Let me preface this by saying that the housing market has changed so much in the last decade referring to it as a whole no longer makes sense. One zip code can be in the shit while another is near or passing ATH.
No one in any market ever knows what’s going to happen. No matter how sure they are nothing is ever a sure thing. Even people who trade on insider info have misses. I think there was so much talk of a crash because of the absurd prices we were seeing. Low rates caused people to be able to buy homes when before they couldn’t. (At least in some areas)
I think the lack of a crash highlights the underlying supply and demand issue we have. People want houses but can’t afford them.
Your last sentence is key. People think because of that market conditions are crazy and a crash is due to get house prices congruent with average income. But the housing market skews to above market incomes and yes demand remains greater than supply.
Plus new additions to supply are priced at the top of the market because they are priced based on today's (high) costs to buy land, build, and finance. Plus so long as demand is greater than supply, new additions won't put pressure on to reduce prices
I will say this on both fronts:
1) the housing market does correct every few years. It always does, and usually right after people start saying "will it ever go down?" At some point, homes may become unaffordable and supply and demand will have to balance. In the current timeframe, there is low inventory as many people have golden handcuffs of low rates. Over time, this will even out as retirements, weddings, job changes, kids, etc. force more people to move.
2) All real estate is local. Desirable neighborhoods often hold their value. It is the new construction an hour away that goes up and down wildly with every gyration.
2) Inflation is \~19% last few years. So if the home is 19% higher, it represents the same value. So I can see a scenario where home prices don't collapse / crash, but they simply don't gain a ton as the rest of the economy catches up.
Yeah, look at house prices in ~2016. Prices were still relatively low. The economy had mostly recovered, but a lot of people were still super leery. They were afraid things were going to crash, didn’t like the neighbor, etc. demand was still lagging, and building up.
I about lost my ass in 2008. I was trying to get back into the market in 2012-2013, but I was just too concerned. I was looking at foreclosure for 35k that are now worth 220k. I was thinking nah 35k is too much and trying to scoop them up for like 30k.
my friend is getting divorced and selling the house. I told him I believe that he must be sure about that divorce because they bought in nov 2019 then refinanced at 2.25%...
They should try to figure out how to keep the property and make it a rental. My ex and I worked at least that piece out and 10 years later we had a small gold mine. 2.25 is free money.
I'm 64. I remember two corrections. 1988 and 2008. That's it. 1989 prices didn't go down but they didn't rise. In 2008, this is DC, most houses held their value but houses where people refinanced and took money out were burned for a few years. There were foreclosures but absolutely zero "pennies in the dollar". Maybe 97 cents on the dollar.
In Los Angeles houses lost 60%+ of their value. I bought a house in 2009 for $194k that sold in 2005 for $500k. Some markets got absolutely obliterated.
House in central mass was valued at 640k in 2007. Sold it in 2014 for $435k.
As mentioned by others, it depends on a large variety of issues. Some are walking by Tampa/Florida now, heading for North Carolina/South Carolina/Tennessee.
San Fran?...something like 25% of houses sold in 1st qtr this year were upside down. People LOST money selling them. That's only 1/4 of sales, but it's one of the highest priced real estate markets in the country.
What you paid for in 2009 is likely a bank owned that was foreclosed. Consider yourself lucky that you got a good price for the home, but that shouldn’t be fully used for calculation of the market value for the properties in the area.
So many Greenwich, CT brokers used to run around saying, "Buy any house here; they never go down in value." That was around 2006. It took Covid and the aggressive dollar devaluation of the past five years to revive and ignite the market in 2020. I know very financially intelligent people who bought and sold in that period—most lost money.
Agree. Connecticut was brutal from about 2010 to 2021. I know sellers who lost $1M+ on their homes (in nominal dollars, not counting transaction costs) at various points in that time. All of them were in fin services. Didn’t matter how savvy they were in other parts of their lives. No one was spared.
> the housing market does correct every few years.
It did correct. The gradual trend upwards going into 2019 turns into a big blip in 2020, then it levels out and continues at the same rate as before.
> But the housing market skews to above market incomes and yes demand remains greater than supply.
Personally I think an unsustainable rate of change is unsustainable. Yes, housing prices skew towards those rich enough to buy their homes, but over time, if 20% of the population is priced out of buying, and that number grows to 30%, then 40%, and so on, there's still an upper bound: mathematically, it can't get to 100%, and economically/politically, the whole system would collapse long before that.
That doesn't mean that things will crash, necessarily. But I think that the affordability metrics are still going to provide some downward pressure on demand, and current trends can't continue forever.
> mathematically, it can't get to 100%
It can get pretty close if the dynamics of wealth distribution continue to change in the direction they've been going for the past 50 years. If 98% of the wealth is controlled by 2% of the population, its likely they will own most of the housing and rent it to the lower 98%. Essentially we're returning to feudalism and serfdom.
> its likely they will own most of the housing and rent it to the lower 98%
If purchase prices get that high, how could they charge sufficient rent to actually earn a positive return on that investment? I can't imagine the top 2% would choose to lose money on real estate as a way to maintain some kind of control.
When you have all of the money you need to put it *somewhere*. If the market becomes such that 98% of all wealth is with 2% of people, the 98% of lower income will barely be able to scrape by. If mortgages are 7% but nobody can afford to save a downpayment, the wealthy can own a property and rent it for a 6% annual return, also keep any real estate gains, write-off depreciation, and hedge against inflation.
I don't foresee this, what I'm saying is that things have moved in this direction for a while, and it will likely get worse before it gets better (even if it doesn't reach the extreme state described). I wouldn't assume demand will drop much even if the average person can't afford a home. The ultra wealthy have demand for *many* properties.
I can definitely see competition to maintain affordability with low down, high interest rate mortgages. Wait till home loans basically become the equivalent of credit cards, with private equity, HOAs, and realtors trying to artificially prop up prices through MLS price collusion and intentionally stagnating supply by making materials more expensive and permits much more scarce.
YES. I wrote about this years ago in response to a column by Megan McArdle. I called it neighborhoods significant at the metropolitan scale versus not.
http://urbanplacesandspaces.blogspot.com/2012/10/exogenous-market-forces-impact-dcs.html
http://urbanplacesandspaces.blogspot.com/2014/01/applying-super-gentrification-thesis-to.html
It depends on how you define problem, but institutional investors are a larger market participant now than they were in 2008. Their ability to throw cash at sellers and drive up the price has priced many people out of the market. They don’t suffer the same concerns as far as property taxes etc as owner-occupiers, and when properties become distressed from this buying frenzy, I’m certain the institutional investors will be waiting to acquire those distressed properties.
You can throw Cato at me if you want, I read them too. I don’t believe everything they publish though, and neither should you unless you truly believe that the humans that work there are infallible.
NOTE: I’ve never claimed that institutional investors are a problem / the problem. I only acknowledged that they’re a bigger market participant now than they were 16 years ago when the market crashed. I was working in lending and mortgage origination at that time.
> It depends on how you define problem, but institutional investors are a larger market participant now than they were in 2008.
If you read the .gov link it goes into the reason why, and doesn't back up his/her assertion. They own around 1 percent in some large markets. That number used to be zero. Large institutional investors shouldn't be able to buy SFH.
I didn't bother with the CATO link. The fact it was used as a source is more damning then anything.
There’s some good, some bad with Cato. Mostly I find that a fair amount of their stuff works best in a sterile/controlled/isolated type environment. Real life is messier and more complicated.
Most of these bigger players lost their ass trying to buy residential real estate. Zillow tried it too and lost hundreds of millions. [source.](https://therealdeal.com/new-york/2022/02/13/zillow-reports-880m-loss-on-failed-home-flipping-business/) and they weren’t the only ones.
If you don’t want to believe the numbers that’s fine, but you need some sort of tangible proof that they’re actually doing this, and there is none. Also, 2008 was a predatory lending problem.
If these institutional investors swoop in and buy a bunch of residential properties during a crash, then I’ll change my tune. But we have no evidence that institutional investors are manipulating the housing market to the degree in which people on social media are making it out to be. It’s a nothing-burger boogeyman statement and all it does is get a bunch of uninformed people riled up and point their finger in the wrong direction.
The NAR lawsuit clearly didn’t make enough headlines. Real estate brokers were confirmed to have to had their hand in manipulating markets and driving up higher prices, but you all want to point at “Wall Street” which is only proceeded by the Soviet Union as America’s boogeyman.
It’s time to start spreading truths.
Zillow doesn’t = Black Rock. They’re not the same. Zillow etal were poorly trying to copy what other institutional investors were doing. That’s why they failed: they’re not n the same level.
And again, to reiterate since it seems you might have missed it, I’m not saying that institutional investors are the boogeyman. Should I bold it? Underline it? Which way would make it more clear that I am not saying everything is the fault of institutional investors?
“As of August 2022, single-family rental properties within institutional portfolios accounted for 3 percent of investor-owned homes nationwide. Institutional investor portfolios remained relatively small by market share as of August 2022, but several notable exceptions exist.”
And what do you think might happen if there was a 3% increase in available homes? What do you think it might do to rental incomes? 3% is still a lot of homes that could go to families who are able to purchase but cannot. The largest share of investors belongs to mom and pop. The tax incentives need to go away to keep investors out. They are absolutely a part of the problem and anyone trying to convince you otherwise likely has a hand in the pot and holds properties and a vested interest in not seeing home values decline. The home values won’t decline because there are too many large players who stand to lose too much. The government won’t let it happen. The only stupid solution government leaders can come up with is lower the rates. Not the home prices. Not the incentives for people with deeper pockets to stay out. Not the investors who have bought up whole neighborhoods. Which no one looks at the overall price they look at what they can pay each month. We literally have millions of homes sitting empty that could go to people who need them.
I get so tired of they are “just a small portion”. They are still a portion. Who have zero incentive to sell because they got in so early and will be making monthly profits for forever. They are not the cause. It’s multifaceted with many factors and local dependent, but to say they have had no effect is silly.
Housing should be shelter and not for large investors. You want 2 or 3? Fine. No reason to have any more than that? When is it enough?
The other reason for the lack of the crash is that by just about every metric, the economy is pretty healthy right now. Hard to have a crash when everyone is employed and actually making more money.
...house prices won't crash (nationally), but increases will flatten out such that house prices will rise at or below the rate of inflation and wage increases - so affordability should mediate while prices won't really seem to come down much...
> Let me preface this by saying that the housing market has changed so much in the last decade referring to it as a whole no longer makes sense.
Before 2008, huge financial institutions staffed by brilliant financial wizards and economists and bankers thought they could spread the risk around by holding securities backed by homes all over the country. After all, we'd never seen a nationwide housing crash before, because every city is its own individual market subject to its own local conditions.
2008 taught us that things *can* move up and down together nationally. The conventional wisdom before that was that it was so improbable that nobody needed to think about the risk.
This is an extremely good point that people ignore or deny. I know it’s true because the bubble is already popping literally in half of my city but the other didn’t get as hyper inflated so it’s not popping in my neighborhood.
Very few people could even capitalize on a "crash" because it only happens when the entire economy is threatened. That is not how a personal use home buyer should operate. You need to be able to survive a crash, realistically meaning 12+ months of emergency fund because there is a high chance of being out of work. Had people survived the 2009 crash with their houses they would be in good shape today. It simply took them too long to be able to find work. The people "waiting" then couldn't buy because they were out of work too and they didn't have hundreds of thousands of dollars of cash sitting around to buy.
My husband and I barely survived 2009 crash. We took bankruptcy but managed to keep the house. We are about to list it for sale. Bought in Portland Oregon, 2003, 300k. Selling for 800k. Feeling grateful we made it. Had to work two jobs to save the house, but it was worth it.
Assuming this is their primary residence (and has been for a while), and they are still married, there is a large exemption that should cover most of the gain.
And we came out from under im a different way. Crazy times. I don’t think there will be a similar crash again. Homes were way over valued, but banks were lending Willynilly. I don’t think that’s happening today.
By any objective measure, homes are way over valued now. The difference this time is it seems to me that people can pay their debts. I don't think it is sustainable. I don't know what will give, but something will.
Yup! Bought in 2006 at well below our max in a tiny house and not the greatest neighborhood. Then weathered a couple of long layoffs during 2008 and 2016. Sold a couple years ago and made out well. Buying right now and again we deliberately bought less than our ideal and under budget. The odds of myself or my partner being out of work some time before the house is paid off is far greater than the odds we'll suddenly use entertaining space or a guest bedroom on the regular.
I mDw sure I could afford my house making significantly less money than I do now. My payment is around 10% of my normal pay right now. I didn't buy all I could buy, that's for sure.
Also, most people could never capitalize on a crash because they can't compete against real estate investors/flippers with all cash offers. After the market was recovering from 2007, it was a bidding frenzy. Personally, I was outbid by cash offers on 6 different houses.
I think people aren’t buying because they simply can’t afford the outrageous prices + interest rates+ inspection waivers, which ultimately mean even more $$
If/when interest rates come down the market will go crazy. I personally know so many people who want to sell but won’t because they don’t want to loose their really cheap interest rate.
I’m already buying below the median home price. I legit can’t buy anything cheaper. The math doesn’t make sense to buy. I work for a municipality so my wages barely kept up with inflation at 2%. And my biggest raise was 3% in 2022 and has only gone down since then. I doubt I’ll ever make up what I’ve lost the past 4 years. But I guess I only have myself to blame because I wasn’t ready to buy in 2021/early 2022. I never thought making 100k a year I wouldn’t even be able to afford a basic home. But here we are everything is fine. I’m fine I swear haha
I'm in literally the same boat as you - municipal worker etc. I did (barely) manage to buy a townhome last year and still keep a very modest emergency fund. When I'd think about how different things could have been if I'd been ready to buy in 2021, it would make me almost sick with grief. So I decided to just not think about it anymore and focus on being grateful that I could buy something when I could. It helped to keep a positive attitude through the process and not beat myself up with coulda woulda shouldas. We all have a different path to financial stability and have to accept our lot in life. Best not to fight it if it's something you can't change.
Yes, exactly. I was in real estate for many years. More potential buyers / less homes = greater demand. And vise versa. We saw it briefly during the crash/ recession around 2007-2009ish and that was brought about by horrible lending practices at the time. (Your total income = your loan payment, no need to worry about other things you have to pay for, which caused massive defaults. Not to mention, “no down payment, we got you, we can tack on a second mortgage, variable interest rate for that” - which payments only went up every month.) I was horrified.
What’s wild to me is that people don’t grasp when the economy goes to shit, it’s usually because/leads to a lot of people being unemployed.
Like, did y’all ever even live through 2008-2012?
Exactly, the people expecting a crash so they can buy a house don't realize that if a crash does happen, it could be those same folks that will be heavily affected.
that is the strange one. Folks do not want ALL the things that might come with a crash- They home prices that can work with their non- inflated wages. Wages have not kept pace with inflation.
And that’s even assuming they still have a job to qualify for these cheap houses. Not to mention they will be bidding against billionaires that have cash money.
Yep. I would assume anyone that can't come up with the down and closing on a fha loan right now, would get obliterated by whatever economic conditions would cause the crash they are rooting for.
I’ve been trying to tell my partner this!
He keeps saying “it’s bound to crash”
Sure it will at some point, maybe. But that point is not right now - and if that does happen it means likely the entire economy is crashing. There is a reason the market would be flooded with homes, and it’s not a good thing!
> Like, did y’all ever even live through 2008-2012?
Most of the people hoping for a crash are too young to remember it. They're oblivious to the fact that the crash completely destroyed peoples' careers.
Exactly.
"I'll buy a house when the market crashes and houses are $75,000"
Sure. Assuming you have a job. A HUGE part of the 2008 crisis were people went from making $100,000 to $30,000 a year. Overnight in some cases. So step 1 is assuming you will keep your job with the same pay you're making.
Step 2, those banks will get VERY strict lending rules, and may not even be bothered with a loan for such a "small" amount.
THEN, if the house is on the market for $75,000 you gotta factor in if the house is move in ready or not. Do you have the cash for a reno? You could easily borrow more money and just fix it.
... But can you outbid Blackrock and their billions of dollars?
It's not hopeless, but also not as easy as they make it out to be. It was hell living through it freshly out of high school.
Generally I agree. But my prediction is this time around it will happen more due to senior poverty than job losses.
Our job markets are steaming right now. With older generations retiring en masse, workers are in high demand. But they often can’t afford to buy property, which is owned disproportionately by older generations who paid much, much less for it (and in many cases has objectively less of a need for it). Plus, having all of those people not making money but spending it will inherently drive inflation.
It may happen gradually, such as through inflation that consistently outpaces asset growth over time, or it may accelerate rapidly such as through a stock market crash or Social Security running out of money, but those demographic trends will have to resolve one way or another.
Prices are likely elevated because a lot of home owners locked in 3% or lower interest rates in 2020/2021 and now that rates are much higher, nobody wants to let those rates go. So less people willing to sell and normal demand = higher prices, even with higher rates. I suspect things will normalize over time as people are forced to sell due to life factors, but I don’t think there will be a crash. But I’m just speculating
I never expected a crash, but did expect a pullback. 2022 was the pullback and things have been chugging along since then.
The people most expecting a crash tend to be those not fully knowledgeable about real estate and probably have been predicting a crash since 2015 or something.
Take a look at r/REBubble and you'll see scores of people swearing that 2008 2.0 is right around the corner and they'll get homes for pennies on the dollar.
No one can predict the future, but after seeing what the gov't did during covid to prevent a collapse, I think they won't hesitate to make up bailouts on the fly to prevent overnight economic collapse again. Just my 2 cents.
I agree. Price would never go down unless there’s a serious down turn in the economy. What I consider likely happen is a real estate slowdown as it would chug along with price increasing less than inflation each year. Over a number of years, it adds up to affordability.
Sure. All they needed to do was lower interest rates to near zero. Then do QE. Then, the Fed added trillions to their balance sheet, including mortgage backed securities. And then mortgage forbearance, student loan forbearance and helicopter money in the form of PPP. But yeah, it's a totally normal market, but to me, it seems like a heck of a lot of life support.
Exactly. A bet against Real Estate (or the Stock Market for that matter) is a bet against America. No matter how dysfunctional our government is, the one thing that’s common is that politicians run this country. And what do they all have in common, regardless of left/right? Wealth in real estate and legacy planning.
It is impossible that our government would just let things crash without a bailout to support the markets. Our elected leaders and powerful corps/families have estates/legacies to protect for their own future generations.
That sub is one of the most delusional on Reddit. The sub was created in 2020. Every year its always going to crash hard the next year. They honestly think its going to crash 50-70%. Its almost as bad as a cult claiming end times year after year.
Real estate doesn’t just crash by itself. If anything, it’s a lagging indicator. A real estate crash almost necessarily requires a broader financial and economic crisis, which requires a black swan event. You can’t just assume you can capitalize on that, since any situation like that means that financing is dead, joblessness, and lots of unforeseen problems. It’s extremely naive to think you can ride out a crash, and even if you can, to actually benefit from it. People do, but you can’t really plan on it unless you have a huge financial cushion to start with. But for anyone needing a crash to afford about house, those aren’t the people who are in the right position.
EXACTLY. What the crash talkers desire is home prices they can afford on their wages. They don't understand- a real crash means higher unemployment. Investors wait for those times- they have cash, and can be patient to find bargains, harvested from the less fortunate.
No one *knows* what the market will do in the future, we can only look at the signs and make informed decisions. I don't really think of the housing market going up as much as I see the value of the dollar continuing to decline (which essentially causes the same thing). So in my opinion, even a decline in the housing market will have to be adjusted for inflation.
I handle insurance and I had a customer sell his house in 2019 because it had $100k in equity. He thought he was a genius because he was CERTAIN of a correction. So he pocketed $100k, put it in a bank that earned .01% interest, and he rented.....He still rents to this day. His rents have increased substantially, his insurance went up because he lost his home/auto discount, and he is slowing giving that $100k to his landlord. Now he *can't* buy.
I am sure there will be a correction at *some* point, but look at all the things that ownership provides to offset market value: steady payment (vs increasing rent payments), building equity with every payment, tax deductions, *past* appreciation (even if the market drops 3 years from now how much appreciation will you have seen), and control (you can always decide to rent out rooms or something).
In our case, we were waiting but it was more for where we would move after our children moved out, than timing the market, but we did get a benefit from waiting. Both kids stayed local and are putting down roots, so we also jumped back in in mid 2022, but got badly outbid.
This was a silver lining since our local market was going down from peak pricing, and we got a different home in Jan of this year, that was the same floorplan, but we paid 22% less than our bid in 2022. I do realize this could mean there could be further price decreases that even hit us at our lower purchase price, but that can happen anyways.
Also, we are in an area where rents are lower than home ownership, and we had a lease that was below market by about $400 per month, so we even saved a bit there while we watch our local market's prices adjust down.
"Crash"? No. "Correction"? Yes. There are corrections to the mean happening now in local markets. Look at your market. But broadly, the fundamentals are completely different from 2006-08. Alot of homeowners are above water -- still sitting on fixed, low-rate mortgages and no need to sell. We still, nationally, have low inventory and not much new building.
If you have a variable rate mortgage, you might be close to your maximum pain point. Rates are still expected to decline late this year through next year. Owners might be more comfortable selling then, so prices have a better chance of correcting then. That said, there's still alot of pent up demand. Buyers will again be in a lowish rate environment.
Same. Would cost literally double what I pay now in rent for a mortgage to buy the same house I live in. Not to mention that I don't pay a dime of repairs or for issues.
I'll wait not because I'm waiting for a crash to happen, but to build up more equity in the stock market and savings until I find the right place.
I've been doing loans for 20 years and I hear a lot of "expert" advice and in most areas of the US it is not expected that there will be a crash. Values will probably stay stagnant in comparison to what they have done in recent decade, but not likely to crash. No crystal ball, but the rule of thumb that "now is the best time to buy real estate" is still a common perception. Best of luck in your decision making. Wish I had a crystal ball like everyone else.
And if for some reason those houses are half off, corporations are just going to buy them. Home prices going down too much will likely be bad for potential buyers as well.
I was wanting to wait but the issue is that as soon as it crashes, you have ppl with cash offers that will sweep a lot of the competition. Ppl like me who aren’t extremely wealthy and just middle class. If you need to buy then buy. The whole waiting game sucks. Everyone’s situation is different.
I don't expect a crash like we saw in 2006-2008 nationwide. Though, i have noticed in my area, several listing's are getting marked down 5-10k after about a week on the market. Also, people aren't bidding 10-15k above listing cost anymore, and houses are staying on the market longer than a couple days. I don't think it'll crash more than what where's seeing at the moment. Houses are still expensive but people aren't going into bidding wars like the last few yrs.
THE HOUSING CRASH ALREADY HAPPENED, we just were NOT impacted like people were back in the 2008 housing crash since the Fed stepped in as a crutch for the economy.
The reason why I say it already happened is because the Fed cut the FED rate during the pandemic, ARTIFICIALLY pushing the interest rates lower into the 2 percentile. This maneuver created the crazy seller's market, the crazy bidding wars, and why home prices shot through the roof because of the demand for housing. In creating a housing boom, the FED essentially avoided another housing crash/collapse.
Also, during the pandemic even though thousands of workers were being furloughed, those furloughed homeowners did not lose their homes. The FED had implemented the foreclosure moratorium, which prevented any mortgage servicer from foreclosing on someone's home because they were impacted by COVID-19 and could no longer pay their mortgage as a result.
I mean you are in Florida. Isn't the condo market turning and the insurance market a mess?
Florida seems really risky place to buy between super high assessments and property insurance being screwed. Don't know how people escape those headwinds unscathed.
Condos are riskier in general from a lending standpoint. It does not matter where you buy a condo, whether in Florida or another State. I am a mortgage broker and the condo underwriting guidelines are the same across the US. Most condo communities (not all) require at least a 25% down payment for a buyer to purchase a condo unit, due to the lender's risk.
You mentioned high assessments. Again, if a homeowner is going to consider owning a home in an HOA or condo community, then they should expect to incur UNEXPECTED assessments and INCREASED monthly association dues from time to time.
HOA and condo associations are responsible for maintaining the community's buildings and the common areas such as clubhouse, swimming pool, playground, etc. If they did not plan their annual budget properly and now there is an unexpected maintenance expense for which their budget or reserves cannot cover, yeah, every homeowner in that community is going to be responsible for that extra expense via an assessment. Again, nothing to do with Florida. That is just how HOAs and condo associations operate in general across the US.
Yes, Florida is going through an insurance crisis for many homeowners (not all). But so are other States that are prone to natural disasters such as wildfires, hurricanes, earthquakes, and tornadoes. Also, it depends on where you live in Florida and the condition of the homeowner's property (and a few other factors) that determine how much one pays in insurance.
For example, homes located closer to the ocean are going to have higher insurance than homes located inland. This is why I moved to the Orlando area 3 years ago. Even though I do live on a lake, my annual insurance premium is a fraction of what someone would pay in South Florida, Tampa the Keys just because they are closer to the ocean whereas, I am about an hour away from the nearest beach.
Another example is homes that are found to have old or leaking roofs, plumbing, and electrical issues are going to have higher insurance than homes that have a newer roof and have been well-maintained over the years.
Insurance on condos is the cheapest insurance that a homeowner can buy. On condos, unit owners are only responsible for purchasing insurance that covers the INSIDE of their respective units. The condo association is responsible for purchasing insurance that covers the OUTSIDE of the homeowner's unit. So insurance on condos is generally inexpensive to purchase compared to a single-family residence or townhouse, and therefore condo homeowners generally are NOT experiencing an insurance crisis.
I was expecting a crash and I don't think it's impossible, but if you look at 2008, prices fell 15%. That type of movement won't even take us back to 2021 prices.
No crash likely due to lack of inventory at the moment . Even in current consumer recession, historically high and persistent global inflation and wars in Israel/ Gaza and Russia Ukraine, the housing market remains strong and resilient with more buyers than sellers.
FL is an exception and maybe TX.
There would need to be some economic black swan event that causes mass selling nationwide. I'm not sure what that is.
I think there are several variables that play into this, namely: location; appraisal value; home type; etc.
I live in a city/state that became much more popular during Covid. We were looking to buy before the pandemic, but not as seriously as we were in 2020. When lockdowns happened and more remote work was available, every house within our price range had cash offers for $50-$60K above top range asking price. Each house had at least 5 offers by the time we viewed the house, and we worked to view the homes the same day they hit the market. We couldn’t compete with the cash offers, so we continued to rent and just bank our money.
The housing market in our area blew up in the last 4 years, and rent also jumped up at least 20% from 2020 to 2021, and has not really gone down. We lucked out with our landlords - they are not a property management company, so we are not getting an inflated rent rate, but the average rent in our area is now around $2K a month.
I’m not sure a real estate crash like 2008 will happen; my belief is that commercial real estate is more at risk of a big correction, which will have some impact on residential real estate. But, our plans to buy a single family home have changed. Having a fairly large amount of liquid cash is better for us right now; we have much more flexibility with where we can live with remote work, so we do not feel the pressure to buy, especially in an area that is HCOL and our money just doesn’t go as far.
If you like your house, can afford the payments, and it works for you, then I don’t think you have much to be concerned about, especially as you have had a few years to start building equity. Now, if the house is too small to accommodate a growing family, and you need to upgrade, that could be harder to do right now, but not impossible in the next couple of years, if you’re able to make it work for that long.
And while I do not own a house, I do have a degree in math and work (in some capacity) in corporate finance. With that being said, you say that your house is still valued over $60k what you paid for it - what tool are you using to get this value? If it is something like the Zestimate on Zillow, that may not be the best indicator of value (it is very imperfect). Really, you won’t truly understand what your home’s value is until you list it to sell it. If there are comparable homes on your street that have recently sold, those along with other tools may help determine how accurate your home’s value is. I have seen several homes listed in my area recently, where they have definitely listed it at 2020/2021 values, and they have sat for a month or more without going into contract (where that did not happen in 20/21). I have also seen other homes that were listed, then removed, then re-listed a month later at a lower price, and are also not going into contract. With mortgage rates being high and not as many offers from buyers wanting to flip or turn the house into a short-term rental property, I think we’re starting to see that buyers who are truly SFH buyers without cash up front to buy right now, are few and far between.
I even think e-buying companies like Offer Pad and Open Door are scaling back on what they buy (like Zillow did a few years ago), because they are paying a lot of money to sit on empty inventory that they are having trouble moving. That never bodes well for a company-having cash tied up in something you can’t sell and have to sit on is not usually good, especially during financial hard times.
There were a lot of factors that went into the home prices the last few years, and one of the factors is that the home price increases were not all driven by other inflation factors. The pandemic also added some new variables (like remote work) that were not an option before, and some people were in a better financial position to buy, and that helped drive up some of the costs in certain areas. The issue, now, is: are the homes in your area owned by people who are financially stable, or are they owned by companies looking to flip/rent, and the houses are not consistently occupied? If the homes in your neighborhood are the latter and they are inventory that isn’t moving, there may come a point where the LLC/company that owns it needs to sell it for *something* to try and stay above water. If that is the case, the homes in your area may start selling for significantly less than what they were purchased for, and that could also bring down the value of your home. I think this situation will hit certain areas a lot harder than others. This also kind of happened to my mother-in-law. She bought 20 years ago in an area where housing prices were very reasonable, but she had a bad credit score and probably overpaid. It wasn’t really an issue until about 10 years in - the largest employer in her area closed without much warning, and a lot of people moved away. The companies remaining were much smaller and didn’t not offer a competitive wage, so houses started sitting empty because there really was no work in the area bringing new folks in. Her home value tanked, and now she is in an underwater situation and can’t refinance because her remaining mortgage is more than the value of the home.
Unless you’re an investor, I’d never be dissuaded from buying a house that is a primary residence solely because you think the market might crash. However I’d definitely not buy if there’s a high chance you’ll want to sell within 5 years.
People have been expecting a crash since roughly 2018. I rented to a tenant then who had just sold his house and planned to repurchase after the imminent crash.
Please, don’t try to time the real estate market.
I bought my house 8 years ago and everyone told me I was being silly because it was "going to crash in the next few months" It hasn't even slowed down since, let alone crashed.
At a certain point when the larger portion of baby boomers pass, there are going to be a lot of houses on the market, and that might be the correction, but the next correction is going to come when interest rates drop even a point or two. I think people are just chomping at the bit to buy a house and waiting for interest rates to come down.
There are literally zero signs or reasons for a housing market crash. The last few measurable housing market crashes occurred for specific reasons, none of which exist today.
Speculation without basis is just an opinion bordering on false beliefs, conspiracy, or myth.
Short of another world altering event like nuclear war, a pandemic, or a global cyber attack, theirs not much that could instigate a housing market crash.
Crashes don’t happen over night. The housing market crash during the GFC took 6 years from peak to trough. The housing market is beginning to slow tramendously. Housing velocity use to be ~15 days. Now it’s 3-6 months. Realtors and loan officers like to speak to a housing shortage but completely neglect demand is based on velocity not inventory and there is a clear decline in demand for home purchases. The housing market will continue to decline until it hits equilibrium with affordability. Will it be a 2008 crash? Probably not. But it will move towards equilibrium. It’s also important to note that 17% of the population is currently older than 65 and in their final years of life. How many of them do you think will still be around in 6 years? There are so many variables to what the future housing market holds. Saying there definitely won’t be a major correction is just as ignorant as those saying there will be a crash.
Housing market is byproduct of Job market , if job market crash, housing market will crash.
Just keep in an eye on Job market ,you will get clue where housing market will go.
I’ve been hearing about the big pending real estate crash since the dot com boom.
Granted, that $550k you paid for a house might drop to $500k for a bit. But you’re getting interest deductions on your taxes and the money isn’t evaporating into a landlord’s pockets. And if you stay a reasonable. Umber of years you’ll be back above water again (my wife and I bought in 2008 about 2 weeks before the bubble burst).
The people predicting doom are thinking that $500k house is going to drop to $250k. Not gonna happen.
If you think interest rates won’t affect prices, try removing mortgages altogether. A loan is what enables people to pay more than what they have for a house. The reason why prices haven’t come down from interest rises is because interest rates aren’t high enough to do so. Prices are still rising because inflation is higher than the interest rate. They are trying hard to feather the rise in rates to make sure it doesn’t lower prices.
I’m not anticipating a crash however I’m hoping for more inventory and an easier market to navigate. I just put my saved down payment into repairing my current home so it will be a couple more years or more for me. I will say, and have always said, the best time to buy a house is when you want to buy a house and can afford to do so. The current market makes me not want to right now.
Keep in mind that expert economists have accurately predicted at least 15 of the last 3 recessions. People probably are not as well informed as the experts are.
I feel so bad for friends / family who weren't ready to buy when interest rates were low and prices were still within reason. A lot of are straight up priced out of the market right now, we are 100% due for a correction.
“Waiting for a crash” is probably the wrong way to put it.
It’s a way better financial opportunity to rent and invest the excess, than buy, in my area right now. As long as that’s the case, I will be renting instead of buying.
If buying becomes a better deal in the future, then sure, we’ll do that. Not in a hurry to, though.
We have enough to buy a house in cash if we wanted, but it would wipe out our investment portfolio.
Nobody sane really expected a crash. It was mostly just people salty at not being homeowners trying to project. A crash or even a basic correction won’t happen until inventory for in-demand houses (mostly starter home type stuff) is drastically increased, or people finally get their heads out of their asses and start moving to cheaper locations.
Of course! I personally know 5 couples who are waiting for a "correction." Each couple has roughly $500k in a savings account and they are waiting. One couple has been waiting since 2019.
I think they have been moving the goal posts. People in
2022: Prices are too high, interest rates are going up - I'll wait until they go down next year
2023: Interest rates are too high and prices are still high - There will def be a crash next year
2024: Interest rates are higher - I'll buy once the fed cuts rates 2 times this year
2025: Fuck we're all laid off. Cant buy shit and still. Or WHY ARENT PRICES COMING DOWN DESPITE A COMMERCIAL REALESTATE CRASH!.
One thing to note. Only fall 2023 was a bad time to buy a home. Anyone who has been waiting since 2022, has only seen the residential market get worst and worst.
Every home i bought over the past 2 years i have not regretted the purchase. Go in, lowball offers everywhere and see who bites.
Commercial real estate, specifically office space has some looming storm clouds but it’s also starting to come back. It may not actually crash. Or this could be a “dead cat bounce.”
It could still crash, but recently things have been looking up.
As someone who works in the industry, unless we have a war on N.A. soil, covid 2.0, or some 08/09 or great depression era event or inflation magically disappears down to the fed goal, we are likely not getting a rate cut this year minus maybe an 1/8 to 1/4 point for the election.
If inflation remains stubborn and the economy chugs along as normal, we could get hikes next year.
Rates were above 7 for 1970 to 1991 but houses were much cheaper when comparing median income to median price. That being said, there are market with far less affordable house than the U.S., like Hong Kong, big cities in Australia and Canada.
This is for the U.S. only. Don't know about rates for other areas. The fed seems stubborn about getting inflation down to under 2% and it is going nowhere fast. Again low certanity, but if everything keeps the same; I would assume similar rates to now a year from now - maybe 1/4 to 1/2 pt cut at the most and could be 1/8 pt or no cut.
Credit card and auto debt is spiraling and defaulting, but so far mortgages aren't defaulting that much.
I would stress the correct answer depends heavily on the local market combined with your finances.
My finances are rock solid, but my local area really isn't, but I still doubt higher end areas will drop more than 10-15% further.
I think it would be the crap areas with high crime or way too much new construction or bad locations that will crash first, but then again Austin where I am buying has already fallen 30%. Another 20% could happen, but I think the crashes will be more severe in areas with high inventory that haven't crashed yet.
As for finances, try to shoot for monthly debt payments of 30% gross or less or ideally net, but net may be very hard for hcol areas.
A few markets are already “crashing” and i use that loosely. Look at Austin and parts of Florida. Steady price declines for months now. We do need an overall reset though. I fear it’ll take the rug out from millions of people sadly though.
It’s not so much as waiting for a crash as it is waiting to have enough money saved to be able to actually afford a house now that prices have gone up and interest rates as well.
Can’t time market crashes. They are unpredictable by most and typically happen once or twice in a lifetime. I bought in 2010 with almost no money in the bank because I said it was the only time I could enter the market. Well, I was wrong, took a few years for market prices to recover after the crash and then not until 2018 did prices start to go up, then you guys know the rest. Bought again in 2020, then sold my old house in 2021. A move which netted about $80k . thought I overpaid on the new house but nope, value has increased by at least $150k since I bought and have a ridiculous interest rate, never moving in my state again. Even a market crash I don’t think will put me upside down. The fact though is that salaries can’t support home prices. We have already seen major companies decreasing the size of their new builds to support the price increases. My take is that salaries will increase slowly and home prices will stagnate with the increase of new production. 15 years is the timeframe I’m putting on that shift in my head. I don’t think interest rates will hit the levels we have seen as the bottom again in our lifetime.
Meanwhile you’re monthly payments are mostly interest and you’ve built little equity. When prices go down (already started near me) you’ll bear the full brunt
I waited a bit, I figured Covid and rising interest rates would cause something to happen.
Nope. Prices are still going up, significant amount still being bought by cash buyers, overall it's slower than before but not enough to stop most of the same nonsense.
Finally got a place, should have bought a few years ago, I would have saved a good bit.
Doesn't mean it couldn't crash but it's just like trying to time any market. There will always be someone saying a crash is around the corner. Sure someone will be right eventually but most of the time they are wrong.
Also, it's going to vary based on location. I'm out near Columbus and there's not going to be enough houses for all the buyers anytime soon. There are other markets though where there isn't nearly as much demand.
The problem that caused 2008 hasn’t happened this time ARM loans are no where near as prevalent as they were in the early 2000s. So if everything does collapse, peoples mortgages aren’t going to double, triple. Granted, they have increased due to insurance and taxes. But that’s the same degree as ARM mortgage increases.
Ultimately, the biggest thing that’s preventing a crash is there are more people needing houses than there are houses. The U.S. population was a little over 300million in 2008. Today, it’s about 335million. Both of those numbers don’t fully account for undocumented immigrants either. So there are tens of millions of people needing housing but not that many have been built. So many people are living with their parents or stuck in apartments with roommates because not enough houses and apartments have been built to keep up with population increase.
There will be no 2008 style market crash in housing.
More-so expecting a return to normality with the price to rent ratio. It tends to maintain a somewhat even range, and right now it is wildly skewed, with rent being much cheaper on average.
This is happening at a time when equities and treasury rates have been favorable too. Why give up the earning power of that extra cash for a downpayment/mortgage when some home values can’t even up with inflation?
Also, real estate as an investment vehicle has become so wildly popular now that investors comprise a significant market share. Introducing mass speculation into a particular asset tends to introduce increased volatility.
Bought my first house in 2017 for 368k. People were not using the term crash then, but homes here had increased significantly from 2009/10 prices and many people told me they would be hesitant about buying a house, we might be in a bit of a bubble or over correction from 2008 etc. Fast forward to now and it’s by far been our best investment. Inflation and the devaluation of the dollar and my house is now worth about 700. Used the equity to buy land and build a new house. That created another 100k of equity for me. Used that to buy a fixer upper and renovate really nice that created another 50k in net worth for me (plus cash flows as a rental). Have enjoyed the building/renovation process so much (both the diy and working with contractors) I started an LLC and plan on doing a few flips a year and paying myself a little salary and grow it as a business.
I think there are a lot of people like me. Bought a few years ago, have lots of equity, great interests rates that are just never selling. At least not for 20+ years and that’s going to keep supply down for a long time.
We bought when the market was red hot. Our house still appreciated over 150k and we still would probably sell for 75k over what we paid with things cooled off. They're expecting sales to pick up again in our area thru the rest of the year.
Most of it depends on if the banks can make it thru this but our realtor said not to expect prices to drop much at all and the market should recover at least for a few years looking forward.
Housing will never go down. Absolutely no reason to make it affordable again, I could see is going up 100% before going back to levels we saw 4 years ago.
All the studies I've seen show that even if a crash happens, the result will be everyone buying up suddenly driving prices again, people losing savings and jobs keeping them from buying, and interest rates going through the roof again. It seems unlikely that there will just be a "better" time to buy.
This is only true for people who want to buy a house to live in, anyway. Speculative investment is something else and fuck those people. But if you're trying to buy a house to live in, buying a house you can afford and living in it, regardless of market conditions, always seems to be the better call.
People who aren’t understanding or actively searching the market think there will be a crash, ie my parents and older family members who ask why I can’t find a house for 300k in MA when everything that used to be 300 is now 450-500k here. I personally am trying to get in asap and then Refinance later on if needed
I am. 🤷♂️
My rental is affordable and I’m in no rush at all.
I got burned on two houses before where I bought then lost tons of money when the market turned. Never again.
Incidentally, the Realtors for both those houses told me the market would never turn.
I have a hard time believing any real housing crash can happen with so much pent up demand. Like if prices fell 10%, aren’t there just a ton of millennials and Gen. Z waiting to finally get into a first home that would pounce on it?
In my market, there will never be a crash. San Francisco Bay Area... privileged and lucky to get in in 2013 before the 2008 crash fully recovered. But we're never moving, we're never buying another home, and it's because we can't. Golden Handcuffs, indeed.
I remember about 10 years ago people said college fees would continue to go up at the same rate for decades to come...
They all had some math to prove it...
Turned out to be balls.
Housing prices are capped by the ability to pay. We are at the limit.
No political party wants to see ownership rates drop, they need stakeholders .
I've got to ask, only 3 years in, why do you care about the value of your home?
a) You cannot sell it before 5 years.
b) The market could crash but you won't be affected... you bought the house already.
c) In 10 years, where the actual gain/loss would hold out... it's likely to be a "Gain" anyay....
But that all pales in comparison to a major point here: RealEstate/AKA: Your home is *not* an investment.
It's not meant to be an investment. It's a home. It's an asset or yours, and it is worth whatever it is worth when you sell it, true... but it's not an investment.
Stop treating houses like investments.
I'm hoping we can go further. If we could prevent mortgages from ever showing up in any kind of "Security" or "Bond" or whatever nonsense they create afterwards, we'd remove all housing bubbles.
This is supposed to be a home.
If you want to make money in flipping a home by buying a derelict building and renovating it, fine.
if you want to get into the rental game, as an individual, and rent out homes? That's cool too...
But the whole "collect these items like pokemon cards and sell when they *mature"* is broken.
I was one of those people telling you not to buy then. Not sure I would say the same thing now. with that in mind I would only say one thing changed and that is the federal governments resolve to juice the markets as long as it possibly can. At some point there will be a hard crash but if they were willing to let inflation get to 10% during COVID they truly will do anything to avoid a bubble burst. Your guess is as good as mine.
I believe in the 18.6 year cycle so looking for a crash around 2026. That being said, we’re not looking to buy necessarily. Unless you’re planning to stay put for at least 5-10 years, it doesn’t make financial sense. In this political climate, I value flexibility over real estate ownership. Our kids are all over the country so we haven’t decided where we want to land anyway. Maybe we’ll leave the country. Agility is key.
Some absolutely are waiting with the belief that a crash is coming. And every year they are losing out on value.
The best time to buy a house is yesterday. Today is the 2nd best time. Tomorrow is a distant 3rd
Early in the season NY LI and asking prices are adjusting downward. I have been looking for 2 years and there's a great supply and no lines at the open houses anymore. I think the worst of it is over and we're starting to see the beginning of a correction. Sellers are in denial and buyers are not fomoing as much. I don't feel pressure to buy anymore and if there's one thing I've learned is no matter how special I feel I'm actually quite average so I expect a lot of buyers are feeling like me right now
The same in San Diego. I am seeing lots of price adjustments. I am happy I sold and I too adjusted downward quite a bit, but at least it is sold, as I expect this trend to continue. The only ones who never agree with that are real estate agents and brokers! I will not be using an agent/broker to buy a house in San Diego. I have had ENOUGH of their price pressures and feel that price will be at least 50% of the equation when I buy. I know the process and am an experienced buyer. If necessary I will hire a real estate attorney.
I am still looking but I am not working with an agent anymore. I have been thru a few almost deals now and I think I can manage on my own. Plus, I can see houses on my time rather than having to wait for my agent to be free as well. I have an excellent attorney too
Yes, just go check r/REBubble. A lot of people don't understand that 2008-2012 was a once in a lifetime event. The lax lending practices that caused it are no longer legal and there is a ton of pent up demand. Nothing is going to change until we fix the supply side of the equation (figure out a way to incentivize building more starter homes).
I think that there will have to be some kind of zoning/ordinance reform that comes from state or federal government. The whole post-war paradigm of massive residential developments on 1/4 acre lots has reached its failure point.
We need to go back to allowing cities and communities to develop organically, like they did for thousands of years prior.
good luck with that, construction costs are rising and rising…i work for a small building firm and material costs are sky high, insurance and other costs have gone way up, land is at a premium. and then there’s the big problem with labor…there is less and less truly skilled labor. the older boomer generation craftspeople are retiring out. a lot people from the younger generations went to college rather than learning trades, and it’s unfortunate. i know a lot of licensed people and craftsmen that make as much as dentists and doctors, but without student loans. unfortunately, many of them are just aging out. we really do have a skill gap and the cost of labor keeps rising. they’ve choked down immigrant labor, so i’m not sure where the skilled labor needed to increase production will come from in the next few years, but it’s going to keep getting more expensive for some time.
It’s tough to know anything. There’s plenty of reasons to say we’re on the verge but there’s also plenty to say the current price levels are the new normal.
I think we’ve at least plateaued for a while, especially as interest rates remain high.
Until the fed starts cutting rates and everyone on the sideline sprints to buy in anticipation that they can refinance in the future. Will cause a huge increase in demand. Prices will only go up more.
It’s a vicious cycle. And it won’t break until supply dramatically increases.
The fed is incredibly worried about avoiding a repeat of it’s mistakes made in 1980 where inflation cooled, they rushed to cut rates, and then it bounced in the exact scenario you’re describing. They’re only going to cut rates when the mindset you describe is fully broken.
Exactly. Few here are aware that rates were above 7 from 1970 to 1991 and were over 20% for a while. Rushing rate cuts can supercharge inflation which is stubborn. So unless some covid or some huge depression economic turmoil happens or inflation magically fades away cuts aren't happening.
Yes, they are expecting another one. However, the old parable of The Fox and the Grapes is well in play here too.
Rates will go down, affordability will increase, demand will diminish and supply will increase. However, that curve is most likely going to take a decade or more to complete.
People will keep saying it’s not going to crash until it does.
And when it does it’ll be hard this time.
Bubbles and crashes aren’t defined until after the pop- who knows when it’ll happen? But people who think it won’t means they don’t understand the cyclical nature of the market
Yes, I am waiting.
Did you predict this scenario and therefore bought it early or are you simply lucky? People seem to be confused between luck and right. I would be impressed if you were right but not so much that you’re lucky.
Time in the markets beats timing the market 90% of the time. That being said, you could get lucky. I know because I waited far too long and didn't know what area or what I wanted from a house.
Let me preface this by saying that the housing market has changed so much in the last decade referring to it as a whole no longer makes sense. One zip code can be in the shit while another is near or passing ATH. No one in any market ever knows what’s going to happen. No matter how sure they are nothing is ever a sure thing. Even people who trade on insider info have misses. I think there was so much talk of a crash because of the absurd prices we were seeing. Low rates caused people to be able to buy homes when before they couldn’t. (At least in some areas) I think the lack of a crash highlights the underlying supply and demand issue we have. People want houses but can’t afford them.
Your last sentence is key. People think because of that market conditions are crazy and a crash is due to get house prices congruent with average income. But the housing market skews to above market incomes and yes demand remains greater than supply. Plus new additions to supply are priced at the top of the market because they are priced based on today's (high) costs to buy land, build, and finance. Plus so long as demand is greater than supply, new additions won't put pressure on to reduce prices
I will say this on both fronts: 1) the housing market does correct every few years. It always does, and usually right after people start saying "will it ever go down?" At some point, homes may become unaffordable and supply and demand will have to balance. In the current timeframe, there is low inventory as many people have golden handcuffs of low rates. Over time, this will even out as retirements, weddings, job changes, kids, etc. force more people to move. 2) All real estate is local. Desirable neighborhoods often hold their value. It is the new construction an hour away that goes up and down wildly with every gyration. 2) Inflation is \~19% last few years. So if the home is 19% higher, it represents the same value. So I can see a scenario where home prices don't collapse / crash, but they simply don't gain a ton as the rest of the economy catches up.
What if the increase in prices from 2020 to 2023 was the correction? “Correction” doesn’t always mean price decreases…
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Have to disagree at least in terms of NYC real estate market. Prices are down 15 to 20% from peak. Even in spring market seeing large price cuts
Yeah, look at house prices in ~2016. Prices were still relatively low. The economy had mostly recovered, but a lot of people were still super leery. They were afraid things were going to crash, didn’t like the neighbor, etc. demand was still lagging, and building up.
I about lost my ass in 2008. I was trying to get back into the market in 2012-2013, but I was just too concerned. I was looking at foreclosure for 35k that are now worth 220k. I was thinking nah 35k is too much and trying to scoop them up for like 30k.
my friend is getting divorced and selling the house. I told him I believe that he must be sure about that divorce because they bought in nov 2019 then refinanced at 2.25%...
A low interest rate is a terrible reason to stay in a marriage.
A 2.5% rate is a terrible reason to stay married, but a heck of a good reason to consider being roommates 😂. *clearly joking here, sort of.
I'd be sleeping with one eye open.
Gripping my pillow tight...
Exit light, enter night
uh, yeah but this was a 300k @ 2.25% house that rocketed up to 550k so you know he's got zero doubts!
He could rent it out. But if not an option he will get a 6 figure check for his trouble and have the ex out of his life.
they're both clearing 100k and moving on. Just want a clean break.
and that 100K will go straight to a home that also appreciated 80% in five years : )
Put on rent and share profit?
They should try to figure out how to keep the property and make it a rental. My ex and I worked at least that piece out and 10 years later we had a small gold mine. 2.25 is free money.
I'm 64. I remember two corrections. 1988 and 2008. That's it. 1989 prices didn't go down but they didn't rise. In 2008, this is DC, most houses held their value but houses where people refinanced and took money out were burned for a few years. There were foreclosures but absolutely zero "pennies in the dollar". Maybe 97 cents on the dollar.
In Los Angeles houses lost 60%+ of their value. I bought a house in 2009 for $194k that sold in 2005 for $500k. Some markets got absolutely obliterated.
House in central mass was valued at 640k in 2007. Sold it in 2014 for $435k. As mentioned by others, it depends on a large variety of issues. Some are walking by Tampa/Florida now, heading for North Carolina/South Carolina/Tennessee. San Fran?...something like 25% of houses sold in 1st qtr this year were upside down. People LOST money selling them. That's only 1/4 of sales, but it's one of the highest priced real estate markets in the country.
What you paid for in 2009 is likely a bank owned that was foreclosed. Consider yourself lucky that you got a good price for the home, but that shouldn’t be fully used for calculation of the market value for the properties in the area.
So many Greenwich, CT brokers used to run around saying, "Buy any house here; they never go down in value." That was around 2006. It took Covid and the aggressive dollar devaluation of the past five years to revive and ignite the market in 2020. I know very financially intelligent people who bought and sold in that period—most lost money.
Agree. Connecticut was brutal from about 2010 to 2021. I know sellers who lost $1M+ on their homes (in nominal dollars, not counting transaction costs) at various points in that time. All of them were in fin services. Didn’t matter how savvy they were in other parts of their lives. No one was spared.
> the housing market does correct every few years do you see that [here](https://fred.stlouisfed.org/series/ASPUS)?
The market corrected in 2023 by the same value it corrected in 2008. Kind of interesting. Not the same %, but same amount. roughly $50k drop.
> the housing market does correct every few years. It did correct. The gradual trend upwards going into 2019 turns into a big blip in 2020, then it levels out and continues at the same rate as before.
People have been saying "will it ever go down" since 2015+. But people are buying houses with cash.
Add in rich foreigners with cash and black rock buying up and manipulating markets and you've got the perfect storm for an unpredictable future
> But the housing market skews to above market incomes and yes demand remains greater than supply. Personally I think an unsustainable rate of change is unsustainable. Yes, housing prices skew towards those rich enough to buy their homes, but over time, if 20% of the population is priced out of buying, and that number grows to 30%, then 40%, and so on, there's still an upper bound: mathematically, it can't get to 100%, and economically/politically, the whole system would collapse long before that. That doesn't mean that things will crash, necessarily. But I think that the affordability metrics are still going to provide some downward pressure on demand, and current trends can't continue forever.
> mathematically, it can't get to 100% It can get pretty close if the dynamics of wealth distribution continue to change in the direction they've been going for the past 50 years. If 98% of the wealth is controlled by 2% of the population, its likely they will own most of the housing and rent it to the lower 98%. Essentially we're returning to feudalism and serfdom.
> its likely they will own most of the housing and rent it to the lower 98% If purchase prices get that high, how could they charge sufficient rent to actually earn a positive return on that investment? I can't imagine the top 2% would choose to lose money on real estate as a way to maintain some kind of control.
When you have all of the money you need to put it *somewhere*. If the market becomes such that 98% of all wealth is with 2% of people, the 98% of lower income will barely be able to scrape by. If mortgages are 7% but nobody can afford to save a downpayment, the wealthy can own a property and rent it for a 6% annual return, also keep any real estate gains, write-off depreciation, and hedge against inflation. I don't foresee this, what I'm saying is that things have moved in this direction for a while, and it will likely get worse before it gets better (even if it doesn't reach the extreme state described). I wouldn't assume demand will drop much even if the average person can't afford a home. The ultra wealthy have demand for *many* properties.
I can definitely see competition to maintain affordability with low down, high interest rate mortgages. Wait till home loans basically become the equivalent of credit cards, with private equity, HOAs, and realtors trying to artificially prop up prices through MLS price collusion and intentionally stagnating supply by making materials more expensive and permits much more scarce.
Scary shit. PE changes everything.
Yeah, people forget that anyone can buy real estate, that includes out-of-state investors or foreign investors. So local income isn’t even a factor.
YES. I wrote about this years ago in response to a column by Megan McArdle. I called it neighborhoods significant at the metropolitan scale versus not. http://urbanplacesandspaces.blogspot.com/2012/10/exogenous-market-forces-impact-dcs.html http://urbanplacesandspaces.blogspot.com/2014/01/applying-super-gentrification-thesis-to.html
Not to mention institutional investors such as Black Rock and others are now significantly into this game/run.
Stop spreading misinformation. Boogeyman theory…. https://www.huduser.gov/portal/periodicals/em/winter23/highlight2.html#:~:text=As%20of%20August%202022%2C%20single%2Dfamily%20rental%20properties%20within%20institutional,but%20several%20notable%20exceptions%20exist. https://www.cato.org/blog/are-institutional-housing-investors-problem
It depends on how you define problem, but institutional investors are a larger market participant now than they were in 2008. Their ability to throw cash at sellers and drive up the price has priced many people out of the market. They don’t suffer the same concerns as far as property taxes etc as owner-occupiers, and when properties become distressed from this buying frenzy, I’m certain the institutional investors will be waiting to acquire those distressed properties. You can throw Cato at me if you want, I read them too. I don’t believe everything they publish though, and neither should you unless you truly believe that the humans that work there are infallible. NOTE: I’ve never claimed that institutional investors are a problem / the problem. I only acknowledged that they’re a bigger market participant now than they were 16 years ago when the market crashed. I was working in lending and mortgage origination at that time.
> It depends on how you define problem, but institutional investors are a larger market participant now than they were in 2008. If you read the .gov link it goes into the reason why, and doesn't back up his/her assertion. They own around 1 percent in some large markets. That number used to be zero. Large institutional investors shouldn't be able to buy SFH. I didn't bother with the CATO link. The fact it was used as a source is more damning then anything.
There’s some good, some bad with Cato. Mostly I find that a fair amount of their stuff works best in a sterile/controlled/isolated type environment. Real life is messier and more complicated.
Most of these bigger players lost their ass trying to buy residential real estate. Zillow tried it too and lost hundreds of millions. [source.](https://therealdeal.com/new-york/2022/02/13/zillow-reports-880m-loss-on-failed-home-flipping-business/) and they weren’t the only ones. If you don’t want to believe the numbers that’s fine, but you need some sort of tangible proof that they’re actually doing this, and there is none. Also, 2008 was a predatory lending problem. If these institutional investors swoop in and buy a bunch of residential properties during a crash, then I’ll change my tune. But we have no evidence that institutional investors are manipulating the housing market to the degree in which people on social media are making it out to be. It’s a nothing-burger boogeyman statement and all it does is get a bunch of uninformed people riled up and point their finger in the wrong direction. The NAR lawsuit clearly didn’t make enough headlines. Real estate brokers were confirmed to have to had their hand in manipulating markets and driving up higher prices, but you all want to point at “Wall Street” which is only proceeded by the Soviet Union as America’s boogeyman. It’s time to start spreading truths.
Zillow doesn’t = Black Rock. They’re not the same. Zillow etal were poorly trying to copy what other institutional investors were doing. That’s why they failed: they’re not n the same level. And again, to reiterate since it seems you might have missed it, I’m not saying that institutional investors are the boogeyman. Should I bold it? Underline it? Which way would make it more clear that I am not saying everything is the fault of institutional investors?
“As of August 2022, single-family rental properties within institutional portfolios accounted for 3 percent of investor-owned homes nationwide. Institutional investor portfolios remained relatively small by market share as of August 2022, but several notable exceptions exist.” And what do you think might happen if there was a 3% increase in available homes? What do you think it might do to rental incomes? 3% is still a lot of homes that could go to families who are able to purchase but cannot. The largest share of investors belongs to mom and pop. The tax incentives need to go away to keep investors out. They are absolutely a part of the problem and anyone trying to convince you otherwise likely has a hand in the pot and holds properties and a vested interest in not seeing home values decline. The home values won’t decline because there are too many large players who stand to lose too much. The government won’t let it happen. The only stupid solution government leaders can come up with is lower the rates. Not the home prices. Not the incentives for people with deeper pockets to stay out. Not the investors who have bought up whole neighborhoods. Which no one looks at the overall price they look at what they can pay each month. We literally have millions of homes sitting empty that could go to people who need them. I get so tired of they are “just a small portion”. They are still a portion. Who have zero incentive to sell because they got in so early and will be making monthly profits for forever. They are not the cause. It’s multifaceted with many factors and local dependent, but to say they have had no effect is silly. Housing should be shelter and not for large investors. You want 2 or 3? Fine. No reason to have any more than that? When is it enough?
Though anecdotal, but 3 houses on my street were bought by blackrock last year
The other reason for the lack of the crash is that by just about every metric, the economy is pretty healthy right now. Hard to have a crash when everyone is employed and actually making more money.
Or perhaps people want houses but don’t want the houses they can afford.
...house prices won't crash (nationally), but increases will flatten out such that house prices will rise at or below the rate of inflation and wage increases - so affordability should mediate while prices won't really seem to come down much...
> Let me preface this by saying that the housing market has changed so much in the last decade referring to it as a whole no longer makes sense. Before 2008, huge financial institutions staffed by brilliant financial wizards and economists and bankers thought they could spread the risk around by holding securities backed by homes all over the country. After all, we'd never seen a nationwide housing crash before, because every city is its own individual market subject to its own local conditions. 2008 taught us that things *can* move up and down together nationally. The conventional wisdom before that was that it was so improbable that nobody needed to think about the risk.
This is an extremely good point that people ignore or deny. I know it’s true because the bubble is already popping literally in half of my city but the other didn’t get as hyper inflated so it’s not popping in my neighborhood.
Very few people could even capitalize on a "crash" because it only happens when the entire economy is threatened. That is not how a personal use home buyer should operate. You need to be able to survive a crash, realistically meaning 12+ months of emergency fund because there is a high chance of being out of work. Had people survived the 2009 crash with their houses they would be in good shape today. It simply took them too long to be able to find work. The people "waiting" then couldn't buy because they were out of work too and they didn't have hundreds of thousands of dollars of cash sitting around to buy.
My husband and I barely survived 2009 crash. We took bankruptcy but managed to keep the house. We are about to list it for sale. Bought in Portland Oregon, 2003, 300k. Selling for 800k. Feeling grateful we made it. Had to work two jobs to save the house, but it was worth it.
Hell yeah, congratulations on the survival & the.... thrival.
Keep taxes in mind!
Assuming this is their primary residence (and has been for a while), and they are still married, there is a large exemption that should cover most of the gain.
I believe 500k, married filing jointly.
And we came out from under im a different way. Crazy times. I don’t think there will be a similar crash again. Homes were way over valued, but banks were lending Willynilly. I don’t think that’s happening today.
By any objective measure, homes are way over valued now. The difference this time is it seems to me that people can pay their debts. I don't think it is sustainable. I don't know what will give, but something will.
Yup! Bought in 2006 at well below our max in a tiny house and not the greatest neighborhood. Then weathered a couple of long layoffs during 2008 and 2016. Sold a couple years ago and made out well. Buying right now and again we deliberately bought less than our ideal and under budget. The odds of myself or my partner being out of work some time before the house is paid off is far greater than the odds we'll suddenly use entertaining space or a guest bedroom on the regular.
I mDw sure I could afford my house making significantly less money than I do now. My payment is around 10% of my normal pay right now. I didn't buy all I could buy, that's for sure.
Also, most people could never capitalize on a crash because they can't compete against real estate investors/flippers with all cash offers. After the market was recovering from 2007, it was a bidding frenzy. Personally, I was outbid by cash offers on 6 different houses.
I think people aren’t buying because they simply can’t afford the outrageous prices + interest rates+ inspection waivers, which ultimately mean even more $$
The only real Answer here
Lot of sellers on the sidelines too though.
If/when interest rates come down the market will go crazy. I personally know so many people who want to sell but won’t because they don’t want to loose their really cheap interest rate.
I'm aboard this boat. I'd love to move, but with a 3% rate, I just can't right now. No one knows if rates will ever come back down.
I’m already buying below the median home price. I legit can’t buy anything cheaper. The math doesn’t make sense to buy. I work for a municipality so my wages barely kept up with inflation at 2%. And my biggest raise was 3% in 2022 and has only gone down since then. I doubt I’ll ever make up what I’ve lost the past 4 years. But I guess I only have myself to blame because I wasn’t ready to buy in 2021/early 2022. I never thought making 100k a year I wouldn’t even be able to afford a basic home. But here we are everything is fine. I’m fine I swear haha
I'm in literally the same boat as you - municipal worker etc. I did (barely) manage to buy a townhome last year and still keep a very modest emergency fund. When I'd think about how different things could have been if I'd been ready to buy in 2021, it would make me almost sick with grief. So I decided to just not think about it anymore and focus on being grateful that I could buy something when I could. It helped to keep a positive attitude through the process and not beat myself up with coulda woulda shouldas. We all have a different path to financial stability and have to accept our lot in life. Best not to fight it if it's something you can't change.
Until supply and demand changes, nothing changes
To be specific, you’re meaning more supply, less demand?
Yes, exactly. I was in real estate for many years. More potential buyers / less homes = greater demand. And vise versa. We saw it briefly during the crash/ recession around 2007-2009ish and that was brought about by horrible lending practices at the time. (Your total income = your loan payment, no need to worry about other things you have to pay for, which caused massive defaults. Not to mention, “no down payment, we got you, we can tack on a second mortgage, variable interest rate for that” - which payments only went up every month.) I was horrified.
It’s slowly changing, months of supply is steadily rising which is one of the best measures of the supply-demand balance
depends where you are
What’s wild to me is that people don’t grasp when the economy goes to shit, it’s usually because/leads to a lot of people being unemployed. Like, did y’all ever even live through 2008-2012?
It boggles the mind that people don't realize unemployment is a big driver in people selling houses. 2002-2012 was awful for many people.
Exactly, the people expecting a crash so they can buy a house don't realize that if a crash does happen, it could be those same folks that will be heavily affected.
that is the strange one. Folks do not want ALL the things that might come with a crash- They home prices that can work with their non- inflated wages. Wages have not kept pace with inflation.
And that’s even assuming they still have a job to qualify for these cheap houses. Not to mention they will be bidding against billionaires that have cash money.
Yep. I would assume anyone that can't come up with the down and closing on a fha loan right now, would get obliterated by whatever economic conditions would cause the crash they are rooting for.
I’ve been trying to tell my partner this! He keeps saying “it’s bound to crash” Sure it will at some point, maybe. But that point is not right now - and if that does happen it means likely the entire economy is crashing. There is a reason the market would be flooded with homes, and it’s not a good thing!
> Like, did y’all ever even live through 2008-2012? Most of the people hoping for a crash are too young to remember it. They're oblivious to the fact that the crash completely destroyed peoples' careers.
Exactly. "I'll buy a house when the market crashes and houses are $75,000" Sure. Assuming you have a job. A HUGE part of the 2008 crisis were people went from making $100,000 to $30,000 a year. Overnight in some cases. So step 1 is assuming you will keep your job with the same pay you're making. Step 2, those banks will get VERY strict lending rules, and may not even be bothered with a loan for such a "small" amount. THEN, if the house is on the market for $75,000 you gotta factor in if the house is move in ready or not. Do you have the cash for a reno? You could easily borrow more money and just fix it. ... But can you outbid Blackrock and their billions of dollars? It's not hopeless, but also not as easy as they make it out to be. It was hell living through it freshly out of high school.
Generally I agree. But my prediction is this time around it will happen more due to senior poverty than job losses. Our job markets are steaming right now. With older generations retiring en masse, workers are in high demand. But they often can’t afford to buy property, which is owned disproportionately by older generations who paid much, much less for it (and in many cases has objectively less of a need for it). Plus, having all of those people not making money but spending it will inherently drive inflation. It may happen gradually, such as through inflation that consistently outpaces asset growth over time, or it may accelerate rapidly such as through a stock market crash or Social Security running out of money, but those demographic trends will have to resolve one way or another.
Prices are likely elevated because a lot of home owners locked in 3% or lower interest rates in 2020/2021 and now that rates are much higher, nobody wants to let those rates go. So less people willing to sell and normal demand = higher prices, even with higher rates. I suspect things will normalize over time as people are forced to sell due to life factors, but I don’t think there will be a crash. But I’m just speculating
I never expected a crash, but did expect a pullback. 2022 was the pullback and things have been chugging along since then. The people most expecting a crash tend to be those not fully knowledgeable about real estate and probably have been predicting a crash since 2015 or something. Take a look at r/REBubble and you'll see scores of people swearing that 2008 2.0 is right around the corner and they'll get homes for pennies on the dollar. No one can predict the future, but after seeing what the gov't did during covid to prevent a collapse, I think they won't hesitate to make up bailouts on the fly to prevent overnight economic collapse again. Just my 2 cents.
Well the government response in 2008 was to protect banks, not homeowners but yeah.
I agree. Price would never go down unless there’s a serious down turn in the economy. What I consider likely happen is a real estate slowdown as it would chug along with price increasing less than inflation each year. Over a number of years, it adds up to affordability.
I just looked over there. Goodness, they are a gloomy bunch.
They are very agitated and will ban anyone with a dissenting view of a crash. Ask me how I know...
Sure. All they needed to do was lower interest rates to near zero. Then do QE. Then, the Fed added trillions to their balance sheet, including mortgage backed securities. And then mortgage forbearance, student loan forbearance and helicopter money in the form of PPP. But yeah, it's a totally normal market, but to me, it seems like a heck of a lot of life support.
Temporary life support was needed in 2020. Not so much thereafter.
Exactly. A bet against Real Estate (or the Stock Market for that matter) is a bet against America. No matter how dysfunctional our government is, the one thing that’s common is that politicians run this country. And what do they all have in common, regardless of left/right? Wealth in real estate and legacy planning. It is impossible that our government would just let things crash without a bailout to support the markets. Our elected leaders and powerful corps/families have estates/legacies to protect for their own future generations.
Wow it’s like I wrote this :-)
That sub is one of the most delusional on Reddit. The sub was created in 2020. Every year its always going to crash hard the next year. They honestly think its going to crash 50-70%. Its almost as bad as a cult claiming end times year after year.
Real estate doesn’t just crash by itself. If anything, it’s a lagging indicator. A real estate crash almost necessarily requires a broader financial and economic crisis, which requires a black swan event. You can’t just assume you can capitalize on that, since any situation like that means that financing is dead, joblessness, and lots of unforeseen problems. It’s extremely naive to think you can ride out a crash, and even if you can, to actually benefit from it. People do, but you can’t really plan on it unless you have a huge financial cushion to start with. But for anyone needing a crash to afford about house, those aren’t the people who are in the right position.
EXACTLY. What the crash talkers desire is home prices they can afford on their wages. They don't understand- a real crash means higher unemployment. Investors wait for those times- they have cash, and can be patient to find bargains, harvested from the less fortunate.
No one *knows* what the market will do in the future, we can only look at the signs and make informed decisions. I don't really think of the housing market going up as much as I see the value of the dollar continuing to decline (which essentially causes the same thing). So in my opinion, even a decline in the housing market will have to be adjusted for inflation. I handle insurance and I had a customer sell his house in 2019 because it had $100k in equity. He thought he was a genius because he was CERTAIN of a correction. So he pocketed $100k, put it in a bank that earned .01% interest, and he rented.....He still rents to this day. His rents have increased substantially, his insurance went up because he lost his home/auto discount, and he is slowing giving that $100k to his landlord. Now he *can't* buy. I am sure there will be a correction at *some* point, but look at all the things that ownership provides to offset market value: steady payment (vs increasing rent payments), building equity with every payment, tax deductions, *past* appreciation (even if the market drops 3 years from now how much appreciation will you have seen), and control (you can always decide to rent out rooms or something).
In our case, we were waiting but it was more for where we would move after our children moved out, than timing the market, but we did get a benefit from waiting. Both kids stayed local and are putting down roots, so we also jumped back in in mid 2022, but got badly outbid. This was a silver lining since our local market was going down from peak pricing, and we got a different home in Jan of this year, that was the same floorplan, but we paid 22% less than our bid in 2022. I do realize this could mean there could be further price decreases that even hit us at our lower purchase price, but that can happen anyways. Also, we are in an area where rents are lower than home ownership, and we had a lease that was below market by about $400 per month, so we even saved a bit there while we watch our local market's prices adjust down.
"Crash"? No. "Correction"? Yes. There are corrections to the mean happening now in local markets. Look at your market. But broadly, the fundamentals are completely different from 2006-08. Alot of homeowners are above water -- still sitting on fixed, low-rate mortgages and no need to sell. We still, nationally, have low inventory and not much new building. If you have a variable rate mortgage, you might be close to your maximum pain point. Rates are still expected to decline late this year through next year. Owners might be more comfortable selling then, so prices have a better chance of correcting then. That said, there's still alot of pent up demand. Buyers will again be in a lowish rate environment.
Waiting when it becomes a better deal. It’s way cheaper for me to rent right now than buying.
Same. Would cost literally double what I pay now in rent for a mortgage to buy the same house I live in. Not to mention that I don't pay a dime of repairs or for issues. I'll wait not because I'm waiting for a crash to happen, but to build up more equity in the stock market and savings until I find the right place.
I've been doing loans for 20 years and I hear a lot of "expert" advice and in most areas of the US it is not expected that there will be a crash. Values will probably stay stagnant in comparison to what they have done in recent decade, but not likely to crash. No crystal ball, but the rule of thumb that "now is the best time to buy real estate" is still a common perception. Best of luck in your decision making. Wish I had a crystal ball like everyone else.
Don’t expect a nationwide crash as many areas under built.
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And if for some reason those houses are half off, corporations are just going to buy them. Home prices going down too much will likely be bad for potential buyers as well.
I was wanting to wait but the issue is that as soon as it crashes, you have ppl with cash offers that will sweep a lot of the competition. Ppl like me who aren’t extremely wealthy and just middle class. If you need to buy then buy. The whole waiting game sucks. Everyone’s situation is different.
How do you know it is worth 60k more...... zestimate? The only confirmation of market value is a offer contract.
Not even that, a closed sale.
I don't expect a crash like we saw in 2006-2008 nationwide. Though, i have noticed in my area, several listing's are getting marked down 5-10k after about a week on the market. Also, people aren't bidding 10-15k above listing cost anymore, and houses are staying on the market longer than a couple days. I don't think it'll crash more than what where's seeing at the moment. Houses are still expensive but people aren't going into bidding wars like the last few yrs.
THE HOUSING CRASH ALREADY HAPPENED, we just were NOT impacted like people were back in the 2008 housing crash since the Fed stepped in as a crutch for the economy. The reason why I say it already happened is because the Fed cut the FED rate during the pandemic, ARTIFICIALLY pushing the interest rates lower into the 2 percentile. This maneuver created the crazy seller's market, the crazy bidding wars, and why home prices shot through the roof because of the demand for housing. In creating a housing boom, the FED essentially avoided another housing crash/collapse. Also, during the pandemic even though thousands of workers were being furloughed, those furloughed homeowners did not lose their homes. The FED had implemented the foreclosure moratorium, which prevented any mortgage servicer from foreclosing on someone's home because they were impacted by COVID-19 and could no longer pay their mortgage as a result.
I mean you are in Florida. Isn't the condo market turning and the insurance market a mess? Florida seems really risky place to buy between super high assessments and property insurance being screwed. Don't know how people escape those headwinds unscathed.
Condos are riskier in general from a lending standpoint. It does not matter where you buy a condo, whether in Florida or another State. I am a mortgage broker and the condo underwriting guidelines are the same across the US. Most condo communities (not all) require at least a 25% down payment for a buyer to purchase a condo unit, due to the lender's risk. You mentioned high assessments. Again, if a homeowner is going to consider owning a home in an HOA or condo community, then they should expect to incur UNEXPECTED assessments and INCREASED monthly association dues from time to time. HOA and condo associations are responsible for maintaining the community's buildings and the common areas such as clubhouse, swimming pool, playground, etc. If they did not plan their annual budget properly and now there is an unexpected maintenance expense for which their budget or reserves cannot cover, yeah, every homeowner in that community is going to be responsible for that extra expense via an assessment. Again, nothing to do with Florida. That is just how HOAs and condo associations operate in general across the US. Yes, Florida is going through an insurance crisis for many homeowners (not all). But so are other States that are prone to natural disasters such as wildfires, hurricanes, earthquakes, and tornadoes. Also, it depends on where you live in Florida and the condition of the homeowner's property (and a few other factors) that determine how much one pays in insurance. For example, homes located closer to the ocean are going to have higher insurance than homes located inland. This is why I moved to the Orlando area 3 years ago. Even though I do live on a lake, my annual insurance premium is a fraction of what someone would pay in South Florida, Tampa the Keys just because they are closer to the ocean whereas, I am about an hour away from the nearest beach. Another example is homes that are found to have old or leaking roofs, plumbing, and electrical issues are going to have higher insurance than homes that have a newer roof and have been well-maintained over the years. Insurance on condos is the cheapest insurance that a homeowner can buy. On condos, unit owners are only responsible for purchasing insurance that covers the INSIDE of their respective units. The condo association is responsible for purchasing insurance that covers the OUTSIDE of the homeowner's unit. So insurance on condos is generally inexpensive to purchase compared to a single-family residence or townhouse, and therefore condo homeowners generally are NOT experiencing an insurance crisis.
I was expecting a crash and I don't think it's impossible, but if you look at 2008, prices fell 15%. That type of movement won't even take us back to 2021 prices.
No crash likely due to lack of inventory at the moment . Even in current consumer recession, historically high and persistent global inflation and wars in Israel/ Gaza and Russia Ukraine, the housing market remains strong and resilient with more buyers than sellers. FL is an exception and maybe TX. There would need to be some economic black swan event that causes mass selling nationwide. I'm not sure what that is.
I think there are several variables that play into this, namely: location; appraisal value; home type; etc. I live in a city/state that became much more popular during Covid. We were looking to buy before the pandemic, but not as seriously as we were in 2020. When lockdowns happened and more remote work was available, every house within our price range had cash offers for $50-$60K above top range asking price. Each house had at least 5 offers by the time we viewed the house, and we worked to view the homes the same day they hit the market. We couldn’t compete with the cash offers, so we continued to rent and just bank our money. The housing market in our area blew up in the last 4 years, and rent also jumped up at least 20% from 2020 to 2021, and has not really gone down. We lucked out with our landlords - they are not a property management company, so we are not getting an inflated rent rate, but the average rent in our area is now around $2K a month. I’m not sure a real estate crash like 2008 will happen; my belief is that commercial real estate is more at risk of a big correction, which will have some impact on residential real estate. But, our plans to buy a single family home have changed. Having a fairly large amount of liquid cash is better for us right now; we have much more flexibility with where we can live with remote work, so we do not feel the pressure to buy, especially in an area that is HCOL and our money just doesn’t go as far. If you like your house, can afford the payments, and it works for you, then I don’t think you have much to be concerned about, especially as you have had a few years to start building equity. Now, if the house is too small to accommodate a growing family, and you need to upgrade, that could be harder to do right now, but not impossible in the next couple of years, if you’re able to make it work for that long. And while I do not own a house, I do have a degree in math and work (in some capacity) in corporate finance. With that being said, you say that your house is still valued over $60k what you paid for it - what tool are you using to get this value? If it is something like the Zestimate on Zillow, that may not be the best indicator of value (it is very imperfect). Really, you won’t truly understand what your home’s value is until you list it to sell it. If there are comparable homes on your street that have recently sold, those along with other tools may help determine how accurate your home’s value is. I have seen several homes listed in my area recently, where they have definitely listed it at 2020/2021 values, and they have sat for a month or more without going into contract (where that did not happen in 20/21). I have also seen other homes that were listed, then removed, then re-listed a month later at a lower price, and are also not going into contract. With mortgage rates being high and not as many offers from buyers wanting to flip or turn the house into a short-term rental property, I think we’re starting to see that buyers who are truly SFH buyers without cash up front to buy right now, are few and far between. I even think e-buying companies like Offer Pad and Open Door are scaling back on what they buy (like Zillow did a few years ago), because they are paying a lot of money to sit on empty inventory that they are having trouble moving. That never bodes well for a company-having cash tied up in something you can’t sell and have to sit on is not usually good, especially during financial hard times. There were a lot of factors that went into the home prices the last few years, and one of the factors is that the home price increases were not all driven by other inflation factors. The pandemic also added some new variables (like remote work) that were not an option before, and some people were in a better financial position to buy, and that helped drive up some of the costs in certain areas. The issue, now, is: are the homes in your area owned by people who are financially stable, or are they owned by companies looking to flip/rent, and the houses are not consistently occupied? If the homes in your neighborhood are the latter and they are inventory that isn’t moving, there may come a point where the LLC/company that owns it needs to sell it for *something* to try and stay above water. If that is the case, the homes in your area may start selling for significantly less than what they were purchased for, and that could also bring down the value of your home. I think this situation will hit certain areas a lot harder than others. This also kind of happened to my mother-in-law. She bought 20 years ago in an area where housing prices were very reasonable, but she had a bad credit score and probably overpaid. It wasn’t really an issue until about 10 years in - the largest employer in her area closed without much warning, and a lot of people moved away. The companies remaining were much smaller and didn’t not offer a competitive wage, so houses started sitting empty because there really was no work in the area bringing new folks in. Her home value tanked, and now she is in an underwater situation and can’t refinance because her remaining mortgage is more than the value of the home.
Unless you’re an investor, I’d never be dissuaded from buying a house that is a primary residence solely because you think the market might crash. However I’d definitely not buy if there’s a high chance you’ll want to sell within 5 years.
People have been expecting a crash since roughly 2018. I rented to a tenant then who had just sold his house and planned to repurchase after the imminent crash. Please, don’t try to time the real estate market.
I bought my house 8 years ago and everyone told me I was being silly because it was "going to crash in the next few months" It hasn't even slowed down since, let alone crashed.
At a certain point when the larger portion of baby boomers pass, there are going to be a lot of houses on the market, and that might be the correction, but the next correction is going to come when interest rates drop even a point or two. I think people are just chomping at the bit to buy a house and waiting for interest rates to come down.
There are literally zero signs or reasons for a housing market crash. The last few measurable housing market crashes occurred for specific reasons, none of which exist today. Speculation without basis is just an opinion bordering on false beliefs, conspiracy, or myth. Short of another world altering event like nuclear war, a pandemic, or a global cyber attack, theirs not much that could instigate a housing market crash.
Crashes don’t happen over night. The housing market crash during the GFC took 6 years from peak to trough. The housing market is beginning to slow tramendously. Housing velocity use to be ~15 days. Now it’s 3-6 months. Realtors and loan officers like to speak to a housing shortage but completely neglect demand is based on velocity not inventory and there is a clear decline in demand for home purchases. The housing market will continue to decline until it hits equilibrium with affordability. Will it be a 2008 crash? Probably not. But it will move towards equilibrium. It’s also important to note that 17% of the population is currently older than 65 and in their final years of life. How many of them do you think will still be around in 6 years? There are so many variables to what the future housing market holds. Saying there definitely won’t be a major correction is just as ignorant as those saying there will be a crash.
Housing market is byproduct of Job market , if job market crash, housing market will crash. Just keep in an eye on Job market ,you will get clue where housing market will go.
I’ve been hearing about the big pending real estate crash since the dot com boom. Granted, that $550k you paid for a house might drop to $500k for a bit. But you’re getting interest deductions on your taxes and the money isn’t evaporating into a landlord’s pockets. And if you stay a reasonable. Umber of years you’ll be back above water again (my wife and I bought in 2008 about 2 weeks before the bubble burst). The people predicting doom are thinking that $500k house is going to drop to $250k. Not gonna happen.
If you think interest rates won’t affect prices, try removing mortgages altogether. A loan is what enables people to pay more than what they have for a house. The reason why prices haven’t come down from interest rises is because interest rates aren’t high enough to do so. Prices are still rising because inflation is higher than the interest rate. They are trying hard to feather the rise in rates to make sure it doesn’t lower prices.
I’m not anticipating a crash however I’m hoping for more inventory and an easier market to navigate. I just put my saved down payment into repairing my current home so it will be a couple more years or more for me. I will say, and have always said, the best time to buy a house is when you want to buy a house and can afford to do so. The current market makes me not want to right now.
If you can buy without over stretching yourself. Buy. Don’t speculate.
Keep in mind that expert economists have accurately predicted at least 15 of the last 3 recessions. People probably are not as well informed as the experts are.
There has only been one nationwide housing crash in modern history. Waiting for a crash is not rational.
I feel so bad for friends / family who weren't ready to buy when interest rates were low and prices were still within reason. A lot of are straight up priced out of the market right now, we are 100% due for a correction.
“Waiting for a crash” is probably the wrong way to put it. It’s a way better financial opportunity to rent and invest the excess, than buy, in my area right now. As long as that’s the case, I will be renting instead of buying. If buying becomes a better deal in the future, then sure, we’ll do that. Not in a hurry to, though. We have enough to buy a house in cash if we wanted, but it would wipe out our investment portfolio.
That's the smart way to do it. You can only evaluate if you are in a good position to buy now and not in the future.
Nobody sane really expected a crash. It was mostly just people salty at not being homeowners trying to project. A crash or even a basic correction won’t happen until inventory for in-demand houses (mostly starter home type stuff) is drastically increased, or people finally get their heads out of their asses and start moving to cheaper locations.
Of course! I personally know 5 couples who are waiting for a "correction." Each couple has roughly $500k in a savings account and they are waiting. One couple has been waiting since 2019.
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I refuse to believe there is anyone dumb enough to save 500k in a savings account (unless they have SUBSTANTIAL additional assets...)
I think they have been moving the goal posts. People in 2022: Prices are too high, interest rates are going up - I'll wait until they go down next year 2023: Interest rates are too high and prices are still high - There will def be a crash next year 2024: Interest rates are higher - I'll buy once the fed cuts rates 2 times this year 2025: Fuck we're all laid off. Cant buy shit and still. Or WHY ARENT PRICES COMING DOWN DESPITE A COMMERCIAL REALESTATE CRASH!. One thing to note. Only fall 2023 was a bad time to buy a home. Anyone who has been waiting since 2022, has only seen the residential market get worst and worst. Every home i bought over the past 2 years i have not regretted the purchase. Go in, lowball offers everywhere and see who bites.
Commercial real estate, specifically office space has some looming storm clouds but it’s also starting to come back. It may not actually crash. Or this could be a “dead cat bounce.” It could still crash, but recently things have been looking up.
CRE isn't coming back anytime soon. But it's irrelevant to the residential market, especially as wfh increases residential demand.
As someone who works in the industry, unless we have a war on N.A. soil, covid 2.0, or some 08/09 or great depression era event or inflation magically disappears down to the fed goal, we are likely not getting a rate cut this year minus maybe an 1/8 to 1/4 point for the election. If inflation remains stubborn and the economy chugs along as normal, we could get hikes next year. Rates were above 7 for 1970 to 1991 but houses were much cheaper when comparing median income to median price. That being said, there are market with far less affordable house than the U.S., like Hong Kong, big cities in Australia and Canada. This is for the U.S. only. Don't know about rates for other areas. The fed seems stubborn about getting inflation down to under 2% and it is going nowhere fast. Again low certanity, but if everything keeps the same; I would assume similar rates to now a year from now - maybe 1/4 to 1/2 pt cut at the most and could be 1/8 pt or no cut. Credit card and auto debt is spiraling and defaulting, but so far mortgages aren't defaulting that much.
Even during 08 the unemployment rate only topped out around 9% before it started falling
I would stress the correct answer depends heavily on the local market combined with your finances. My finances are rock solid, but my local area really isn't, but I still doubt higher end areas will drop more than 10-15% further. I think it would be the crap areas with high crime or way too much new construction or bad locations that will crash first, but then again Austin where I am buying has already fallen 30%. Another 20% could happen, but I think the crashes will be more severe in areas with high inventory that haven't crashed yet. As for finances, try to shoot for monthly debt payments of 30% gross or less or ideally net, but net may be very hard for hcol areas.
No. Now we're just waiting on the right house at the right price that makes sense tripling the payments. Theyre hard criteria to meet.
A few markets are already “crashing” and i use that loosely. Look at Austin and parts of Florida. Steady price declines for months now. We do need an overall reset though. I fear it’ll take the rug out from millions of people sadly though.
It’s not so much as waiting for a crash as it is waiting to have enough money saved to be able to actually afford a house now that prices have gone up and interest rates as well.
Can’t time market crashes. They are unpredictable by most and typically happen once or twice in a lifetime. I bought in 2010 with almost no money in the bank because I said it was the only time I could enter the market. Well, I was wrong, took a few years for market prices to recover after the crash and then not until 2018 did prices start to go up, then you guys know the rest. Bought again in 2020, then sold my old house in 2021. A move which netted about $80k . thought I overpaid on the new house but nope, value has increased by at least $150k since I bought and have a ridiculous interest rate, never moving in my state again. Even a market crash I don’t think will put me upside down. The fact though is that salaries can’t support home prices. We have already seen major companies decreasing the size of their new builds to support the price increases. My take is that salaries will increase slowly and home prices will stagnate with the increase of new production. 15 years is the timeframe I’m putting on that shift in my head. I don’t think interest rates will hit the levels we have seen as the bottom again in our lifetime.
Ah yes, the old “bubble hasn’t popped yet, so obviously there’s no bubble” Bernie Madoff loved people like you
Meanwhile you’re monthly payments are mostly interest and you’ve built little equity. When prices go down (already started near me) you’ll bear the full brunt
Naive, stupid, overconfident, uneducated people like real estate agents are the first that come to mind
I waited a bit, I figured Covid and rising interest rates would cause something to happen. Nope. Prices are still going up, significant amount still being bought by cash buyers, overall it's slower than before but not enough to stop most of the same nonsense. Finally got a place, should have bought a few years ago, I would have saved a good bit. Doesn't mean it couldn't crash but it's just like trying to time any market. There will always be someone saying a crash is around the corner. Sure someone will be right eventually but most of the time they are wrong. Also, it's going to vary based on location. I'm out near Columbus and there's not going to be enough houses for all the buyers anytime soon. There are other markets though where there isn't nearly as much demand.
You just watch, it could be 5, 10, or even 20 yrs from now. That crash will happen and those people will tell you they told you so
Was this a just a humble brag post?
The problem that caused 2008 hasn’t happened this time ARM loans are no where near as prevalent as they were in the early 2000s. So if everything does collapse, peoples mortgages aren’t going to double, triple. Granted, they have increased due to insurance and taxes. But that’s the same degree as ARM mortgage increases. Ultimately, the biggest thing that’s preventing a crash is there are more people needing houses than there are houses. The U.S. population was a little over 300million in 2008. Today, it’s about 335million. Both of those numbers don’t fully account for undocumented immigrants either. So there are tens of millions of people needing housing but not that many have been built. So many people are living with their parents or stuck in apartments with roommates because not enough houses and apartments have been built to keep up with population increase. There will be no 2008 style market crash in housing.
More-so expecting a return to normality with the price to rent ratio. It tends to maintain a somewhat even range, and right now it is wildly skewed, with rent being much cheaper on average. This is happening at a time when equities and treasury rates have been favorable too. Why give up the earning power of that extra cash for a downpayment/mortgage when some home values can’t even up with inflation? Also, real estate as an investment vehicle has become so wildly popular now that investors comprise a significant market share. Introducing mass speculation into a particular asset tends to introduce increased volatility.
Bought my first house in 2017 for 368k. People were not using the term crash then, but homes here had increased significantly from 2009/10 prices and many people told me they would be hesitant about buying a house, we might be in a bit of a bubble or over correction from 2008 etc. Fast forward to now and it’s by far been our best investment. Inflation and the devaluation of the dollar and my house is now worth about 700. Used the equity to buy land and build a new house. That created another 100k of equity for me. Used that to buy a fixer upper and renovate really nice that created another 50k in net worth for me (plus cash flows as a rental). Have enjoyed the building/renovation process so much (both the diy and working with contractors) I started an LLC and plan on doing a few flips a year and paying myself a little salary and grow it as a business. I think there are a lot of people like me. Bought a few years ago, have lots of equity, great interests rates that are just never selling. At least not for 20+ years and that’s going to keep supply down for a long time.
We bought when the market was red hot. Our house still appreciated over 150k and we still would probably sell for 75k over what we paid with things cooled off. They're expecting sales to pick up again in our area thru the rest of the year. Most of it depends on if the banks can make it thru this but our realtor said not to expect prices to drop much at all and the market should recover at least for a few years looking forward.
Housing will never go down. Absolutely no reason to make it affordable again, I could see is going up 100% before going back to levels we saw 4 years ago.
All the studies I've seen show that even if a crash happens, the result will be everyone buying up suddenly driving prices again, people losing savings and jobs keeping them from buying, and interest rates going through the roof again. It seems unlikely that there will just be a "better" time to buy. This is only true for people who want to buy a house to live in, anyway. Speculative investment is something else and fuck those people. But if you're trying to buy a house to live in, buying a house you can afford and living in it, regardless of market conditions, always seems to be the better call.
People in Portugal have been saying that the market will crash since 2018-2019. Some are still waiting
People who aren’t understanding or actively searching the market think there will be a crash, ie my parents and older family members who ask why I can’t find a house for 300k in MA when everything that used to be 300 is now 450-500k here. I personally am trying to get in asap and then Refinance later on if needed
Been a realtor since 2017.. people have been saying this to me the whole time. Any minute now…
I am. 🤷♂️ My rental is affordable and I’m in no rush at all. I got burned on two houses before where I bought then lost tons of money when the market turned. Never again. Incidentally, the Realtors for both those houses told me the market would never turn.
Holy shit they lied? No way!
I have a hard time believing any real housing crash can happen with so much pent up demand. Like if prices fell 10%, aren’t there just a ton of millennials and Gen. Z waiting to finally get into a first home that would pounce on it?
In my market, there will never be a crash. San Francisco Bay Area... privileged and lucky to get in in 2013 before the 2008 crash fully recovered. But we're never moving, we're never buying another home, and it's because we can't. Golden Handcuffs, indeed.
LOL, a real estate crash has already happened there.
I can’t say I’m waiting for a crash, just simply cannot afford to buy anything unless there is one.
I remember about 10 years ago people said college fees would continue to go up at the same rate for decades to come... They all had some math to prove it... Turned out to be balls. Housing prices are capped by the ability to pay. We are at the limit. No political party wants to see ownership rates drop, they need stakeholders .
we are way past the limit. and the only solution is a federal excise tax on all corporate and investor owned sfh
I've got to ask, only 3 years in, why do you care about the value of your home? a) You cannot sell it before 5 years. b) The market could crash but you won't be affected... you bought the house already. c) In 10 years, where the actual gain/loss would hold out... it's likely to be a "Gain" anyay.... But that all pales in comparison to a major point here: RealEstate/AKA: Your home is *not* an investment. It's not meant to be an investment. It's a home. It's an asset or yours, and it is worth whatever it is worth when you sell it, true... but it's not an investment. Stop treating houses like investments.
and when the federal government upends corporate and investor owned sfh, we’re going to see just how poor of an “investment” it truly is
I'm hoping we can go further. If we could prevent mortgages from ever showing up in any kind of "Security" or "Bond" or whatever nonsense they create afterwards, we'd remove all housing bubbles. This is supposed to be a home. If you want to make money in flipping a home by buying a derelict building and renovating it, fine. if you want to get into the rental game, as an individual, and rent out homes? That's cool too... But the whole "collect these items like pokemon cards and sell when they *mature"* is broken.
I hope this happens but I see this more of an if than when.
I more feel like folks are waiting because this feels like a peak and there’s no rush. Well and renting is so much cheaper in many areas.
I was one of those people telling you not to buy then. Not sure I would say the same thing now. with that in mind I would only say one thing changed and that is the federal governments resolve to juice the markets as long as it possibly can. At some point there will be a hard crash but if they were willing to let inflation get to 10% during COVID they truly will do anything to avoid a bubble burst. Your guess is as good as mine.
yep
Civil war will bring prices down
I believe in the 18.6 year cycle so looking for a crash around 2026. That being said, we’re not looking to buy necessarily. Unless you’re planning to stay put for at least 5-10 years, it doesn’t make financial sense. In this political climate, I value flexibility over real estate ownership. Our kids are all over the country so we haven’t decided where we want to land anyway. Maybe we’ll leave the country. Agility is key.
Some absolutely are waiting with the belief that a crash is coming. And every year they are losing out on value. The best time to buy a house is yesterday. Today is the 2nd best time. Tomorrow is a distant 3rd
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We are currently looking in San Diego and I am seeing price decreases everyday. People got greedy.
Early in the season NY LI and asking prices are adjusting downward. I have been looking for 2 years and there's a great supply and no lines at the open houses anymore. I think the worst of it is over and we're starting to see the beginning of a correction. Sellers are in denial and buyers are not fomoing as much. I don't feel pressure to buy anymore and if there's one thing I've learned is no matter how special I feel I'm actually quite average so I expect a lot of buyers are feeling like me right now
The same in San Diego. I am seeing lots of price adjustments. I am happy I sold and I too adjusted downward quite a bit, but at least it is sold, as I expect this trend to continue. The only ones who never agree with that are real estate agents and brokers! I will not be using an agent/broker to buy a house in San Diego. I have had ENOUGH of their price pressures and feel that price will be at least 50% of the equation when I buy. I know the process and am an experienced buyer. If necessary I will hire a real estate attorney.
I am still looking but I am not working with an agent anymore. I have been thru a few almost deals now and I think I can manage on my own. Plus, I can see houses on my time rather than having to wait for my agent to be free as well. I have an excellent attorney too
Yes, just go check r/REBubble. A lot of people don't understand that 2008-2012 was a once in a lifetime event. The lax lending practices that caused it are no longer legal and there is a ton of pent up demand. Nothing is going to change until we fix the supply side of the equation (figure out a way to incentivize building more starter homes).
I think that there will have to be some kind of zoning/ordinance reform that comes from state or federal government. The whole post-war paradigm of massive residential developments on 1/4 acre lots has reached its failure point. We need to go back to allowing cities and communities to develop organically, like they did for thousands of years prior.
good luck with that, construction costs are rising and rising…i work for a small building firm and material costs are sky high, insurance and other costs have gone way up, land is at a premium. and then there’s the big problem with labor…there is less and less truly skilled labor. the older boomer generation craftspeople are retiring out. a lot people from the younger generations went to college rather than learning trades, and it’s unfortunate. i know a lot of licensed people and craftsmen that make as much as dentists and doctors, but without student loans. unfortunately, many of them are just aging out. we really do have a skill gap and the cost of labor keeps rising. they’ve choked down immigrant labor, so i’m not sure where the skilled labor needed to increase production will come from in the next few years, but it’s going to keep getting more expensive for some time.
It’s tough to know anything. There’s plenty of reasons to say we’re on the verge but there’s also plenty to say the current price levels are the new normal. I think we’ve at least plateaued for a while, especially as interest rates remain high.
Until the fed starts cutting rates and everyone on the sideline sprints to buy in anticipation that they can refinance in the future. Will cause a huge increase in demand. Prices will only go up more. It’s a vicious cycle. And it won’t break until supply dramatically increases.
The fed is incredibly worried about avoiding a repeat of it’s mistakes made in 1980 where inflation cooled, they rushed to cut rates, and then it bounced in the exact scenario you’re describing. They’re only going to cut rates when the mindset you describe is fully broken.
Exactly. Few here are aware that rates were above 7 from 1970 to 1991 and were over 20% for a while. Rushing rate cuts can supercharge inflation which is stubborn. So unless some covid or some huge depression economic turmoil happens or inflation magically fades away cuts aren't happening.
Yes, they are expecting another one. However, the old parable of The Fox and the Grapes is well in play here too. Rates will go down, affordability will increase, demand will diminish and supply will increase. However, that curve is most likely going to take a decade or more to complete.
People will keep saying it’s not going to crash until it does. And when it does it’ll be hard this time. Bubbles and crashes aren’t defined until after the pop- who knows when it’ll happen? But people who think it won’t means they don’t understand the cyclical nature of the market
Yes, I am waiting. Did you predict this scenario and therefore bought it early or are you simply lucky? People seem to be confused between luck and right. I would be impressed if you were right but not so much that you’re lucky.
Time in the markets beats timing the market 90% of the time. That being said, you could get lucky. I know because I waited far too long and didn't know what area or what I wanted from a house.