Another Housing Crash

[Randolph Kinney]

https://www.thedenverchannel.com/ne...ases-piling-up-amid-colorados-housing-crisis-

 

[Overimprovement]

Of interest is the rise of non-traditional banks as originators of home mortgages. I'm not smart enough to know how this will play out, only that it seems to be a large difference. I am thinking of players like Quicken loans. As people continue having less on deposit with traditional brick and mortar lenders, their importance as mortgage originators I think will continue to decline.

The human elements in real estate transactions are quickly disappearing--no real estate agents (lots of FSBOs), often no face to face application with the lender, and if the current trends continue with Fannie, often no human involved in the valuation of the property. I will leave for discussion what fewer humans overall might mean, again I just note that this is a big change in our midst.

 

[glenn walker]

Gave up years ago trying to figure market tops or bottoms about all I can say is today I am working on one that was listed for $750,000 nothing fancy - 1,700 Square foot attached pud built in 1990 -- Buyers have bid it up to $790,000 and one comparable at $760,000. The listing agent informed the agents to resubmit all best and highest offers and will let them know who is the winner. Very scary because this has become a everyday event in some of the ares I work and we blew past 2006-2007 about a year ago and each sale is turning into a bidding war. The standard statement is there is no inventory and either pay the price or take a hike. There is truth to the inventory issue but what nobody seems to address is affordability is gone and very few People other than investors or people -leaving the state - dying or other issues is moving. There is no place to go except die or leave the state.

 

[Mark K]

Unlike the most recent financial crash that started with the real estate market and nearly took down the global financial system, I see localized crashes or at least, market doldrums, but I think the problems will mostly be local. It may be a case where the outrageously priced areas get the flu, maybe pneumonia, and most of the rest of the country will get the sniffles for a few days.

In this area, and I'm sure in a lot of other areas, prices are so cheap (compared to the coasts and a few other 'big-city' markets) that there's no reason to expect any substantial problems. Our supply is short and there are bidding wars, 12 hour marketing times, etc., but the average price has appreciated only about 10%/year for the past 3 years and our county avg. price is still less than $200K.

I don't see the localized crashes seriously affecting the whole country. I'm sure the "news" casts will play it like its the end of the world since those are the only places that matter to them. I know CA has had some previous crashes and our market didn't even notice. As far as the problems on the coasts, to quote someone, maybe Lou Holtz...."Don't tell people your problems. Most people don't care, and the others are glad you've got them."

 

[Randolph Kinney]

https://www.marketwatch.com/story/h...s-the-housing-boom-finally-cooling-2018-05-03

Some housing markets have already cooled. Must be that affordability thing.

 

[Elliott]

So, the 44% of appraisers who believe there is a going to be a crash, how do you prepare your reports differently? Do you say, the value is $X, but whoa, the market is going to crash and then it won't be $X? How do you handle your guidance?

 

[Meandering]

So, the 44% of appraisers who believe there is a going to be a crash, how do you prepare your reports differently? Do you say, the value is $X, but whoa, the market is going to crash and then it won't be $X? How do you handle your guidance?

The value is good for the effective date of value. Markets change, sometimes suddenly, hence the value opinion is not expected to represent the market value on any day other than the effective date stated in the report.

.

 

[Basically Rectangular]

If nothing changes then the market should remain constant. However any external issues such as increased unemployment or possibly even steady interest rate increases would have a reasonably unfavorable effect on the real estate market.
The sad thing in my market is that over the past few years construction of typical "middle class" suburban dwellings has diminished. Its either townhome city or +3000 sq ft three car garage Q2 - Q3 built on golf course PUD.
I don't see values holding 5% 30 year mortgage rates with the typical income for my area.

 

[djd09]

 

[Randolph Kinney]

So, the 44% of appraisers who believe there is a going to be a crash, how do you prepare your reports differently? Do you say, the value is $X, but whoa, the market is going to crash and then it won't be $X? How do you handle your guidance?

You simply include the data that's available. You make observations about trends prices, incomes and affordability. Plus the lending requirements that have been loosened allowing the marginal buyer with marginal credit to enter the market.