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I am not sure if it will lose that high of a percentage, but I do expect some fall out. Second homes may have issues if the economy worsens, job losses mount, and people stop travelling. Houses held for air b and b could be affected imho.
50%? No, not in this lifetime. Will it come back to Earth eventually? Yes, I believe it will. With the cost of everything skyrocketing, the stock market down, unemployment creeping higher, the demand for these high priced homes will wane and bring prices down with it. When that will occur is anyone's guess.
Do you think the real estate market is going to crash...
- meaning that it will lose at least 50% of the gains since January 2020?
Likely. Like everything else so many want to call 'gains' since the Trump illusion.
eg: DJIA Nov 2017 ~23,500 (+5% /yr compounded) = ~29,900 <-- real close to the close yesterday
The base problem with RE is the distortion of housing needs by the 70-120 million surplus Americans
who require someone else to pay their rent for them vs the needs of those who actually do earn ...
even in a "normal" market there just aren't enough bedrooms to go around.
The compound problem is this latter group of earners who don't earn enough ...
enough to keep up with the "gains" the sellers seem to expect as their due.
I just sold a small Cape Cod house for more than value, built as entry level home for factory workers. Plywood walls, 4" not 6", 1948, no insulation. I did many updates, purchased in '07 for $100,000. over value (at the time) for here. Sold for $155,000. I could have sold close to 170,000, not doing that to my neighbors. Many homes being bought up for AirBNB, it is an issue for people trying to buy, being outbid by groups of people. Hard to say where this is going.
If housing lost 50% of it's value we would be in deep deep do-do. There is a lot dependent on home values being stable. If that happened I'm sure mortgage lenders wouldn't lend under traditional circumstances, not sure what they would do.
Home equity lines of credit would be called due. People would go into foreclosure left and right because many would be underwater. It would be 2008 all over again, except worse because the other sectors of our economy are already weak.
I've been hearing doom and gloom but in this hypothetical scenario we are talking about a full blown depression.
I'm predicting a monumental implosion. If this isn't a real estate bubble then what is?
We are already starting to see the air come out of it.
Interest rates are already having a major impact and the Fed is nowhere near done with rate hikes.
A recession is looking more and more likely which will lead to job losses and job insecurity.
Inventory is climbing as demand slows due to interest rate hikes, and as more and more people list their homes trying to cash out while the market is still high.
NOT total value... just the illusory "gain" since some given benchmark point.
I'm comfortable calling that late 2017 (after the Obama era baked in X factor had settled).
The Q's are about what a "normal" degree of gain is reasonable,
and what youngsters without direct experience prior to the recent insanity think is "normal"
I think some of you are missing they said hypothetically lose 50% of the value gained since January 2020 not lose 50% of its value overall. That’s certainly likely in some markets if the economy skids into a recession. Our house nearly “doubled” in value since then.
I believe the housing market will correct but not crash. The amount of the correction will depend on the desirability of the local market. Some markets will face a greater correction than others.
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