Another Housing Market Crash Looming?

ajricketts

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In reality I bet it was due to the actions of a small number of individuals, who gambled and lobbied to allow their gambling.
2008 was due to overconfidence.

Overconfidence on the part of the borrowers that thought they would make enough money in raises to pay their inflated mortgage payments when the rates changed, and that, "surely a bank wouldn't approve me for more than I can afford! They're looking out for my best interest, not selling a product." Overconfidence on the part of lenders that thought they could keep bundling and selling marginal loans on the secondary market, and that their underwriting teams were doing their due diligence. Overconfidence that the market would keep rising at the rate it had been.

Everyone trusted someone else to be the gate keeper. And when the secondary market realized they were being sold garbage assets and stopped buying, and banks realized they were over exposed to marginal borrowers, it crumbled rapidly.

That's why I don't think a real crash is coming. In my very humble opinion, I'd guess the average buyer/borrower is much more qualified now than in 2008. Sufficient underwriting/due diligence, and not simply trusting everyone else to be honest, stabilizes the whole system.
 
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BigHornRam

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2008 was due to overconfidence.

Overconfidence on the part of the borrowers that thought they would make enough money in raises to pay their inflated mortgage payments when the rates changed, and that, "surely a bank wouldn't approve me for more than I can afford! They're looking out for my best interest, not selling a product." Overconfidence on the part of lenders that thought they could keep bundling and selling marginal loans on the secondary market, and that their underwriting teams were doing their due diligence. Overconfidence that the market would keep rising at the rate it had been.

Everyone trusted someone else to be the gate keeper. And when the secondary market realized they were being sold garbage assets and stopped buying, and banks realized they were over exposed to marginal borrowers, it crumbled rapidly.

That's why I don't think a real crash is coming. In my very humble opinion, it's guess the average buyer/borrower is much more qualified now than in 2008. Sufficient underwriting/due diligence, and not simply trusting everyone else to be honest, stabilizes the whole system.
Pretty good summary. Time will tell where things go this time. Right now people are scrambling to convert the monopoly money into real assets. Right now the world economy is a house of cards. Won't take much to trigger another panic, and the herd will turn around and run in the opposite direction. Back to cash. Best thing anyone can do right now is get out of debt. Make smart financial decisions, and develope good and diverse job skills.
 

Gerald Martin

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All I know is that something has to give. Framing lumber is 4-5x what it was last year at this time.
I am in the process of building a 12x16 garden shed. Total cost of materials should be @ 1200 in a normal year. Looking like it’s gonna cost @ 4K for materials alone.
I paid $16 for 5/8” OSB last July. I bought six sheets last night for $71.08 per sheet.
 

BigHornRam

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All I know is that something has to give. Framing lumber is 4-5x what it was last year at this time.
I am in the process of building a 12x16 garden shed. Total cost of materials should be @ 1200 in a normal year. Looking like it’s gonna cost @ 4K for materials alone.
I paid $16 for 5/8” OSB last July. I bought six sheets last night for $71.08 per sheet.
You bought at that price. No one held a gun to your head and made you buy. Price is high because people continue to buy.
 

rwc101

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If my house tanks in value I'll just pull out every other 2x4 and panel of plywood and sell them. I'll be rich.
 

McShooter

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I still like the AirBnB/VRBO model for investment real estate, but now is not the time to be buying one. Anyone who bought one and wasn't aggressively paying it down has made a terrible mistake. Those properties can generate impressive cash flow but can sink in a hurry with a long period of vacancy. If you're going to be an owner or property like that you really should have something like 6 months of reserves saved up.
Agreed
 

mtmuley

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All these folks from out of state that paid cash, or covered appraisal gaps with cash, will have a rude awakening when they realize employers aren't going to pay NY, Chicago, California, fill in the blank wages for them to sit at their computer out of state. It's already happening.
This is why I feel fortunate to work for a company that has clients that don't give a rip how much materials cost, or worry about where they need to work. mtmuley
 

wllm1313

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All these folks from out of state that paid cash, or covered appraisal gaps with cash, will have a rude awakening when they realize employers aren't going to pay NY, Chicago, California, fill in the blank wages for them to sit at their computer out of state. It's already happening.
Maybe. Maybe not.

My sisters company has a COL policy and salaries shift depending on what state or country you live in, you get a 2 month buffer. So she does short term rentals. Recently she has been getting lots of calls from recruiters for SF based companies that are paying SF salary and don't give a crap where you are based.

This is obviously anecdotal but I think it will largely depend on the field and the talent pool.

We shall see.

Also cracks me up the finger pointing at NY and CA.

You guys do realize that there are half a dozen positions in oil companies that make over $300K a year.

An oil field manager in the Permian makes more than a cardiologist in NYC. I have actually seen the contracts for a Company Man that was $650,000.
 

Buffs35

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Maybe. Maybe not.

My sisters company has a COL policy and salaries shift depending on what state or country you live in, you get a 2 month buffer. So she does short term rentals. Recently she has been getting lots of calls from recruiters for SF based companies that are paying SF salary and don't give a crap where you are based.

This is obviously anecdotal but I think it will largely depend on the field and the talent pool.

We shall see.

Also cracks me up the finger pointing at NY and CA.

You guys do realize that there are half a dozen positions in oil companies that make over $300K a year.

An oil field manager in the Permian makes more than a cardiologist in NYC. I have actually seen the contracts for a Company Man that was $650,000.
I'm not pointing fingers, there has been an influx of those folks moving into the mountain west. And my point is that just because the evening news says workers will work from home for the foreseeable future doesn't make it so.
 

LuketheDog

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SAJ-99

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I'm not pointing fingers, there has been an influx of those folks moving into the mountain west. And my point is that just because the evening news says workers will work from home for the foreseeable future doesn't make it so.
Hopefully the employer said it would be so.


that is hilarious. You have to wonder why companies don’t want to post target salary ranges. You would think the job pays what it pays. Studies have shown transparency in pay has huge benefits in employee retention and satisfaction with pay. But it has never really gained traction.
 

Backofbeyond

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I'm not pointing fingers, there has been an influx of those folks moving into the mountain west. And my point is that just because the evening news says workers will work from home for the foreseeable future doesn't make it so.

Ahhh local news. The corner stone of all research for major life decisions.
 

ajricketts

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Hopefully the employer said it would be so.



that is hilarious. You have to wonder why companies don’t want to post target salary ranges. You would think the job pays what it pays. Studies have shown transparency in pay has huge benefits in employee retention and satisfaction with pay. But it has never really gained traction.
I'm guessing it's because a lot of people are still so guarded about sharing that kind of information. As far as I'm aware, it is illegal just about anywhere to limit employees sharing their salary information. Yet it's still not common practice to do so. If individuals aren't really pushing to make it common practice, and aren't willing to be transparent themselves, it won't likely ever really gain traction. Too many people, and companies, would rather wheel and deal to save a buck or deal than deal with the core problems like employee retention and morale.
 

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