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?

[Jay Hinrichs]

Quote from @Andrew Syrios:

Quote from @Jay Hinrichs:

Quote from @Marcus Auerbach:

Quote from @Chris Williams:

Quote from @Marcus Auerbach:

Sorry, I am reading a bunch of internet-nonsense here mixed with a few half-true statements that makes them sound semi-realistic. The data does not support a crash.

We do have an absolute inventory shortage in the US of about 3-5 million units (depending on who's research you want to trust: Goldman Sachs, Attom, Altos CoStar etc) because we have underbuilt for 14 straight years following 2008. So we have a net deficit on housing stock that coincided with the millennials changing their mind on renting forever. Now you have the largest generation in their late 30s early 40s buying their first home. It is called household formation. Once they made up their mind to buy, they may delay, but they are not going back to being content renting.

All other points I am reading here have the potential to impact the market to a certain degree, but nothing can produce enough inventory to change the direction (up). A housing stock shortage is not the same as owners not selling due to rate lock. If and when they sell, they have to move somewhere (about 72%, the rest rents, goes into assisted living or moves in with family), so inventory-wise wise it's for the most part a wash.

The only way you can see the supply/demand situation change is if a market (the US or a metro area) loses a significant percentage of the population (like a pandemic or nuclear incident) or we catch up building 3-5 million homes (surplus of normal), with tales the better part of a decade if we can even find the labor. Everything else is just background noise.

And one more point: residential real estate prices are "downward sticky". They share this trait with W2 labor cost. Once a salary is increased it is very hard to bring it down. If the market is not good to sell a house, the majority of homeowners will just not sell and wait for a better time rather than lowering their price.

2008 was very predictable already in 2005. All you have to do and look at inventory and DOM. Until we see 6 month of inventory, 25+% of listings expire without a sale and the average sale taking 150 days or more you don't have the ingredients for a market crash defined as more than a 5% correction.

Will we see corrections like in Austin, where an exuberance of appreciation sorts itself out? Yes, absolutely. But my market Milwaukee has never seen more than 8% appreciation and we are well to trend to hit this again in 2024. And we don't even have much net-migration, our 6 buyers to 1 seller ratio is 90% based on a demographic shift and household-formation.

 Finally someone with sense. No inventory = no crash. 2008 was a flood of supply but no demand that followed which brought prices down. There is massive demand now and no supply due to the setback of 2008 and home builders taking a few steps back. Great points!

TY. You summarized it even better. A great metric to watch and compare markets is MoS or MoI (Months Of Inventory) because it captures both supply and demand.

For example: Austin has currently 5.72 MoS and Milwaukee 1.17 

Also look at Sale/List ratio and median sale price!

Marcus for context.. in 08 Ms. Lori and I went to Miami and we got to fly with one of my fellow cirrus owners.. he was in RE there as well.. at the time Miami had 11 YEARS of inventory :) Mainly condos of course but still 11 YEARS I was in shock.

 11 years! Geez, I saw some nasty gluts in Oregon and KC but nothing like that. Yikes...

Andrew I am certain most of that inventory was condos there were whole brand new high rises were maybe 10 units got sold and then NOthing..  took some years to absorb all those units.

[Andrew Syrios]

Quote from @Jay Hinrichs:

Quote from @Andrew Syrios:

Quote from @Jay Hinrichs:

Quote from @Marcus Auerbach:

Quote from @Chris Williams:

Quote from @Marcus Auerbach:

Sorry, I am reading a bunch of internet-nonsense here mixed with a few half-true statements that makes them sound semi-realistic. The data does not support a crash.

We do have an absolute inventory shortage in the US of about 3-5 million units (depending on who's research you want to trust: Goldman Sachs, Attom, Altos CoStar etc) because we have underbuilt for 14 straight years following 2008. So we have a net deficit on housing stock that coincided with the millennials changing their mind on renting forever. Now you have the largest generation in their late 30s early 40s buying their first home. It is called household formation. Once they made up their mind to buy, they may delay, but they are not going back to being content renting.

All other points I am reading here have the potential to impact the market to a certain degree, but nothing can produce enough inventory to change the direction (up). A housing stock shortage is not the same as owners not selling due to rate lock. If and when they sell, they have to move somewhere (about 72%, the rest rents, goes into assisted living or moves in with family), so inventory-wise wise it's for the most part a wash.

The only way you can see the supply/demand situation change is if a market (the US or a metro area) loses a significant percentage of the population (like a pandemic or nuclear incident) or we catch up building 3-5 million homes (surplus of normal), with tales the better part of a decade if we can even find the labor. Everything else is just background noise.

And one more point: residential real estate prices are "downward sticky". They share this trait with W2 labor cost. Once a salary is increased it is very hard to bring it down. If the market is not good to sell a house, the majority of homeowners will just not sell and wait for a better time rather than lowering their price.

2008 was very predictable already in 2005. All you have to do and look at inventory and DOM. Until we see 6 month of inventory, 25+% of listings expire without a sale and the average sale taking 150 days or more you don't have the ingredients for a market crash defined as more than a 5% correction.

Will we see corrections like in Austin, where an exuberance of appreciation sorts itself out? Yes, absolutely. But my market Milwaukee has never seen more than 8% appreciation and we are well to trend to hit this again in 2024. And we don't even have much net-migration, our 6 buyers to 1 seller ratio is 90% based on a demographic shift and household-formation.

 Finally someone with sense. No inventory = no crash. 2008 was a flood of supply but no demand that followed which brought prices down. There is massive demand now and no supply due to the setback of 2008 and home builders taking a few steps back. Great points!

TY. You summarized it even better. A great metric to watch and compare markets is MoS or MoI (Months Of Inventory) because it captures both supply and demand.

For example: Austin has currently 5.72 MoS and Milwaukee 1.17 

Also look at Sale/List ratio and median sale price!

Marcus for context.. in 08 Ms. Lori and I went to Miami and we got to fly with one of my fellow cirrus owners.. he was in RE there as well.. at the time Miami had 11 YEARS of inventory :) Mainly condos of course but still 11 YEARS I was in shock.

 11 years! Geez, I saw some nasty gluts in Oregon and KC but nothing like that. Yikes...

Andrew I am certain most of that inventory was condos there were whole brand new high rises were maybe 10 units got sold and then NOthing..  took some years to absorb all those units.

Oh those condos were brutal. I had a friend who bought one in Phoenix in around 2006... yeah. I think the price it could have sold for was less than half of what he bought it for. That one ended up going back to the bank.

[Robert Ellis]

Quote from @Jay Hinrichs:

Quote from @Marcus Auerbach:

Quote from @Chris Williams:

Quote from @Marcus Auerbach:

Sorry, I am reading a bunch of internet-nonsense here mixed with a few half-true statements that makes them sound semi-realistic. The data does not support a crash.

We do have an absolute inventory shortage in the US of about 3-5 million units (depending on who's research you want to trust: Goldman Sachs, Attom, Altos CoStar etc) because we have underbuilt for 14 straight years following 2008. So we have a net deficit on housing stock that coincided with the millennials changing their mind on renting forever. Now you have the largest generation in their late 30s early 40s buying their first home. It is called household formation. Once they made up their mind to buy, they may delay, but they are not going back to being content renting.

All other points I am reading here have the potential to impact the market to a certain degree, but nothing can produce enough inventory to change the direction (up). A housing stock shortage is not the same as owners not selling due to rate lock. If and when they sell, they have to move somewhere (about 72%, the rest rents, goes into assisted living or moves in with family), so inventory-wise wise it's for the most part a wash.

The only way you can see the supply/demand situation change is if a market (the US or a metro area) loses a significant percentage of the population (like a pandemic or nuclear incident) or we catch up building 3-5 million homes (surplus of normal), with tales the better part of a decade if we can even find the labor. Everything else is just background noise.

And one more point: residential real estate prices are "downward sticky". They share this trait with W2 labor cost. Once a salary is increased it is very hard to bring it down. If the market is not good to sell a house, the majority of homeowners will just not sell and wait for a better time rather than lowering their price.

2008 was very predictable already in 2005. All you have to do and look at inventory and DOM. Until we see 6 month of inventory, 25+% of listings expire without a sale and the average sale taking 150 days or more you don't have the ingredients for a market crash defined as more than a 5% correction.

Will we see corrections like in Austin, where an exuberance of appreciation sorts itself out? Yes, absolutely. But my market Milwaukee has never seen more than 8% appreciation and we are well to trend to hit this again in 2024. And we don't even have much net-migration, our 6 buyers to 1 seller ratio is 90% based on a demographic shift and household-formation.

 Finally someone with sense. No inventory = no crash. 2008 was a flood of supply but no demand that followed which brought prices down. There is massive demand now and no supply due to the setback of 2008 and home builders taking a few steps back. Great points!

TY. You summarized it even better. A great metric to watch and compare markets is MoS or MoI (Months Of Inventory) because it captures both supply and demand.

For example: Austin has currently 5.72 MoS and Milwaukee 1.17 

Also look at Sale/List ratio and median sale price!

Marcus for context.. in 08 Ms. Lori and I went to Miami and we got to fly with one of my fellow cirrus owners.. he was in RE there as well.. at the time Miami had 11 YEARS of inventory :) Mainly condos of course but still 11 YEARS I was in shock.

 12 straight years of appreciation now in miami 

[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.

[Cody Roberts]

yes

[Paul Duran]

49% of homes are owned free and clear with no mortgage attached to them. Plus there is less than 760k homes for sale in the U.S. which clearly means there is a supply shortage. There will not be a crash anytime soon. And since builders are not currently incentivized to build given the high cost and low margins, that will keep prices stable and demand high once rates begin to drop in 2026. All we are seeing is mini corrections in over heated markets like Austin, Orlando etc. 

[James Hamling]

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?

My chief economics analyst seems to be having some technical difficulties today....

[Nicholas L.]

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

[Jacopo Iasiello]

I always hear about this 

[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. 

[Alan F.]

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 wonder though, was that mini recession really enough?

[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.  

[Alan F.]

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.  

 As a gear head love your analogies! BTW its N2o lol.

Could you imagine, Americans! Austerity! Bwhaha 

[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. 

[V.G Jason]

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?

 Sure-- I think assets take a hit a bit after the first rate cut.

[James Hamling]

Quote from @V.G Jason:

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?

 Sure-- I think assets take a hit a bit after the first rate cut.

Take a "hit".... After first rate cut.... I am confused. 

So your thinking when they raise everyone's credit card limit, that people will spend LESS....

[Cody Roberts]

Bankruptcies have surged by 17%, if the trend continues, it could mean recession. While I acknowledge the current housing shortage, an economic downturn with rising unemployment could mean people can't afford homes, driving down prices. The memory of the 2008 housing crisis still lingers, but I don't foresee a repeat of that situation. A recession is part of the economic cycle, and as many have on here have said, be prepared to scoop up some great deals.

[James Hamling]

Quote from @Cody Roberts:

Bankruptcies have surged by 17%, if the trend continues, it could mean recession. While I acknowledge the current housing shortage, an economic downturn with rising unemployment could mean people can't afford homes, driving down prices. The memory of the 2008 housing crisis still lingers, but I don't foresee a repeat of that situation. A recession is part of the economic cycle, and as many have on here have said, be prepared to scoop up some great deals.

[Michael Dickerson]

I have been watching the market for sometime bought a couple to hold. but what I’ve noticed on the low income, fixer uppers the prices have doubled in the last year

[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. 

[V.G Jason]

Quote from @James Hamling:

Quote from @V.G Jason:

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?

 Sure-- I think assets take a hit a bit after the first rate cut.

Take a "hit".... After first rate cut.... I am confused. 

So your thinking when they raise everyone's credit card limit, that people will spend LESS....

 A bit after the first rate cut. Let the euphoria jump after the first rate cut, cause a bit of a spending spree. Then down from there. Yes, I believe that. Markets price in what they expect to happen, it doesn't mean it will. A 25bps cut will not yield more lending, infact by then lending will be under scrutiny. Small high after rate cut, harsh hit after. No recession, just correction.

Very different view, but that's what I am standing on. Too many people kicking the can down the road anticipating a rate cut while getting tighter on their balances. When the rate cut comes, they'll gain a bit of breathing room temporarily just not sustainable. I'm talking more equities, than real estate for what it's worth. Assets in general. 

[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.

[V.G Jason]

Quote from @Michael Dickerson:

I have been watching the market for sometime bought a couple to hold. but what I’ve noticed on the low income, fixer uppers the prices have doubled in the last year

That's one way to put it. Your dollar has gotten less valuable. The floor has moved up, and in certain sectors like real estate the shortage & scarcity play will keep it propped up. Create more land or remove population, that's the only tangible long-term solution. Building more has a cap too.

[Andrew Syrios]

Quote from @Alan F.:

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 wonder though, was that mini recession really enough?

Perhaps not for the economy on the whole, especially with the insane amounts of debt being racked up, but real estate prices have effectively depreciated for about 2 years given even when RE prices were going up, inflation was higher so while the nominal prices have increased, real prices have (or at least had, I haven't looked for a while) declined since their peak. 

[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).