How Long Do You Think It Will Be?

[TRESinc]

i was talking last night with another appraiser and the topic of the next crash came up.

interest rates are climbing (currently 4.89% on a 30 year fixed from my lender) so anyone who refi'd in the last 8-9 years won't be able to do so today and see any savings.

there is still a severely limited inventory of available housing which is causing short marketing times (off the top of my head i would say 50-75% of the comps i am using in my reports are on the market for 30 days or less) and bidding wars driving up the price of housing (i got one last week that was on the market for $249,000 and contract price of $272,000 after 4 days and another that was listed at $110,000 with a contract price of $143,000 after 9 days). currently in the county i reside the population is 1,256,000. there are currently 554 houses for sale on the MLS from $100,000-$250,000, the "starter house" range if you will. that means there is one house for sale for every 2,268 people.

the start of the repeal of DF is happening. they moved the limit from $50b to $250b for lending institutions to comply with reserves, stress tests and the like. institutions like american express and bb&t are no longer considered “systemically important” and subject to stricter oversight. small and midsized lenders are now exempt from reporting certain disclosures which can easily lead to discrimination without anyone to see that it is happening. banks will once again be allowed to play with higher risk investments which may pay off better but also have a better chance of failing. on top of that net income of commercial banks and saving institutions posted a 27.5% increase for Q1 2018 vs Q1 2017.

personally i am putting away every dollar i can to pick up rental properties sometime in the next 3-5 years when it hits the fan. that is my timeframe guess.what is yours?

 

[Randolph Kinney]

It's all about interest rates, money supply, and liquidity. The money supply is shrinking and liquidity is drying up and the price of money is going up. My estimation is there will be a correction starting in the real estate market by 4th quarter 2019.

 

[techbiker]

It sounds to me like the housing market is still incredibly "undersupplied". If demand is remaining high even after the end of all of the easy money policies, what would precipitate a RE crash in the near future? Where I live, many home buyers pay cash just to beat out other interested parties.

 

[George Hatch]

The 'what will eventually happen" is relatively straightforward due to our experience with previous RE cycles. Looking forward, we can all figure out what conditions we think a market would turn if it was acting rationally, except that "acting rationally" is often not the case in the residential RE markets. Which we also know from experience.

I don't try to do "when" anymore for that reason, and because there's also no accounting for the unpredictable machinations of the State in manipulating the financing end. Will they or won't they take steps to enable more marginal buyers to enter into more marginal and unsustainable deals. That's a variable we cannot know - and therefore cannot account for - in advance of them actually doing it.

 

[TRESinc]

It sounds to me like the housing market is still incredibly "undersupplied". If demand is remaining high even after the end of all of the easy money policies, what would precipitate a RE crash in the near future? Where I live, many home buyers pay cash just to beat out other interested parties.

who told you the end of "easy money policies" has occurred? you can get a 3% down conventional loan all day long and as we learned 10 years ago lack of equity is not a good thing.

 

[George Hatch]

It sounds to me like the housing market is still incredibly "undersupplied". If demand is remaining high even after the end of all of the easy money policies, what would precipitate a RE crash in the near future? Where I live, many home buyers pay cash just to beat out other interested parties.

How much of the housing is owned by rental-income oriented investors as opposed to owner-users? All the action is at the margins, so what happens if the investors stop adding to the demand side (by competing with the owner-users in buying more units) and starts adding to the supply (by competing with the sellers to divest an asset that has no more short term ROI to offer).

 

[Randolph Kinney]

How much of the housing is owned by rental-income oriented investors as opposed to owner-users? All the action is at the margins, so what happens if the investors stop adding to the demand side (by competing with the owner-users in buying more units) and starts adding to the supply (by competing with the sellers to divest an asset that has no more short term ROI to offer).

• Distressed home sales — including bank-owned (REO) sales, third-party foreclosure auction sales, and short sales — accounted for 14.7 percent of all single family home and condo sales in Q1 2018, up from 13.6 percent in Q4 2017 but still down from 16.9 percent in Q1 2017.

Such a booming market still has way too may distressed sales. There are other kinks too.

 

[George Hatch]

If we started getting a lot of articles popping up like this that could contribute to spooking the herd.

https://www.msn.com/en-us/money/rea...ore-2020-economists-say/ar-AAxEbqH?li=BBnbfcN

Thinking of selling your home? Do it before 2020, economists say

Prospective home buyers these days are probably feeling pressure to lock in a deal quickly given skyrocketing home prices across most of the country. But those who wait a couple of years may be rewarded.

Real-estate website Zillow and research firm Pulsenomics surveyed more than 100 real-estate experts and economists — and roughly half of them predicted that the next recession will begin sometime in 2020, most likely in the first quarter. That’s actually later than the panel’s previous prediction of late 2019.

This prediction dovetails with a survey of economists carried out by The Wall Street Journal earlier this month. The economic growth that started in 2009 and is the second-longest in U.S. history will likely end in 2020, they said. “The current economic expansion is getting long in the tooth by historical standards, and more late-cycle signs are emerging,” according to Scott Anderson, chief economist at Bank of the West, and one of the economists predicting a 2020 recession. Some 59% of private-sector economists in the Journal’s survey forecast a 2020 recession.


.....

 

[Terrel L. Shields]

popping up like this that could contribute to spooking the herd.

Aren't these almost always wrong though?

 

[Randolph Kinney]

If we started getting a lot of articles popping up like this that could contribute to spooking the herd.

https://www.msn.com/en-us/money/rea...ore-2020-economists-say/ar-AAxEbqH?li=BBnbfcN

Instead, the experts predicted that monetary policy will be the deciding factor this time around.

Even though the housing market likely won’t be the cause of the next recession, an economic downturn would still have an impact on real estate.

“Any time there are widespread job losses, particularly if these job losses are protracted, the housing market softens — even if the housing market isn’t the central cause or most prominent casualty of the downturn,” Terrazas said. “The spillover to the housing market will depend on the depth, length and severity of the next recession and, if some parts of the country feel the impact worse than others, some localized regional housing markets could see deeper effects.”