Real Estate Crash Coming?

[jyl]

Yeah, house sales and prices are booming in some areas. But the % delinquency in mortgages is shocking.

Here’s a blog post on FHA mortgage delinquency rate. Over 17%. All time record. https://wolfstreet.com/2020/09/25/fha-mortgage-delinquencies-hit-record-17-4-subprime-higher-risk-in-deep-trouble-even-as-fed-policies-trigger-mad-land-rush-in-split-housing-market/

This recession is fantastic for the richest ($BNaires), not hurting many others one bit, and hitting others very hard. In the housing market, eviction moratoriums and loan forbearances means we’re seeing all the positive stuff - the higher income city dwellers buying their refuges in the rural/exburbs/suburbs - while the negative stuff - the foreclosures and evictions - is artificially suppressed. For how much longer?

[look 171]

My agent predicts it will be another 6-9 months when forbearance lifts from all the CV 19 none payments. There will be a lot of real estate owners that can't hold on any longer will be foreclosed flooding the market. Renter will continue to lag behind with actual payments. Good luck getting close to a year's rent back(who knows, maybe more?) from these dead beat tenants. I have one now, as soon as they announced it, he stopped paying. I know he still have a job, but I can't evict. so far, I am owe 17,500 by the end of this month. Kiss all that money good bye. Most can't hold on that long.

[look 171]

Last recession, the hosing was one of the few industry held it together. I am not sure about this one. Its time to buy in a year and go for a ride

[Bill Douglas]

Originally Posted by jyl

Real Estate Crash Coming?

I don't mind. Everything I do is long term, and I'll just see it as an opportunity to buy another.

[look 171]

Originally Posted by bill douglas

i don't mind. Everything i do is long term, and i'll just see it as an opportunity to buy another.

100%

[LWJ]

Ok. That is shocking. Living in a town with expensive real estate, I have seen that jumbo mortgages really haven't gotten cheaper. I was told that the perceived risk has increased. And this is for someone with a 800+ credit score.

Summary. I believe it.

The question is, seeing the writing on the wall, what to do TODAY to anticipate this?

(Which is ironic, as I spent my afternoon researching commercial real estate for investment)

[cabmandone]

As long as there are subprime loans, there will be risk of a crash. They are lending money to people who should be renters, not owners. When it hits, we'll see all those great "strategic defaults" because people will be under water. We never learn... Ever...

[KFC911]

Originally Posted by look 171

Last recession, the hosing was one of the few industry held it together. I am not sure about this one. Its time to buy in a year and go for a ride

Don't understand this post... a dozen years ago housing was totally dead here and it took about 6-7 years to dig out of the abyss.

Cheap credit has created it again imo ... folks are in houses they can't afford....

Rinse & repeat

edited: ^^^^ or what Nick said

[Porsche-O-Phile]

Housing has been stupidly overpriced for a long time - people simply can’t afford it and a major correction is coming.

Glad I sold when I did.

Maybe I’ll buy again but maybe not... it’ll be interesting for sure to see what happens.

[ckelly78z]

A housing crash to me means a buying opportunity...what is happening now is unsustainable exuberance, that is driving bidding wars for homes. You better be prepared to pay $10,000 over asking price !

[KFC911]

This area has never experienced housing prices that increase rapidly.... just slow & steady (taking 7 years off in '08 as the shtf). Now it's a frenzy (for here).... it's not real, nor sustainable.

Just like the equity markets .... it will correct.
I've never bought houses anticipating increases in value other than normal, modest, appreciation.

Houses of cards purchased on credit quicksand for many.

I think I've seen this movie before...

[Shaun @ Tru6]

I see a major crash coming across the board worse than 2008. Our economy is on a sugar high built on cheap money. And we are in a state of ignorant bliss in exactly the same way as leading up to the 2008 crash. I haven't looked but think seeing what Michael Burry and Nouriel Roubini have to say about the future is prudent. Corporate debt is through the roof, deficit spending and debt is through the roof, we don't seem to have a proper monetary policy other than free money. What could go wrong?

I think it will take a good 2-3 years for all of this to catch up to us. Accelerants are aplenty though.

[Sooner or later]

As long as people are unable to work....damn near 6 months in and we still have 10 states with unemployment above 10% (August numbers)

https://www.bls.gov/web/laus/laumstrk.htm

[biosurfer1]

Originally Posted by Sooner or later

As long as people are unable to work....damn near 6 months in and we still have 10 states with unemployment above 10% (August numbers)

https://www.bls.gov/web/laus/laumstrk.htm

Meanwhile we just spent a few days at Lake Tahoe and on a walk to dinner I counted 14 stores, 12 of which had "help wanted" signs in the windows.

When there is incentive not to work, some people won't work.

[LakeCleElum]

Can anyone confirm what I was recently told:

In August, 34% of the mortgages were not paid on time?????

[HardDrive]

Agree. We are in for a nasty ride.

Originally Posted by Shaun @ Tru6

I see a major crash coming across the board worse than 2008. Our economy is on a sugar high built on cheap money. And we are in a state of ignorant bliss in exactly the same way as leading up to the 2008 crash. I haven't looked but think seeing what Michael Burry and Nouriel Roubini have to say about the future is prudent. Corporate debt is through the roof, deficit spending and debt is through the roof, we don't seem to have a proper monetary policy other than free money. What could go wrong?

I think it will take a good 2-3 years for all of this to catch up to us. Accelerants are aplenty though.

[Seahawk]

A few things.

Real estate corrections are an if, not when, occurrence. I wish, and it will never happen, that after the coming real estate debacle, firm lending rules are put in place...like the old days.

If Biden is elected the entire economy will be on a Nantucket Sleigh Ride and we are the whale. The markets will sink like the Kursk.

If Trump is elected the harpoon may miss, but he has to fix the federal budget. He has shown zero inclination to do so. No pol has...the federal budget is a complete abrogation of responsibility by your elected officials.

There is no more room for debt, folks, let alone a Green New Deal or other flights of fancy.

Me? I own the farm, live on the water, know how to fish, have no debt and plan on expanding our acre garden.

Lots of things to shoot as well.

[look 171]

Originally Posted by KC911

Don't understand this post... a dozen years ago housing was totally dead here and it took about 6-7 years to dig out of the abyss.

Cheap credit has created it again imo ... folks are in houses they can't afford....

Rinse & repeat

edited: ^^^^ or what Nick said

I am in a different location then you. LA real estate has always been hot just like any other over crowded cities around the world. Supply and demand. With that come traffic, crime and every good bad things a large city offers.

Our last recover rate was 2-3 years back in 08. It started to creep back up. The pricing went beyond the last height of the market and kept going. Some areas didn't get hit much, pricing remained, about a 5-10% drop in value with people still buying and selling, yet slowly. That was when I got involved. I think this one maybe different. We are in it for a long recession. Like Bill and others say, buy and hold. It will come back up. Its long term.

My suggestion to some is to take money out if there's equity in their home, wait and buy when the market drops. Its free money now at something like 2.7%, or lower? I feel inflation is already here with everything I see going up. I am not sure if its covid related due to closure. Once that goes up, there is no pulling it back down.

In CA or LA for that matter, the left policy is what's putting the fear in me on more investments. Lots apt owners are feeling the pinch with their hands tied. They are selling. These policies are not healthy for real estate investments.

[Tobra]

2-3 years is pretty optimistic. It is going to auger in, and it will be spectacular.

[speeder]

One hell of a lot more than the RE market is going to crash. If you have a house to live in and it’s worth less on paper than in 2020, that will be the least of your worries.