.G Jason:

Quote from @Andrew Syrios:

Quote from @V.G Jason:

Quote from @Andrew Syrios:

People have been talking about the impending real estate crash from back even before Covid. Here's an example on these forums from four years ago: https://www.biggerpockets.com/forums/888/topics/829466-housi...

I still stick with what I said in mid 2022: Given that lending standards were much, much stronger than in 2008 and that most homeowners have long term fixed rates instead of Teasers, the real estate market won't collapse even if demand is down because supply is down (less inventory because people don't want to sell off properties with those great loans). The only way real estate will get pulled down more than a small correction (which effectively happened between Q3 of 2022 and Q4 of 2023 as RE appreciation was behind inflation) is with a general recession. 

And even if that happens (which is fairly likely IMO) real estate should be affected less than the rest of the economy. At least those are my two cents. 

https://www.biggerpockets.com/blog/this-housing-market-isnt-...

Q3 & 4 2022 were the recession. I wouldn't call it a correction. I mean a general recession, we had flat/negative GDP the preceding quarters, S&P down 20% +.

Not sure what more people want.

What folks don't realize with investor saturation, tech, and everything in between, the market has a profound way of realizing positions and getting in & out of them to where the markets overcorrect and sometimes move so quick all the juice in it happens to squeeze out so fast. Covid bottom free fall was in a small window, rate hikes started in mid 2022 and the recession was right then and there. Folks realized rates for longer and bought back into the rally top of 2023.

The correction we'll see after the first rate cut will touch what we saw in  H2 2022 but i do not believe will surpass it.

I think you mean Q1 and Q2 of 2022, where GDP went down 1.6% and 0.9% respectively, the stock market was down 20% and inflation was rampant. They made some excuses that because production wasn't really down much and unemployment was still low that it wasn't a recession but I think that was bogus. It was just a very shallow recession. 

I'm wondering if we're going to get those rate cuts though. I doubt it will happen unless they change their inflation target to at least 3 maybe 4% or whenever a recession happens. 

I'm getting old, so the specifics on time you are probably correct on.

With that said, I expect rate cuts after the election. I think it'll cause too much controversy if it's prior to it. 

I could see some modest rate cuts, but I think they're still quite nervous about inflation. That being said, since most US debt is owned by Americans, increasing rates means American lenders and treasury bond holders earn a higher return and have more money to spend, negating much of what rate increases are supposed to do (namely, slow down the economy and reduce inflation). 

 CME fed watch tool agrees with a rate cut pre-election. Went from 50% chance of no change to 25%, and that 25% increase for a 25bps cut in Sep. I've gone the opposite way-- this is still 8 weeks plus away. If something breaks, then this will all change.  I think equities may get a reckoning, per usual, in October though. This would prevent that. 

Each bar from right to left is 4 weeks to 1 week prior projections.

[James Hamling]

Quote from @V.G Jason:

Quote from @James Hamling:

Quote from @V.G Jason:

Quote from @Andrew Syrios:

Quote from @V.G Jason:

Quote from @Andrew Syrios:

People have been talking about the impending real estate crash from back even before Covid. Here's an example on these forums from four years ago: https://www.biggerpockets.com/forums/888/topics/829466-housi...

I still stick with what I said in mid 2022: Given that lending standards were much, much stronger than in 2008 and that most homeowners have long term fixed rates instead of Teasers, the real estate market won't collapse even if demand is down because supply is down (less inventory because people don't want to sell off properties with those great loans). The only way real estate will get pulled down more than a small correction (which effectively happened between Q3 of 2022 and Q4 of 2023 as RE appreciation was behind inflation) is with a general recession. 

And even if that happens (which is fairly likely IMO) real estate should be affected less than the rest of the economy. At least those are my two cents. 

https://www.biggerpockets.com/blog/this-housing-market-isnt-...

Q3 & 4 2022 were the recession. I wouldn't call it a correction. I mean a general recession, we had flat/negative GDP the preceding quarters, S&P down 20% +.

Not sure what more people want.

What folks don't realize with investor saturation, tech, and everything in between, the market has a profound way of realizing positions and getting in & out of them to where the markets overcorrect and sometimes move so quick all the juice in it happens to squeeze out so fast. Covid bottom free fall was in a small window, rate hikes started in mid 2022 and the recession was right then and there. Folks realized rates for longer and bought back into the rally top of 2023.

The correction we'll see after the first rate cut will touch what we saw in  H2 2022 but i do not believe will surpass it.

I think you mean Q1 and Q2 of 2022, where GDP went down 1.6% and 0.9% respectively, the stock market was down 20% and inflation was rampant. They made some excuses that because production wasn't really down much and unemployment was still low that it wasn't a recession but I think that was bogus. It was just a very shallow recession. 

I'm wondering if we're going to get those rate cuts though. I doubt it will happen unless they change their inflation target to at least 3 maybe 4% or whenever a recession happens. 

I'm getting old, so the specifics on time you are probably correct on.

With that said, I expect rate cuts after the election. I think it'll cause too much controversy if it's prior to it. 

I don't think your factoring in all the election lead-up "make it rain" vote pandering. Gonna have to flush out that inflation. 

And if a swap of powers is imminent, well buckle-up-buttercup cause no reason to NOT go hog-wild for those last precious weeks grasp power before transfer cause when it all comes a crashing down it's "see SEE, we said don't vote for him!". 

I mean come on, keep in mind everything that EVER bad happened was Bush's fault until Trump came along. I think I heard a rumor gout is Trumps fault now, along with obesity, acne, inflation, deflation, stagflation, and POTUS said something about "whnjkwnkdn s-wjoians-wijoniwnebbbb" being his fault too but not too sure what that is. 

Remember when they took certain keys of the keyboards as left white house, lol. 

So yeah, if getting da-boot, oh-man it's gonna be a spendy spree you just wait n see. 

As we get closer to the election, there'll be too much conspiracy if we did a rate cut prior. People will say Jerome rigged it for biden, etc., I think they'll hesitate too but obviously lots of time between now & September. Anything can happen. I thought for sure-90% + in September, now I'm at 50%. And it's coming down each week.

If they were serious at Davos, which I have never doubted, well this is exactly how it's achieved. Not via some crazy BS of soldiers coming door to door to confiscate or whatever no no no. MONEY, economic policy, THAT is how it's done and evidence is today and yesterday because it's coming true as we live it now..... 

If Wall Street is the mechanism to transfer wealth from the foolish to the patient.... INFLATION is the mechanism of transferring it unto the 2% and government.... 

[Dave Hagen]

Market timing is a losing proposition. Especially in real estate investing. On a 30% swing, most will miss the top by 5-10%, and the bottom by the same, effectively missing out on 30-70% of the correction. And with commissions and delays in buying/selling, along with missing out on the rent income, and losing your loan position where you are just starting to pay down principle, you lose.

I'm not forecasting a recession, or skyrocketing appreciation. And I'm not addressing the typical real estate supply/demand/Investment strategies. There are too many economic and political factors that also affect REI and are difficult to predict, as well as dealing with politicians that readily lie about the economy to protect their backside. Those are the points I want to delve into.

Demand/Population - Younger people are waiting to start families, not having kids, and generally not the same trends as prior generations. And Biden has allowed 10-15 million to cross the border. If re-elected, that will continue. If Trump is elected, expect deportations. As well as the 10-20 million here illegally from prior influx and haven't had amnesty. And as states like California and New York lose the highly taxed millionaires and they move to lower or no income tax states, expect them to raise taxes on the lesser taxed to make up for the huge portion the rich paid. Jeff Bezos saved over $600 million in taxes when he sold Amazon stock this year, just because he moved from Washington to Florida.

Inflation/Interest - Inflation calculations have been changed. Comparing current inflation to other times, like the 80s, or 2010s aren't valid. Food, housing and energy have been removed. The categories affecting most people's budgets. Many economists believe inflation is currently about 10% and was up to 20% a couple years ago. They are also playing games with prices, claiming that some increases are due to increased quality, so no actual inflation. Or that health insurance is increasing due to increased cost of healthcare, so no inflation to report there. To combat inflation, interest rates above inflation are needed. They aren't really trying to combat inflation. They want to inflate away the debt. If interest rates are cut, inflation will increase. Inflation is great for REI to pay off loans with cheaper dollars, but terrible for the people trying to pay rent. Politicians may create rent caps, and look to do away with tax breaks as they look to increase income from taxes. Those would be disastrous, as building would cease and cause financial crisis for landlords. And back in the 80s, mortgage interest rates rose to almost 20%, and government bonds were paying 15%.

Unemployment - Current new job numbers are between 200k-300k per month. During the Obama administration, this was just the number of jobs to keep unemployment constant as new, young people entered the workforce, and elderly retired. Almost every month, the numbers are adjusted down, and Jim Rickards, and others, report that new jobs for the last few years have been mostly government jobs, and part time jobs going to the illegals coming into the country. Many are currently living in schools, hotels, and other places not affecting rentals, but others are renting. If Trump deports, many will go back, instead of waiting to be deported. And they are counting part-time jobs the same as full time jobs, as if each job counts as one person back to work, instead of someone working multiple jobs to replace the single full-time job they lost. Obamacare mandated health insurance for jobs with more than 20 hours a week. That caused many companies to hire part-time, less than 20 hours, instead of full-time employees.

AI - A lot of AI is hype. Web sites that have been making recommendations for years suddenly claim it is AI. AI is coming, and it can do things like summarize and gather information. But it can also hallucinate and make up "facts". It isn't currently good enough to replace programmers, but it is being used by knowledgeable ones to become more efficient, and with they knowledge that they need to double check everything presented. It will replace some jobs, and create others. What the net will be is anybody's guess.

Minimum wage - As prices and wages increase, companies are looking at automation and other ways to reduce their labor costs. Automation does create some jobs in manufacturing and repair. More than they replace? Raising minimum wages costs jobs, and affects other wages, like labor contracts that are indexed to minimum wage.

Will inflation, automation and raising minimum wage result in more people that can't afford rent increases? Will it force many to self-employment with work that has a less regular income?

As inflation raises the cost of everything, insurance and property taxes are increasing. And so many other factors, that are currently being considered, can have a huge effect on profitability.

Since nobody knows what the future holds, the best plans are to prepare for tough times, don't stretch yourself too thin, and be prepared to grab great deals if they appear. And take advantage of every way to reduce expenses. Except maybe throwing good employees and relatives out... ;)

[Peter W.]

Quote from @James Hamling:

Quote from @Nicholas L.:

Does anyone want to make a specific prediction, and we'll all agree to meet back here and see what happened?

Ok, ready to strap on your thinking cap's as I'm gonna get all kinds of technical, putting my neck out there.

First is to understand where we are at.

Picture the economy as a 777 happily flying around. The thrust from the jet's is the movement of $currency$ in the economic system.

Now in covid, where effectively they all but completely turned off the fuel to the engines, well not hard math to figure it wouldn't be long before that 777 became worlds biggest lawn dart. So, out came Uncle Sam who started shooting N02 straight into those turbines to keep going.

Problem is, that made a hell of a lot of "thrust".

What happens with more thrust? yeah, "lift" aka inflation.

So now coming out of things the Fed is saying wow we need to come back down to a more gentle altitude, and to keep from turning this into a vomit-comet let's do this "easily", slowly, gently.....

So here is the thing, to come down means less thrust.

But politicians dont want that, they keep pressing that peddle down, more and more and more thrust.

AND, to boot, as we go higher, the air is thinner, there is less there (affordability). So it takes even more thrust to keep up, and the "down" is even sharper when let off.

So yeah, to come down means actions most don't want. But keep feeding the engines means more lift that others don't want. Ya can't do the things that increase lift and expect to go down.

I see politics going into 5-alarm freak-out by Novemeber. And really good chance Uncle Sammy brings out that N02 again so all can feel like were getting somewhere, ignoring fact were about to to leave atmosphere. And WHEN all are forced off that throttle, and they WILL be because at a certain point, there is no more air, none, and those engines go out, completely.

And then.... Then people will be wishing we were just a yard-dart again because were gonna be a freakin comet hurdling back to level but things is now it takes that much more force to pull out of the dive.

Inflationary feedback into stagflation (where we are entering now) into run away inflation making for deflationary death spiral.......

Some may think story stops there, oh contraire monfrair.

Don't forget USA is lead by the all time gold-medalist super champions of the can-kicking Olympics.

See I foresee as the vomit-comet comes a hurdling down, they'll just pull along side a nice new shinny UPDATED 777-AMERO or other and just, change rides. yes, a currency default swap.

And yes, there is ways to still have the USD while moving economy to a multi-national indexed currency such as the Amero.

World chaos, oh heck yeah but look around, what would be new in that category? And who holds the majority of USD debt? yeah, exactly.

What's the alternative?

Tell all US citizens they gotta suck things up, austerity measures, slash social programs 50%..... Not a chance any politcian will go that road, no way.

It's math, USA went off the debt cliff a LOOOooong time ago, debt service is nearing unserviceable. What would you do? If end is inevitable, yeah, you'd get the maximum pump before it comes apart too wouldn't ya. I would.

I think they can keep this plane going a lot longer than expected. They just need real inflation to be slightly larger than income, and gdp growth (including inflation) to be larger than treasury yields. We've been quite successful at exporting our inflation for years. And we've been successful at importing people to increase gdp growth.

I guess this isn't a real prediction though. I'll quantify, suburbs of Rochester, NY in Monroe county east of the Genessee river, see 5-10+% appreciation for the next 4 years as measured Zillow home price index.

[Timothy Hero]

When rates were low 3's, they said any day a crash was coming.

When rates jumped to 8%, they said any day a crash was coming.

During both markets, the foreclosure rates and prices remained healthy and strong in most markets.

Inflation has come down, 9/10 markets are up YTD in prices, and rates have come down from 8% to upper 6's.

[James Hamling]

Quote from @Peter W.:

Quote from @James Hamling:

Quote from @Nicholas L.:

Does anyone want to make a specific prediction, and we'll all agree to meet back here and see what happened?

Ok, ready to strap on your thinking cap's as I'm gonna get all kinds of technical, putting my neck out there.

First is to understand where we are at.

Picture the economy as a 777 happily flying around. The thrust from the jet's is the movement of $currency$ in the economic system.

Now in covid, where effectively they all but completely turned off the fuel to the engines, well not hard math to figure it wouldn't be long before that 777 became worlds biggest lawn dart. So, out came Uncle Sam who started shooting N02 straight into those turbines to keep going.

Problem is, that made a hell of a lot of "thrust".

What happens with more thrust? yeah, "lift" aka inflation.

So now coming out of things the Fed is saying wow we need to come back down to a more gentle altitude, and to keep from turning this into a vomit-comet let's do this "easily", slowly, gently.....

So here is the thing, to come down means less thrust.

But politicians dont want that, they keep pressing that peddle down, more and more and more thrust.

AND, to boot, as we go higher, the air is thinner, there is less there (affordability). So it takes even more thrust to keep up, and the "down" is even sharper when let off.

So yeah, to come down means actions most don't want. But keep feeding the engines means more lift that others don't want. Ya can't do the things that increase lift and expect to go down.

I see politics going into 5-alarm freak-out by Novemeber. And really good chance Uncle Sammy brings out that N02 again so all can feel like were getting somewhere, ignoring fact were about to to leave atmosphere. And WHEN all are forced off that throttle, and they WILL be because at a certain point, there is no more air, none, and those engines go out, completely.

And then.... Then people will be wishing we were just a yard-dart again because were gonna be a freakin comet hurdling back to level but things is now it takes that much more force to pull out of the dive.

Inflationary feedback into stagflation (where we are entering now) into run away inflation making for deflationary death spiral.......

Some may think story stops there, oh contraire monfrair.

Don't forget USA is lead by the all time gold-medalist super champions of the can-kicking Olympics.

See I foresee as the vomit-comet comes a hurdling down, they'll just pull along side a nice new shinny UPDATED 777-AMERO or other and just, change rides. yes, a currency default swap.

And yes, there is ways to still have the USD while moving economy to a multi-national indexed currency such as the Amero.

World chaos, oh heck yeah but look around, what would be new in that category? And who holds the majority of USD debt? yeah, exactly.

What's the alternative?

Tell all US citizens they gotta suck things up, austerity measures, slash social programs 50%..... Not a chance any politcian will go that road, no way.

It's math, USA went off the debt cliff a LOOOooong time ago, debt service is nearing unserviceable. What would you do? If end is inevitable, yeah, you'd get the maximum pump before it comes apart too wouldn't ya. I would.

I think they can keep this plane going a lot longer than expected. They just need real inflation to be slightly larger than income, and gdp growth (including inflation) to be larger than treasury yields. We've been quite successful at exporting our inflation for years. And we've been successful at importing people to increase gdp growth.

I guess this isn't a real prediction though. I'll quantify, suburbs of Rochester, NY in Monroe county east of the Genessee river, see 5-10+% appreciation for the next 4 years as measured Zillow home price index.

When talking on historically the US was a-ok on kick-the-can economics, REMEMBER, 60 of the last 100 years Europe and Asia were in some state of burning rubble. WWI, WWII, Korea, Vietnam, Iron Curtain, etc etc... 

So for vast majority of the history where USA enjoyed position as net exporter, innovator, world currency standard, it was NOT a title held due exclusively to the USA "greatness" as we are all force feed.     The rest of developed world was in various stages of disaster and incapable to truly compete. 

Today is an age the USA has long not seen, COMPETITION. And reality is USA has been LOOSING that battle, consistently, on nearly every front. 

[Alan F.]

Quote from @Timothy Hero:

When rates were low 3's, they said any day a crash was coming.

When rates jumped to 8%, they said any day a crash was coming.

During both markets, the foreclosure rates and prices remained healthy and strong in most markets.

Inflation has come down, 9/10 markets are up YTD in prices, and rates have come down from 8% to upper 6's.

 Who is "they" that predicated  a crash?

Inflation is dow 9/10, would you share that source of info? 

Thx

[Timothy Hero]

Quote from @Alan F.:

Quote from @Timothy Hero:

When rates were low 3's, they said any day a crash was coming.

When rates jumped to 8%, they said any day a crash was coming.

During both markets, the foreclosure rates and prices remained healthy and strong in most markets.

Inflation has come down, 9/10 markets are up YTD in prices, and rates have come down from 8% to upper 6's.

 Who is "they" that predicated  a crash?

Inflation is dow 9/10, would you share that source of info? 

Thx

 Read my comment again. I didn't say inflation was down 9/10. I said 9/10 markets have increased YTD.

As for "they", the media and all these "gurus" on social media. Grant has been preaching of a market crash since early 2023. 18 Months later, nothing.

Robert Kiyosaki has been claiming it for 3 years. Nothing.

Then you have the media, which feeds on fear.

[Alan F.]

Quote from @Timothy Hero:

Quote from @Alan F.:

Quote from @Timothy Hero:

When rates were low 3's, they said any day a crash was coming.

When rates jumped to 8%, they said any day a crash was coming.

During both markets, the foreclosure rates and prices remained healthy and strong in most markets.

Inflation has come down, 9/10 markets are up YTD in prices, and rates have come down from 8% to upper 6's.

 Who is "they" that predicated  a crash?

Inflation is dow 9/10, would you share that source of info? 

Thx

 Read my comment again. I didn't say inflation was down 9/10. I said 9/10 markets have increased YTD.

As for "they", the media and all these "gurus" on social media. Grant has been preaching of a market crash since early 2023. 18 Months later, nothing.

Robert Kiyosaki has been claiming it for 3 years. Nothing.

Then you have the media, which feeds on fear.

 Woops! I missed the comma lol, I don't watch television or follow social media so thank you for sharing with me.

[Timothy Hero]

Quote from @Alan F.:

Quote from @Timothy Hero:

Quote from @Alan F.:

Quote from @Timothy Hero:

When rates were low 3's, they said any day a crash was coming.

When rates jumped to 8%, they said any day a crash was coming.

During both markets, the foreclosure rates and prices remained healthy and strong in most markets.

Inflation has come down, 9/10 markets are up YTD in prices, and rates have come down from 8% to upper 6's.

 Who is "they" that predicated  a crash?

Inflation is dow 9/10, would you share that source of info? 

Thx

 Read my comment again. I didn't say inflation was down 9/10. I said 9/10 markets have increased YTD.

As for "they", the media and all these "gurus" on social media. Grant has been preaching of a market crash since early 2023. 18 Months later, nothing.

Robert Kiyosaki has been claiming it for 3 years. Nothing.

Then you have the media, which feeds on fear.

 Woops! I missed the comma lol, I don't watch television or follow social media so thank you for sharing with me.

 Understood. Also, sorry if my comment came off as rude. It seemed direct, lol.

[V.G Jason]

Quote from @Peter W.:

Quote from @James Hamling:

Quote from @Nicholas L.:

Does anyone want to make a specific prediction, and we'll all agree to meet back here and see what happened?

Ok, ready to strap on your thinking cap's as I'm gonna get all kinds of technical, putting my neck out there.

First is to understand where we are at.

Picture the economy as a 777 happily flying around. The thrust from the jet's is the movement of $currency$ in the economic system.

Now in covid, where effectively they all but completely turned off the fuel to the engines, well not hard math to figure it wouldn't be long before that 777 became worlds biggest lawn dart. So, out came Uncle Sam who started shooting N02 straight into those turbines to keep going.

Problem is, that made a hell of a lot of "thrust".

What happens with more thrust? yeah, "lift" aka inflation.

So now coming out of things the Fed is saying wow we need to come back down to a more gentle altitude, and to keep from turning this into a vomit-comet let's do this "easily", slowly, gently.....

So here is the thing, to come down means less thrust.

But politicians dont want that, they keep pressing that peddle down, more and more and more thrust.

AND, to boot, as we go higher, the air is thinner, there is less there (affordability). So it takes even more thrust to keep up, and the "down" is even sharper when let off.

So yeah, to come down means actions most don't want. But keep feeding the engines means more lift that others don't want. Ya can't do the things that increase lift and expect to go down.

I see politics going into 5-alarm freak-out by Novemeber. And really good chance Uncle Sammy brings out that N02 again so all can feel like were getting somewhere, ignoring fact were about to to leave atmosphere. And WHEN all are forced off that throttle, and they WILL be because at a certain point, there is no more air, none, and those engines go out, completely.

And then.... Then people will be wishing we were just a yard-dart again because were gonna be a freakin comet hurdling back to level but things is now it takes that much more force to pull out of the dive.

Inflationary feedback into stagflation (where we are entering now) into run away inflation making for deflationary death spiral.......

Some may think story stops there, oh contraire monfrair.

Don't forget USA is lead by the all time gold-medalist super champions of the can-kicking Olympics.

See I foresee as the vomit-comet comes a hurdling down, they'll just pull along side a nice new shinny UPDATED 777-AMERO or other and just, change rides. yes, a currency default swap.

And yes, there is ways to still have the USD while moving economy to a multi-national indexed currency such as the Amero.

World chaos, oh heck yeah but look around, what would be new in that category? And who holds the majority of USD debt? yeah, exactly.

What's the alternative?

Tell all US citizens they gotta suck things up, austerity measures, slash social programs 50%..... Not a chance any politcian will go that road, no way.

It's math, USA went off the debt cliff a LOOOooong time ago, debt service is nearing unserviceable. What would you do? If end is inevitable, yeah, you'd get the maximum pump before it comes apart too wouldn't ya. I would.

I think they can keep this plane going a lot longer than expected. They just need real inflation to be slightly larger than income, and gdp growth (including inflation) to be larger than treasury yields. We've been quite successful at exporting our inflation for years. And we've been successful at importing people to increase gdp growth.

I guess this isn't a real prediction though. I'll quantify, suburbs of Rochester, NY in Monroe county east of the Genessee river, see 5-10+% appreciation for the next 4 years as measured Zillow home price index.

Appreciation off a low absolute value really voids the argument. Much like Detroit being the "hottest" city, overtaking Miami. 20% appreciation on $80k is nothing in absolute value. So we need to compare apples to apples.

[Alan F.]

Quote from @Timothy Hero:

Quote from @Alan F.:

Quote from @Timothy Hero:

Quote from @Alan F.:

Quote from @Timothy Hero:

When rates were low 3's, they said any day a crash was coming.

When rates jumped to 8%, they said any day a crash was coming.

During both markets, the foreclosure rates and prices remained healthy and strong in most markets.

Inflation has come down, 9/10 markets are up YTD in prices, and rates have come down from 8% to upper 6's.

 Who is "they" that predicated  a crash?

Inflation is dow 9/10, would you share that source of info? 

Thx

 Read my comment again. I didn't say inflation was down 9/10. I said 9/10 markets have increased YTD.

As for "they", the media and all these "gurus" on social media. Grant has been preaching of a market crash since early 2023. 18 Months later, nothing.

Robert Kiyosaki has been claiming it for 3 years. Nothing.

Then you have the media, which feeds on fear.

 Woops! I missed the comma lol, I don't watch television or follow social media so thank you for sharing with me.

 Understood. Also, sorry if my comment came off as rude. It seemed direct, lol.

 No apologies necessary, I appreciate the info, FWIW I'm on phone so my writing isn't great lol

[Peter W.]

Maybe... But I see the rise of East Asia (China and India specifically) coming at the expense of Europe and South America, not the United States. (Not that someone's rise has to come at the expense of others)I have a friend who is a project manager for installing lab equipment.  He moved to Brazil to work for a couple of years, moved back stateside a few years later because it was impossible to get anything done down there.  Our ability to compete is much better than the cultures in Europe, Africa and South America. 

Many of our losses in manufacturing come from strong environmental protection laws which should help us in the long run.  That's not to say we don't have problems, but they are smaller than everywhere else.  My number one investment thesis is never short America.

Britian had a similar debt issue in the late 1700s thanks to the seven years war (interest was half of government spending) and they were able to kick the can almost all the way to world war I (this is of course a gross simplification). It did significantly affect their reduce GDP growth during the Victorian age.  They ain't the superpower they once were, but it's still not a bad place to live.  With that said, Britian is the only ones who have managed to do it.

[Peter W.]

Quote from @V.G Jason:

Quote from @Peter W.:

I guess this isn't a real prediction though. I'll quantify, suburbs of Rochester, NY in Monroe county east of the Genessee river, see 5-10+% appreciation for the next 4 years as measured Zillow home price index.

Appreciation off a low absolute value really voids the argument. Much like Detroit being the "hottest" city, overtaking Miami. 20% appreciation on $80k is nothing in absolute value. So we need to compare apples to apples.

Fair enough, but I don't know any markets other than mine--which is why I made the prediction specific to where I live and invest.  I will say the cheapest suburbs I mentioned have an average selling price of 200k--depending on the specific zip code, it might be as high as 400k (I don't know off the top of my head). This is still very cheap compared to the rest of the country, but isn't the same as 80k.  And I will also the cheapness is part of why they will see such high appreciation.

[James Hamling]

Quote from @Timothy Hero:

Quote from @Alan F.:

Quote from @Timothy Hero:

When rates were low 3's, they said any day a crash was coming.

When rates jumped to 8%, they said any day a crash was coming.

During both markets, the foreclosure rates and prices remained healthy and strong in most markets.

Inflation has come down, 9/10 markets are up YTD in prices, and rates have come down from 8% to upper 6's.

 Who is "they" that predicated  a crash?

Inflation is dow 9/10, would you share that source of info? 

Thx

 Read my comment again. I didn't say inflation was down 9/10. I said 9/10 markets have increased YTD.

As for "they", the media and all these "gurus" on social media. Grant has been preaching of a market crash since early 2023. 18 Months later, nothing.

Robert Kiyosaki has been claiming it for 3 years. Nothing.

Then you have the media, which feeds on fear.

How many movies can you name of last 10/20 yrs that were to do with end of the world? Some form of apocalyptic, dystopian, zombie whatever future? 

Ok, now how many can you name over same time that were of a prosperous future?...... 

Yeah.... No surprise the masses are doom obsessed, it's all the idiot box keeps cramming down there gullet. You are what you eat, right. 

[James Hamling]

Quote from @Peter W.:

Our ability to compete is much better than the cultures in Europe, Africa and South America. 

Ok.... Exactly how do you come up with such OTHER THAN it's your "feelings" of such? Because the facts simply do NOT support that in any way shape of form. 

How about education. 

We are in a tech age, innovation IS tech revolving and always will be going forward, right. Exactly how does USA compare? Struggling, STRUGGLING to stay in top 50! FIFTY! last I knew was around #40 in world.    Try naming 40 countries, lol! I bet most can't even name 10. 

Falling so far behind in education from rest of world, exactly how does USA remain competitive?  

UAE is rapidly becoming "the" engineering center. Israel is crushing it in ai and tech sector. Africa is "THE" resource goliath and China is leagues beyond everyone else in tapping such. RU dominates in oil and gas so much so that Europe the continent is dependent upon them. 

The list goes on and on, exactly what does USA "dominate" in anymore? That USA is GAINING not LOOSING market share or dominance in?    And guess what, were not even doing that militarily anymore, nope not event there. Our lead was big but the gap is rapidly closing, our lead disappearing. 

See I call it for what it is BECAUSE the 1st step in SOLVING a problem, is first acknowledging that you have one to begin with. 

As long as USA keeps running around high on smell of our own farts of greatness long-gone, we WILL continue to fail, and fail HARD. 

When we OWN the harsh reality, stare it dead in the face, then and only then can we get serious at the task of SOLUTIONS, of changing the vectoring. 

To say USA problems are smaller then everywhere else, simply declares ones exceptionally limited scope of worldly travel, knowledge and experience. 

My taxi driver in Mauritius spoke 3 languages FLUENTLY. THREE! A taxi driver. That is a norm in rest of world outside USA, a level of education and knowledge far FAR beyond where USA stands today. It's simple math of what compounding returns of such will be. 

[Nicholas L.]

@V.G Jason

at least it was a specific prediction =)

@Peter W.

we have the same issue here in Pittsburgh.  15221 - Wilkinsburg, challenging area,  median price $170kish.  right next door to: 15208, point breeze, median home price $700K-$1.1M depending on the source.

[Nicholas L.]

@James Hamling

definitely agree with some of what you wrote, although I think China is going to struggle... seems like they are going to have a demographic crisis soon, although maybe it plays out differently than it would elsewhere since, you know, they're not a free society

[John Neufer]

Maybe

[Henry Clark]

OP

Depends on your REI type and your deal structures.

Looks like your bio says institutional investing and your group has done $90mm of deals since 2014.  Definitely not small, but not big either.  Doesn’t say if MFH or office or retail.  

For you it depends on your original deal analysis which you are aware.  Occupancy, rent rate, market study, capex, funding source and terms and deal horizon.  Plus dumb luck how exposed you were.  

If your in MFH and are the fund manager your in total control. Depending on your market, you can take a haircut in rates and occupancy and come out even. Capex you can adjust spending levels as long as you controlled costs. Performance expectations and deal horizon can be adjusted and recommunicated. The biggest issue will be did your fund take to much out of the deal and make the investors feel all of the pain.

Personally, we are in retirement stage so we don’t have to be as aggressive. But we still shoot for 100% on cash on cash appreciation in 3 years on country subdivisions and 400% on new Self Storage locations.

 Debt to equity we are sitting at 40/60 on our business side and 0/100 on our personal side.  

Debt is either in 7 or 20 year balloons on 20 year amorts thus can ride out any need for refinancing.

 Our market studies have been in target.  Our greatest exposure is a new 75 acre subdivision coming in line this fall.  We are short on housing in our area, thus there is a demand for building lots.  We only sell lots.  Will they sell in our 7 year time horizon???  

Capex costs for expansion have stopped us growing in our "C" markets. Not enough return. Our "A" markets we are starting a $5mm project at 8% cap rate new storage and parking facility. Low risk since this will be a multi phase development using cargo containers and parking versus a large upfront outlay.

Yesterday just signed a contract for 89 more acres to grow Teak in Belize.  25 year horizon.  Trees get bigger and inflation keeps their value growing.

My point above is you and I and everyone else have a different perspective on if there is a crash coming or if it is a good or bad thing.  

Either way, REI is a great thing.

[V.G Jason]

Quote from @Nicholas L.:

@V.G Jason

at least it was a specific prediction =)

@Peter W.

we have the same issue here in Pittsburgh.  15221 - Wilkinsburg, challenging area,  median price $170kish.  right next door to: 15208, point breeze, median home price $700K-$1.1M depending on the source.

 China copies, they never innovate. For that, they'll continue to be a threat but for different reasons. 

USA vs emerging markets is a real & tangible concern, I mean **** look at it in sports. We lack the discipline, the effort, and the hunger. These basketball players from outside the USA whoop the USA inside the USA. As a country, we're soft. To really knock off America though, that's going to take a whole different spin. It'd need to be multi-country nuclear war threat. Not out of the world to assume, but a bit on the low side probability wise.

A taxi driver in Mauritius needs to speak multiple languages to attend to all it's fancy guests like James himself. Go to any exotic island, they all speak multiple languages. That's a plus for them, not necessarily a knock on us. We need to continue to be at the forefront of technology, then get more in front of it on the military and mathematics end. But most of all natural resources-- in particular energy even ahead of ags. If we have that cushion, we can push these guys out. Basically hold the world by speak my language and use my money, and we'll be golden. I know the latter is being threatened but refer back to natural resources. 

With that back to the original meaning of the thread. 

Ignore, the November specific date. I am old and bad at this. But the bottom of this "period", post covid was sub 3600 S&P. We sit high 5500s today. That's a 1/3 drop to get back to that, that's very significant.

We're sitting at 18300s, the bottom was 10400 ish in Oct 2022. That'd be a 40%-ish drop.

I know this isn't REI related, but go see late Q3-Q4 22 in your market. Inventory had a sharp increase, in some, and price cuts had to happen. It wasn't linear to these drops, but this is due to inventory staying short. Now if rate cuts happen, and the economy is tighter, you'll see inventory pick up as the rate cuts come in.

For example Boston. Sitting 450 today, sitting 417-420 in H2 22. 8% ish difference

Phoenix. 503 now, 470 then.

Seattle 377 now, high 340s then.

So down 5-10% in big markets, with an inventory squeeze. What happens when rate cuts, and the market has already priced this in. Then, inventory picks up. I think that 1 +1 leads to more of a correction than some assume, albeit no "crash" in general. 

[V.G Jason]

Quote from @Minna Reid:

Well I've been expecting the downturn for several years now, but seems they postponed it with super low rates and cheap Covid era money. I'm seeing the market turn here in Jacksonville FL now. Can be hard to tell whether its a true downturn or a seasonal slowdown though. 

It does feel like more than a summer slowdown. 

Also my calls for foreclosure help have finally been picking up. Nothing crazy but definitely an uptick. 

Covid mortgage workout programs are still in effect and not sunsetting until April 2025, unless they extend...again. Those are keeping some folks afloat still.

Not sure how much longer they can kick that can down the road, but I continue to be surprised lol. Also election years can swing things.

For what its worth these discussions feel a lot like the ones I saw here in 2006-2007 ish. We all know how that went down ( at least those of us old enough to have experienced it).

Jacksonville is a good example, too. This will have it's reckoning.

[Drew Sygit]

@Nate Armstrong what experts are you referring to?

Hedge funds are stockpiling cash to buy commercial properties out of expected defaults.

Residential may soon see a minor correction, but nothing like 2008-2010.
Number one reason is there are no subprime liar loans with spiking rates & payments.

[Jason Rash]

In South Florida, I see a few things happening:

AIRBNB - Most people I personally know who went into Airbnb jumped in after getting swept up in the Big returns + the 2.5% Interest rates. In my eyes this created a bloat.

The other issue that most didn't see is that now the STR market is 10X more competitive - if you can't market a property to its fullest : Themed/ Clean/ Location/ Instagramable.. then most will get buried in the rise in taxes and insurance. This is the off loading most are seeing now. People are still traveling but being more selective where they make the memories

I wouldn't say a crash per say is coming with these properties. What I do see though is, many will off-load these properties within the next 12-36 months. However long they can hang on for or until it isn't economically feasible - whichever comes first.

Residential Property:

As far as a correction, that's happening now - unfortunately most of current price reductions are because agents either don't know the real starting price point, or what's more likely... the real estate agent is in a personal cash crunch and will just list at whatever the seller wants to list at.

There is still demand as many people who have the means are paying in cash 1MM-10MM all cash. They are all coming from New England, specifically NY and Connecticut. When you have great policies combined with zero state income tax you will more than likely always be on the high side of demand. 

I've been hearing an RE crash is coming for the last 5 years.... still waiting

Hope that helps

[Peter Mckernan]

Quote from @Nate Armstrong:

Is a massive real estate crash on the horizon? Experts are divided, but what do you think—are there warning signs suggesting caution for potential buyers and investors?

 I remember going to conferences in 2016-2018 and everyone was saying hold your cash there is going to be this huge dip and you can clean up.. Well, I held off from buying those years.... and wish I kept buying :-(.. You need to buy deals that are good in down markets and up markets.. The deals need to make sense, if not walk from those deals.