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So, I'm just guessing here, that the real estate market is going to have some "flushing."
Now that some/most are seeing some light at the end of a tunnel, it seems to me that the entities that loan money, are going to start to evict the dead fish, out of their pools. This is going to put A LOT of properties, back into circulation.
This may help pricing drop significantly. Some recent buyers, may see their equity evaporate. (These may be the people most vulnerable.)
The people that bought 20-30 years ago? Not much likely will happen to them.
The young people, living beyond their means? They may have to start over, with more realistic goals. Some, may just remain in the "rental" ,market forever, as they don't want to risk getting burned again. Long term, this could be bad for the RE market, as demand for rentals remains strong, but sales could be stronger with their participation.
Sure, I know things are going awesome for RE agents/brokers, but I see the tide is about to start changing. I sure hope they've played their cards intelligently.
I base this on the "cycle." We all know this is cyclical. We don't exactly know when the "high" is, nor the "low." (But, we DO know that the climb we've experienced isn't sustainable.) Again, I'm guessing, here.
So, with this inevitability coming, what have you done to prepare for it? Anything? Nothing?
More importantly, what do YOU think is going to happen, in the next 3-6 years?
Nothing to worry about? On the other end of the spectrum? 2007-2008 all over again.
Sorry, I'm rambling. I just listened to our Fearless Leader with his first media show.
I think as people feel more comfortable letting strangers into their homes, there will be more listing (most of the houses I visited in the last 5 months are empty or staged). Although I’m not sure if there will be more buyers as they also get comfortable walking into strangers homes, and companies making WFH permanent or demand workers be in offices cause another wave of migration
So, I'm just guessing here, that the real estate market is going to have some "flushing."
Now that some/most are seeing some light at the end of a tunnel, it seems to me that the entities that loan money, are going to start to evict the dead fish, out of their pools. This is going to put A LOT of properties, back into circulation.
This may help pricing drop significantly. Some recent buyers, may see their equity evaporate. (These may be the people most vulnerable.)
The people that bought 20-30 years ago? Not much likely will happen to them.
The young people, living beyond their means? They may have to start over, with more realistic goals. Some, may just remain in the "rental" ,market forever, as they don't want to risk getting burned again. Long term, this could be bad for the RE market, as demand for rentals remains strong, but sales could be stronger with their participation.
Sure, I know things are going awesome for RE agents/brokers, but I see the tide is about to start changing. I sure hope they've played their cards intelligently.
I base this on the "cycle." We all know this is cyclical. We don't exactly know when the "high" is, nor the "low." (But, we DO know that the climb we've experienced isn't sustainable.) Again, I'm guessing, here.
So, with this inevitability coming, what have you done to prepare for it? Anything? Nothing?
More importantly, what do YOU think is going to happen, in the next 3-6 years?
Nothing to worry about? On the other end of the spectrum? 2007-2008 all over again.
Sorry, I'm rambling. I just listened to our Fearless Leader with his first media show.
I don’t think there’ll be as many foreclosures as people think (or hoping for some). Personally I didn’t know one person who lost their job during the pandemic that was a homeowner. I’m sure plenty did though. Also in the beginning I got letters from both my mortgage companies offering to defer my payments to the end of my loans if I couldn’t make my payments.
As you say it’s cyclical, I don’t think anyone will argue that, but if the market drops by 20-25% tomorrow where will that put it? 2017-2018 prices (or later in some markets). I don’t see people walking either if their mortgage is upside. People who did this during the Great Recession saw prices get back to where they were (and then some) so no need to hit the panic button if it happens.
Despite owning two homes I wouldn’t mind if I lose equity in the short run as I’ve been looking at picking up an investment property the last couple of years. Those that weren’t just right look good now as I got priced out of what I could afford comfortably this past year. I thought prices would drop during the pandemic and I waited too long. Thus is life.
I think there will be a few more (percentage-wise) homes come on the market compared to a year ago...examples:
People who were probably just about ready to list when the pandemic hit and decided to wait things out (and also couldn't/wouldn't travel to go house-hunting in person). I'm thinking empty nesters or early retirees, for example, who don't need to move, but maybe want to downsize and/or move to another area or situation.
Landlords who are tired of dealing with tenants. Once eviction restrictions are lifted, I can see them cleaning/fixing up their rental properties to sell and take some profits.
Otherwise, I don't see a whole lot flooding the market. With WFH arrangements, even partially so, people who generally like where they live but have a long/bad commute will probably want to stay put...or they're stuck/priced-out of where they'd rather be.
I'm hoping some of the city dwellers who (supposedly) fled to the 'burbs decide to return to the cities, opening-up the suburbs for those of us who are searching there. And I'm also hoping the foreign national investor types, who come in with huge cash offers, somehow disappear from the market.
First, I think the crash of 2008 or so was even swings of the market extreme. I think only the crash of 1929 compares. So while I’m sure that the market will swing back the other way, I would be surprised if if was as bad as 2008/2009 or so. I tend to lean more towards a correction similar to the one in the early 90s, etc. Not fun to live through, but not quite as brutal.
Second, I also agree some of the other posters that I don’t see a huge crush of houses coming onto the market. Some of the houses now who have mortgages in forbearance will go into foreclosure, but a lot won’t. And even if every home in forbearance were available for purchase that still wouldn’t get us to “normal” inventory levels, especially at the lower entry level price points.
I tend to lean towards the lower price points not returning to more normal inventory levels until multi-unit housing becomes more common and starts getting built. Which I do think is slowly happening. My area has very few if any condos or townhouses, and when townhouses and villas are built they tend to be the luxury kind that is designed for people downsizing versus first home buyers. I am starting to see that slowly change. I also think many first time home buyers also need to readjust their expectations that they will have a SFH as their first home, especially in places where housing has traditionally been more affordable.
1) Fannie and Freddie will tack on any arrears on to the end of the mortgages, redoing the underlying notes. I am confident this will happen as the feds control those entities.
2) I don't think you appreciate what is happening with builders right now. They are struggling to build due to shortages. Since they aren't adding enough inventory to help with the supply problem, I don't think home prices are coming down for a while. At least not in my area.
3) Once boomers start dying, then I think you will see things slow down unless there is some catastrophe between now and then. So 2025-2035 is when the bulk of them will be dying. They own close to 40% of the housing stock.
4) I don't see a lot of young people living beyond their means. The young people that I have been working with look at buying houses are actually coming in with more savings than I did when I bought my first home with a downpayment loan from the in-laws.
5) Things aren't going awesome for real estate agents in my area. It is brutal for anyone working with buyers to get them under contract. They are writing a ton of offers for a single buyer. It is an incredible amount of work. I think you are confusing fast sales for the listing agent, with easy money. Commissions are being hammered in my area. So far this year, commissions on SOLD homes are solidly between .75% and 2.5% only 2% of homes sold in my area offered 3% to a buyer agent.
I do agree that the tide will be changing as the swelling we got in the past few years will diminish. Real estate is not an enjoyable job right now. There is serious stress by all parties in the market. Just like in the crash, agents will leave because you have to work really hard to try and close a deal right now when representing buyers.
You also need to look at what's going on in the world. The demographics are not what we have seen in the past. It's not as simple as boomer aging out and selling off inventory. Companies are not going back to the offices like they were before so people can work remotely indefinitely. You are going to see a bigger shift out of big metro areas than even before.
Thanks all for your comments. These posts give others, a viewpoint that they may not have been exposed!
But, that doesn't mean we have to stop commenting, either!
Where I am, the market is "cooling quickly" from a red hot level, 5 months ago. Don't know if it's a money thing, or something else. Maybe it's an over all "lack of confidence" in the upcoming future, I don't know.
It seems there are many factors that go into any one particular market.
When I read stuff like this, I don't see much of a slow down or even a "flushing" as you say. When I read about this many cash offers, I don't even begin to think about similarities to pre-recession. This is the real-deal right now. But no one can predict the future.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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The people who have been laid off or had their hours cut are not typically homeowners, they are renters in lower pay jobs. There may be some homeowners that owned a business, such as restaurants that have fallen behind on their mortgage, but that's not enough to make a significant number. In our area the demand is still far greater than supply, and the few that have sole in the last year have been boomers downsizing. There will be a little more of that in the next few years, but not enough to cool the market. With working from home more common, homelessness and unrest in the big cities, I would expect the safer suburban area home prices to continue the upward trajectory.
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