All Forum Posts by: Dylan Mathias

@Omar Khan

I do not think it will be as bad as 2008. I am also not saying anyone should try and time of predict the market. I am in a situation where I just graduated from college with a finance degree. I worked full time throughout college so I didn't have student loans and was fortunate enough to land a job at a fortune 500 company in my second year of college so I actually came out of college with a good amount of money in the bank. I worked during the day and went to school at night. 

I just turned 24 and have some money but cannot find a deal that can cash flow in my area. There was an average 2 bedroom 2 bath house that just sold in my town for 800K. People are buying over asking price or at asking price and anything that comes on the market is quickly bought up. 

It seems like my only option to even find a decent deal is to go out of state and I personally do not believe that is the best idea for my first investment. 

What would you said someone in my situation should do?

@Daniel Lehman

Daniel i think you are correct. They are more strict on giving out loan and how they are qualifying people. I think you are right though. I don't think housing prices will decrease as much as they did but demand will increase.  It is really hard to say because there are so many factors that can swing something one way or another. 

With that being said 2008 was cause by real estate and faulty collateralized loans. I do not believe the next recession will be caused by the same fundamentals. I believe the next recession will be cause by some other fundamental in the economy, say personal debt and that will have a domino effect on the real estate industry because everything is so tied together. 

On a side note I just left Qualcomm in San Diego and am currently working for them remotely from NorCal. Lived in San Diego for 3 years and absolutely love it there. Carlsbad is one of the best places to be!

@Caroline Widjaja

You got in at the perfect time and congrats on accomplishing that! My brother was old enough to get into the market doing an auction deal in 2009-2010 and did extremely well too. 

@Jay Hinrichs

Jay I totally agree with you and I think you bring great inside and knowledge to these forums. THANK YOU!!!. I also think it depends on many factors (age, risk tolerance, where in the economic cycle etc.). For example for myself if there were great opportunities in the market like 2009 and after I would be much more inclined to leverage myself out investing in good areas. Once I get older I would not be as risky as well as in times like these, I would be weary about over leveraging. 

@Caleb Heimsoth

Yeah I agree with you. No one can predict the market. The point I am trying to wrestle with is I want to get into real estate but in the Bay Area, CA you are dealing with extremely high prices. Sonoma county is around 690K for medium housing price and San Francisco which is around 1.6  million for a medium price house. 

For me personally I worked all throughout college and was able to save up money. I am 24 with no student loans, a decent amount saved up for my age and an okay grasp on the real estate industry. 

What I am having a hard time with is if I jump in right now and there is a 40% correction I will have extended myself to get such a high priced house right now I will not be able to take advantage of the correction. On the other hand if there is no correction and prices keep going up I am just in a worse spot. 

Just trying to get an idea of what people are thinking because it is a hard decision on what to do. 

Hi Tami, 

I agree times like 2008 is devastating for people but i might be a hard *** when saying this but you can't fix stupid. When you have people buying million dollar single family homes on an average salary it just makes me not feel as bad when they loose the house if things hit the fan. I feel for these people but when you try and educate them and they don't care to learn it is harder to feel sorry for them when they loose their home similar to 2008 ect. 

@John M.

I couldn't agree with you more with all that you said. Since it is impossible to time the market it is important to do your best to set yourself up for success and not failure. I think most people can agree that their is a greater probability to the downside then upside but currently in the stock market I am slowly moving my funds to more conservative investments. I am 24 and just got out of college so I have not jumped into the real estate market yet but if I was I would probably be putting  more capital into the equity of my houses instead of getting more leveraged unless I came across a good deal. 

That is just me though. Every persons situation is different depending on who they are as a person and their current situation. Personally I would rather be more conservative and grow my wealth over the long haul rather then do the get rich quick which I think is more based on luck and gambling. 

I am a little worried about where we are and do think their will be a big correction it is just a matter of when. I am just doing what I can to help mitigate against the downside. 

@Karl B.

I really like your response. I didn't even mention not only our national debt but our countries consumer debt. It is a huge problem and its scary more people are not worried about it. 

I really like your thoughts behind people wanting to get a piece of the action. It reminds me of bitcoin when people wanted to get in way to late because it was jumping 600% a week and then all my friends who did it after me warning them lost their pants when it halved overnight. 

@Jay Hinrichs

With the banking system tide so closely with corporations  and real estate don't you think they will go hand in hand? I don't think we will get something like 2008 again but it could be a good size downturn. I don't know if these numbers are 100% accurate but I heard the other day in Sonoma County CA that a household needs to make a combined 175K a year to afford living and a mortgage in our county and that only 4% of people meet that criteria. 

Hi All, 

Wanted to start a discussion on peoples outlook on the real estate market and the economy in general. I know it is a controversial topic but I have not seen many discussions on BiggerPocket on this topic and I believe they are important conversations to have. 

Here are my general thoughts on the topic. 

Economies always go through cycles and we are coming up on the longest bull market era in history. If history is any indication of the future their have always been corrections or crashes every 8-10 years. 

Data

1. Interest rates are rising and the yield curve is flattening a tell tale sign of future growth expectations are declining

2. Corporations are turning to stock buybacks because they cannot find internal or M&A returns that can get a high enough return. Once buybacks are done will corporations begin to "restructure" or contract leading to layoffs and the downward spiral of layoff, people not buying as many goods and services leading to more layoffs. 

3. Inflation is another worry when prices begin to increase at a higher rate after almost a century of 2% inflation people are going to be inclined to buy less leading to the ugly spiral as well. 

4. In the stock market is extremely over prices with PE ratios being the highest they have ever been.

5. Housing prices especially in California have increase much more rapidly then wage increases and I do not see this as a sustainable recipe.

There are many other factors and coming from an analytical background i know there are ways to spin the numbers to make it look any way you want. 

I cannot time the market and nor do I think anyone can but I am writing this post to get others perspectives about where we are and what they think of the future outlook of the economy. With the ways things are, my guess is there will be at least a big correction in 2019 or 2020 but I could be way off as well. 

I would like to get peoples opinions on both sides. I am not someone stuck in my ways and truly believe that debating with someone that has complete opposite views is the best way to learn in life.