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?

[Jason Rash]

Quote from @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. 

 FACTS 

[Jaden Jung]

So since markets are hyperlocal, it would be helpful to separate the "crash" from local market corrections.

As for the macroeconomic "crash", as long as institutional investor ownership is involved, the market will be mostly stable. They are conservative in their acquisitions and carry little to no risk, and are well-funded to protect their downsides. For more info here, look into market stabilization after '09 with the advent of institutional investors. While banks and lenders caused the widespread crash, these real estate institutions also stabilized prices. I'm not advocating anything here, I'm just stating as they are.

As to the hyperlocal market correction, this will have to happen. High inflation, wages not keeping up, supply slowly rising, demand slowly falling, rates pending for a controlled easing... these factors point to a correction but nowhere near the depth / breadth of '08.

NAR ruling is also another factor (though many agents will disagree) that will take much longer to see its effects but is pending for some housing adjustments. I wouldn't count on this in the near-term, however, to force a housing correction.

Not sure what you do with this information - if you're looking to buy or just curious - but hope this helps!

[Jay Hsu]

Quote from @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

 Thanks for the SF insights! Dropping some data I have been looking at as well which I'm sure everyone is aware of.

What do you think this will do to BRRRR or turn key long term renting for cashflow? Are rentals also suffering and having to lower rents?

[Dave Hagen]

Quote from @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... ;)

I forgot to include that government spending is propping up the economy. Like when they were dumping money in the market to prop it up, they are spending money on infrastructure and climate change projects, adding government jobs and other spending. This is to inflate GDP, which is promoted as the economy growing, even though inflation is causing more money to be spent. They are only getting an estimated 40-60 cents for every dollar they spend. This is unsustainable, as the debt is past any reasonable limit.

With GDP, inflation, and unemployment all being heavily manipulated, they can't be used to justify a healthy economy. 2008 showed the problem with pushing mortgages onto people who couldn't afford them and weren't financially literate, but it was the inflation that caused many to choose food and other expenses over home payment. Not all the foreclosures and bankruptcies were sub-prime mortgages.

And the inflation started in 2006 with gas prices rising, just like in 2021, with gas prices rising, and driving up inflation on everything with increased transportation costs.

The price of cars and trucks is skyrocketing, because car manufacturers are losing money on EVs and raising prices on gas and diesel powered vehicles to make up the difference. They are intentionally raising gas prices and forcing higher CAFE efficiency ratings to force everyone into EVs. And the electrical infrastructure can't handle it. They just doubled the MPG rating for pickup trucks.

And if the dollar isn't the reserve currency, look out.

I don't know what the future will bring. These are just some of the points that cause many to question the future. I understand real estate investors discussing supply and demand, interest rates, bankruptcies, foreclosures, and regulations, but there are so many other things that can affect the future, and I've only tried to touch on what many other investors have been discussing.

[Paul Azad]

Quote from @Pradeep Patel:

Don’t time the market! Buy it when you are ready. Who cares if it’s going to crash or not if you are going to rent it out&or live in it?

 Who cares? many Americans who bought in 2006 were negative equity until 2022, and that was from a moderate 34% pullback in U.S. residential from GFC, the Price you pay affects the Value you get.

[Paul Azad]

Quote from @Dave Hagen:

Quote from @Dave Hagen:

I forgot to include that government spending is propping up the economy.


What Can the US government do, But keep spending to prop up the economy and to keep our military strong and our number one status in the global financial system. Dave, to quote your father, Tom Hagen, Consiglieri to the Corleone family. "with the money they earn, They can buy more Police and political power".  (watch first 30 seconds)  This line is the Real Politik that defines any Nation State

Scene from Godfather One with Tom Hagen and Vito Corleone and Santino discussing business. - Google Search

    Government spending Is definitely propping up the US economy, and the real estate market for now, too. But that's precisely what got us out of the great financial crisis and why the US economy has boomed over the last 15 years compared with Europe and Asia. Sometimes you've got to spend money to make money.          
   America is only 4% of the global population, and yet represents 26% of global GDP, and the US Dollar over 92% of all international financial transactions. I believe this success is due to three reasons.
Number one : rule of law. No country treats every plaintiff and defendant with as much fairness and judicial process as the United States does, and no one is above the Law. 
Number two : One life, One vote. No country endeavors to allow every man and woman, even many convicted felons the right to have an equal vote to the wealthiest person in the country.
Number three : Freedom of speech and conscience. This is essential to make the other two legitimate and real.
All three combined are the three pillars that hold up American civilization and are its true underlying power and greatness. And what gives us a competitive edge over almost everyone else.
    Even a taxicab driver who speaks 3 languages in Mauritius could have his money confiscated, any business he slowly built seized by the government, be arrested for political speech, or his family threatened for his not voting a certain way. 
Europe is a nursing home where Dreams can't be remembered any longer, China is a prison where Dreams are beaten and jailed (Jack MA), and India an abattoir where Dreams are veiled behind colorful silks then slaughtered by crony capitalism. 
America always remains, its greatness rests upon these 3 pillars, a chance for anyone to come here and Dream, Dream away
(sorry, but after the shooting last night, I felt a little Rah, Rah Murika! today, even as an ACLU card carrying, bed wetting liberal, that saddened and angered me last night. We need to persuade each other of our ideas, then vote in fair elections, then Dream our Dreams like Americans always have!)

[Theresa Harris]

Quote from @Dave Hagen:

Quote from @Dave Hagen:

Market timing is a losing proposition. Especially in real estate investing....

Demand/Population - Younger people are waiting to start families, not having kids, and generally not the same trends as prior generations....
...
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".

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. ...

The price of cars and trucks is skyrocketing, because car manufacturers are losing money on EVs and raising prices on gas and diesel powered vehicles to make up the difference. They are intentionally raising gas prices and forcing higher CAFE efficiency ratings to force everyone into EVs. And the electrical infrastructure can't handle it. They just doubled the MPG rating for pickup trucks.

...

 I deleted a bunch of text to mention I agree with most of your points.  I agree with AI especially as people seem to take everything they read as fact even when it is clearly wrong.

With vehicles-I'm in Canada-I think part of the increased cost is associated with more bells and whistles and people buying larger vehicles. I just bought a new car (my first ever and only my second car).  The car it replaced was the same car and the cost was about $2K more than what the first one cost 19 years ago (and it was 2 years old when I bought it).

Demand for housing in Canada is up due to several reasons-lots of single people living on their own, more recently (last 5ish years) massive immigration (at an unsustainable level) and the low interest rates we had for about a decade that basically made borrowing free and then drove up house prices.

Canada is different than the US in some ways, but similar and I have no idea what the market will do. I do know there is no point worrying about something that is out of our control other than making sure you aren't over extended and if you have places you are thinking if selling in the next year or two-try to keep an eye out.

[Dave Hagen]

Quote from @Paul Azad:

Quote from @Dave Hagen:

Quote from @Dave Hagen:

I forgot to include that government spending is propping up the economy.


What Can the US government do, But keep spending to prop up the economy and to keep our military strong and our number one status in the global financial system. Dave, to quote your father, Tom Hagen, Consiglieri to the Corleone family. "with the money they earn, They can buy more Police and political power".  (watch first 30 seconds)  This line is the Real Politik that defines any Nation State

Scene from Godfather One with Tom Hagen and Vito Corleone and Santino discussing business. - Google Search

    Government spending Is definitely propping up the US economy, and the real estate market for now, too. But that's precisely what got us out of the great financial crisis and why the US economy has boomed over the last 15 years compared with Europe and Asia. Sometimes you've got to spend money to make money.          
   America is only 4% of the global population, and yet represents 26% of global GDP, and the US Dollar over 92% of all international financial transactions. I believe this success is due to three reasons.
Number one : rule of law. No country treats every plaintiff and defendant with as much fairness and judicial process as the United States does, and no one is above the Law. 
Number two : One life, One vote. No country endeavors to allow every man and woman, even many convicted felons the right to have an equal vote to the wealthiest person in the country.
Number three : Freedom of speech and conscience. This is essential to make the other two legitimate and real.
All three combined are the three pillars that hold up American civilization and are its true underlying power and greatness. And what gives us a competitive edge over almost everyone else.
    Even a taxicab driver who speaks 3 languages in Mauritius could have his money confiscated, any business he slowly built seized by the government, be arrested for political speech, or his family threatened for his not voting a certain way. 
Europe is a nursing home where Dreams can't be remembered any longer, China is a prison where Dreams are beaten and jailed (Jack MA), and India an abattoir where Dreams are veiled behind colorful silks then slaughtered by crony capitalism. 
America always remains, its greatness rests upon these 3 pillars, a chance for anyone to come here and Dream, Dream away
(sorry, but after the shooting last night, I felt a little Rah, Rah Murika! today, even as an ACLU card carrying, bed wetting liberal, that saddened and angered me last night. We need to persuade each other of our ideas, then vote in fair elections, then Dream our Dreams like Americans always have!)

Sometimes spending can help. But when debt is already unsustainable, it doesn't help that we aren't even getting great results. The GDP increase is largely from inflation. And people are changing their buying habits, buying generic brands instead of name brand food, stopping subscriptions to streaming services, and other cut backs not indicated by a growing GDP. Covering up a bad economy might help politically, but is just putting off the coming reset. The only thing that can offset that is to have an economy taking off. Raising interest rates causes an economy to pull back. Raising taxes results in less money for people to spend. If they were doing things to grow the economy, that would be great, but all they seem to be doing is trying to manipulate numbers to pretend the economy is great. And good luck with the debt. We long ago passed the point where we can even just pay interest on the debt if it ever got to 80s interest levels of 15% on government debt and 20% on mortgages.

[Dave Hagen]

Quote from @Theresa Harris:

Quote from @Dave Hagen:

Quote from @Dave Hagen:

Market timing is a losing proposition. Especially in real estate investing....

Demand/Population - Younger people are waiting to start families, not having kids, and generally not the same trends as prior generations....
...
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".

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. ...

The price of cars and trucks is skyrocketing, because car manufacturers are losing money on EVs and raising prices on gas and diesel powered vehicles to make up the difference. They are intentionally raising gas prices and forcing higher CAFE efficiency ratings to force everyone into EVs. And the electrical infrastructure can't handle it. They just doubled the MPG rating for pickup trucks.

...

 I deleted a bunch of text to mention I agree with most of your points.  I agree with AI especially as people seem to take everything they read as fact even when it is clearly wrong.

With vehicles-I'm in Canada-I think part of the increased cost is associated with more bells and whistles and people buying larger vehicles. I just bought a new car (my first ever and only my second car).  The car it replaced was the same car and the cost was about $2K more than what the first one cost 19 years ago (and it was 2 years old when I bought it).

Demand for housing in Canada is up due to several reasons-lots of single people living on their own, more recently (last 5ish years) massive immigration (at an unsustainable level) and the low interest rates we had for about a decade that basically made borrowing free and then drove up house prices.

Canada is different than the US in some ways, but similar and I have no idea what the market will do. I do know there is no point worrying about something that is out of our control other than making sure you aren't over extended and if you have places you are thinking if selling in the next year or two-try to keep an eye out.

I've leased cars where after 3 years it had lost almost 50% of it's new price. Your 2 year old car could have been around 65% of original price, depending on how hard you bargained. Tariffs, taxes, demand and now the push for EVs also play a part in prices. Lately there has been a glut of cars, because interest rate increases causing people to hold onto their cars longer. Dealers are also paying higher interest on cars in their lot. Hopefully you got a salesman that was desperate to sell a car. I don't know about their EV mandates in Canada. I hope you aren't being pushed into EVs that won't work in winter. Here in the U.S. the losses on EVs are being supported by raising the price on gas cars. And they've had "Cash for Clunkers", that took out a lot of cars that were available for much cheaper prices. Their push here is that nobody owns a car, and everybody uses public transportation.

Rent here is going up in part due to raising interest rates, the Covid ban on evictions, where people stopped paying, more single people, not starting families, and the unreasonable demand that young people seem to have to own a large house, just like their parents had, not realizing that many started in smaller houses. Large houses are a recent change, and they are willing to offer over asking to beat out other buyers. I've actually seen them blaming baby boomers for jacking up the prices, without realizing that their increased demand at any cost is what is causing the rising prices.

Having plans in place is always good business, including alternatives to just selling. No point stressing, but knowing your options in advance can bring peace of mind. Rent to own, or other solutions are good to consider, and selling isn't the only answer. Some say 1/3 of potential buyers don't qualify for normal mortgages. They have money, but their credit score is in the toilet. Many have no idea how their credit affects them.

[Alan Asriants]

There's been a crash coming since 2012. 

Pretty sure people thought the world was going to end then too.

Buy long term. Buy smart. You should be happy

[Theresa Harris]

Quote from @Dave Hagen:

Quote from @Theresa Harris:

Quote from @Dave Hagen:

Quote from @Dave Hagen:

Market timing is a losing proposition. Especially in real estate investing....

Demand/Population - Younger people are waiting to start families, not having kids, and generally not the same trends as prior generations....
...
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".

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. ...

The price of cars and trucks is skyrocketing, because car manufacturers are losing money on EVs and raising prices on gas and diesel powered vehicles to make up the difference. They are intentionally raising gas prices and forcing higher CAFE efficiency ratings to force everyone into EVs. And the electrical infrastructure can't handle it. They just doubled the MPG rating for pickup trucks.

...

 I deleted a bunch of text to mention I agree with most of your points.  I agree with AI especially as people seem to take everything they read as fact even when it is clearly wrong.

With vehicles-I'm in Canada-I think part of the increased cost is associated with more bells and whistles and people buying larger vehicles. I just bought a new car (my first ever and only my second car).  The car it replaced was the same car and the cost was about $2K more than what the first one cost 19 years ago (and it was 2 years old when I bought it).

Demand for housing in Canada is up due to several reasons-lots of single people living on their own, more recently (last 5ish years) massive immigration (at an unsustainable level) and the low interest rates we had for about a decade that basically made borrowing free and then drove up house prices.

Canada is different than the US in some ways, but similar and I have no idea what the market will do. I do know there is no point worrying about something that is out of our control other than making sure you aren't over extended and if you have places you are thinking if selling in the next year or two-try to keep an eye out.

I've leased cars where after 3 years it had lost almost 50% of it's new price. Your 2 year old car could have been around 65% of original price, depending on how hard you bargained. Tariffs, taxes, demand and now the push for EVs also play a part in prices. Lately there has been a glut of cars, because interest rate increases causing people to hold onto their cars longer. Dealers are also paying higher interest on cars in their lot. Hopefully you got a salesman that was desperate to sell a car. I don't know about their EV mandates in Canada. I hope you aren't being pushed into EVs that won't work in winter. Here in the U.S. the losses on EVs are being supported by raising the price on gas cars. And they've had "Cash for Clunkers", that took out a lot of cars that were available for much cheaper prices. Their push here is that nobody owns a car, and everybody uses public transportation.

Rent here is going up in part due to raising interest rates, the Covid ban on evictions, where people stopped paying, more single people, not starting families, and the unreasonable demand that young people seem to have to own a large house, just like their parents had, not realizing that many started in smaller houses. Large houses are a recent change, and they are willing to offer over asking to beat out other buyers. I've actually seen them blaming baby boomers for jacking up the prices, without realizing that their increased demand at any cost is what is causing the rising prices.

Having plans in place is always good business, including alternatives to just selling. No point stressing, but knowing your options in advance can bring peace of mind. Rent to own, or other solutions are good to consider, and selling isn't the only answer. Some say 1/3 of potential buyers don't qualify for normal mortgages. They have money, but their credit score is in the toilet. Many have no idea how their credit affects them.

 Both cars are Toyotas, so they retain their values.  Yes our prime minister is trying to push EV, but they aren't realistic at that scale in Canada due to the weather, lack of infrastructure and distances between cities.  Fine if people (not me) want to drive them in town, but we have issues from time to time with the electric grid keeping up in extreme temps, I can't imagine if we had a bunch of people also trying to charge their EVs.

We've had a shortage of cars (I use that term to refer to any vehicle) and only now are some dealerships getting inventory of new cars.  The price of used vehicles is still nuts-What I paid for a new one was a little bit less (~$100-500) LESS than a 1-2 year old one-same make, model, level of trim.  So I waited a few months for a new one to arrive (because they have none on the lots).

[Mark H. Porter]

This is just the type of question being answered that brings BiggerPockets I to a gossip column instead of a truly valuable medium.

[Robert Ellis]

Quote from @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.

 don't even get me started on average age of building, net migrations, diversity of industries, to compare Detroit to Miami is insane Detroit is about as bad as it gets. I met a guy at BP con last year who is a doctor in Detroit who doesn't invest there lol. good that someone local cares about Detroit for once

[V.G Jason]

10 year treasury has moved up about 10% since the fed cut rates. Employment number was huge, and inflation rose. Looks like the September did exactly the opposite from what the Fed was thinking.

Nov rate cuts stand as 87% .25bp, 13% unch. Curious how this develops until election time.

I think the Fed needs to let some bleeding happen, it's the only true way to tame the inflation:unemployment gap. The fed needs to learn you can have it all, just not all at once. The reality is unemployment will be easier to manage than inflation, so unless they shift their focus this may get rippy. I think the focus will change a bit, and we'll see higher for longer than expected as of today(10/10/2024). I think still am awaiting on this election but I think net assets dip, even after this little hurrah since the election. 

The upwards projection of major indices is sub 10% on a technical basis, that's more bearish than most expected with a .5bps cut.

[Marcus Auerbach]

I was thinking the same, but I was wondering if this is already the effect of the rate cut, but probably that's too short and it is just the expectation of a rate cut that has been out there all summer, that has caused the effect. 

I don't think we will see any more cuts before spring. and I can see the 10yT going to 4.50% again before turning, which means mortgage rates in the upper 6s

[James Hamling]

Anyone who's predicting a crash, i say prove to me that's your REAL thought's, show me what your selling. 

Or, better yet, sell me everything. I will take an option on your entire portfolio. 

If you really think a "crash" is imminent, you'd view me as free-$. 

I will give a fair-$ Purchase Option on anything/everything housing. SFR, MFH, you name it.

[Marcus Auerbach]

Quote from @James Hamling:

Anyone who's predicting a crash, i say prove to me that's your REAL thought's, show me what your selling. 

Or, better yet, sell me everything. I will take an option on your entire portfolio. 

If you really think a "crash" is imminent, you'd view me as free-$. 

I will give a fair-$ Purchase Option on anything/everything housing. SFR, MFH, you name it.

You are right of course, I think we have moved on from predicting a crash here.. 

From what it looks like, spring market will be nuts again, at least in Milwaukee. Even more so if rates drop just below 6%, which is currently industry consensus.

But that may not be true for all markets. If I were a betting man, I'd say there is a good change that the Midwest will outperform FL next year. Inventory is already sky high there, insurance hard to get /afford and now there is a recent disaster concern on top of all that..  But on the other hand real estate trends change so slowly, especially migration trends.

[James Hamling]

Quote from @Marcus Auerbach:

Quote from @James Hamling:

Anyone who's predicting a crash, i say prove to me that's your REAL thought's, show me what your selling. 

Or, better yet, sell me everything. I will take an option on your entire portfolio. 

If you really think a "crash" is imminent, you'd view me as free-$. 

I will give a fair-$ Purchase Option on anything/everything housing. SFR, MFH, you name it.

You are right of course, I think we have moved on from predicting a crash here.. 

From what it looks like, spring market will be nuts again, at least in Milwaukee. Even more so if rates drop just below 6%, which is currently industry consensus.

But that may not be true for all markets. If I were a betting man, I'd say there is a good change that the Midwest will outperform FL next year. Inventory is already sky high there, insurance hard to get /afford and now there is a recent disaster concern on top of all that..  But on the other hand real estate trends change so slowly, especially migration trends.

I agree in large part. 

I think the "race too TX / FL / Etc." has lost a lot of it's steam. Not saying stopped, just stepped down from the all but panicked fevered race it once was. 

And with that, those market prices will be stepping back to basis more-so held by local market fundamentals than OOS $ flocking in using other-market perceptual value and in-market ignorance of value basis for pricing. 

In market persons are far less apt to "over pay' than out state relocating persons who have to rely on trust that a purchase price is "fair". 

Although I think if mortgage rates just hold in 6% area, and volatility subsides that alone is enough for a rally. Volatility, election chaos, that is #1 factor I see holding things back, not interest rates anymore. 

[Nicholas L.]

@Marcus Auerbach

100%.  I just read a WSJ article about Tampa, and homeowners there are frustrated because they can't sell their houses... for 5-10% more than they paid for them 1-3 years ago.

[Jay Hinrichs]

Quote from @James Hamling:

Quote from @Marcus Auerbach:

Quote from @James Hamling:

Anyone who's predicting a crash, i say prove to me that's your REAL thought's, show me what your selling. 

Or, better yet, sell me everything. I will take an option on your entire portfolio. 

If you really think a "crash" is imminent, you'd view me as free-$. 

I will give a fair-$ Purchase Option on anything/everything housing. SFR, MFH, you name it.

You are right of course, I think we have moved on from predicting a crash here.. 

From what it looks like, spring market will be nuts again, at least in Milwaukee. Even more so if rates drop just below 6%, which is currently industry consensus.

But that may not be true for all markets. If I were a betting man, I'd say there is a good change that the Midwest will outperform FL next year. Inventory is already sky high there, insurance hard to get /afford and now there is a recent disaster concern on top of all that..  But on the other hand real estate trends change so slowly, especially migration trends.

I agree in large part. 

I think the "race too TX / FL / Etc." has lost a lot of it's steam. Not saying stopped, just stepped down from the all but panicked fevered race it once was. 

And with that, those market prices will be stepping back to basis more-so held by local market fundamentals than OOS $ flocking in using other-market perceptual value and in-market ignorance of value basis for pricing. 

In market persons are far less apt to "over pay' than out state relocating persons who have to rely on trust that a purchase price is "fair". 

Although I think if mortgage rates just hold in 6% area, and volatility subsides that alone is enough for a rally. Volatility, election chaos, that is #1 factor I see holding things back, not interest rates anymore. 

Jim one of your better posts.. you hit the nail on the head on OOS investors compared to locals.  I think FLA will still continue to see growth because of TAX's and weather along with available land . And TX for jobs I guess some folks like the weather in Texas not my cup of tea though.

[Marcus Auerbach]

Quote from @Nicholas L.:

@Marcus Auerbach

100%.  I just read a WSJ article about Tampa, and homeowners there are frustrated because they can't sell their houses... for 5-10% more than they paid for them 1-3 years ago.

This could create a self-increasing dynamic. When buyers see a lot of inventory and many months on market, it empowers them to negotiate more, this lowers prices, which in turn lowers comps, which prompts more sellers to sell out of concern, discourages buyer to make that "investment", causing more inventory and encourages the remaining buyers to offer "ahead of" where the market is going, which is anticipated even lower...

I have always said, once the first row of houses is washed into the ocean, watch how quickly the for sale signs pop up in the second row. And who wants to buy there now - which is now first row?

[Jorge Vazquez]

Hey Nate, as a broker who's completed over 3,500 transactions and managed 30 of my own properties alongside 300 rentals, I can tell you a crash in 2025 isn’t likely. The fundamentals are strong—stricter lending, low housing inventory, and upcoming rate cuts. Inflation is being tamed, and the Feds will likely lower rates further to manage the debt ceiling and keep long-term payments sustainable. Add to that, it’s an election year, and federal and private funding are pouring billions into new infrastructure, keeping every general contractor and builder busy with jobs. This combination points to stability, not a crash.

Florida's population growth and strong job market keep demand high, especially in places like South Florida. Even if prices cool a bit, that’s normal. The luxury market in Miami and Palm Beach adds extra stability. My only concern is the short-term rental market, where there’s a slight oversupply, but aside from that, everything else is on solid footing. With insurance rates stabilizing due to legal reforms, I just don’t see a crash happening anytime soon.