Another Housing Market Crash Looming?

[SAJ-99]

Do you think a crash will happen faster due to how fast this crash happened relative to '08 or do you think the market will snap back?

I'm wondering if some of what is going on are just "paper loses" and if we will snap back? Is that totally naive?

Stock market? It will snap back because out current generation of investors believes it the place to put savings. Hell the market went 20% from the low on 3/23. Lots of debate on the economy. Most are sticking with U recovery. Optimist will stick with V until they are forced to change. Hard to say how this will change permanently anything in economy. Will people be filling planes and movie theaters 12 months from now? Probably. I have to figure 1 of 5 restaurants will not make it, but they had a high turnover rate to start with. There will be a lot of entrepreneurs that see this episode as the starting point of their opportunity. It has always been that way.

 

[Tiredofthebickering]

The world is bankrupt right now. Countries, states, and cities. I hope I'm wrong, but a recovery this decade is wishful thinking IMO.

I'm far from an expert, but it's thinking about the fact that we're only 12 years out from 2008. We were in the middle of huge market gains, skyrocketing property values, etc. and have been for a little while. I'm no Nostradamus but I think if we can get back to "normal" within 6 months I'd bet we're mostly recovered within a couple years.

 

[Jape]

Good point.

All eight of my employees are in their 20s and 30s. They are all hard working, frugal, and savers. They all paid their way through college or worked jobs while the parents helped. They saved up for down payments on houses or they make the conscious decision to rent and not incur the additional overhead of taxes, insurance, or maintenance tasks that imposes on their time. They mostly drive old beater rigs, buy used stuff, and laugh at how the 50+ year-old generation blows their money on material things, as generalized as that last statement is.

The value they place on the most precious commodity of time seems to be far advanced from what my grasp of that concept was at their age. If I asked any of them the choice between a $5K bonus or a month off work, they would be logging off their computer and headed to their next adventure without blinking an eye.

Yet, I know a ton of people my age who are on the great American treadmill hoping for just one more stock market run so they can pay off their second mortgage that was used to buy a European vacation and new SUV, vehicle four in the garage. And to avoid generalization by single example, I know many my age who got off the treadmill in their 40's and gave the middle finger to the the great American idea of "More is better. Just give your employer more of your time."

The generalizations of either group are just that, generalizations. I see my age groups does more critiquing of the younger generations than the other way around, which could be a function of my peer group. I get why young folks came up with the "Boomer" memes and responses.

As a CPA that gets to see just how much debt a lot of 50+ year olds are dragging around and how poorly prepared they are for their later years, I don't see that level of debt in younger people I know. Maybe younger folks have surprisingly healthy balance sheets compared to a lot of 50+ folks, as they haven't been around long enough to acquire the same level of debt.

I did have a December conversation that was a bit sticky when a 63 year-old started railing on millennials, socialism, lazy asses, Bernie, AOC, etc. You know, the topics with trendy memes on FB these days. About two sentences later he talked about how his health care costs will go waaaay down when he can get on Medicare in less than two years. I smiled and quipped, "That socialism shit is a bitch, isn't it." He knew full well what I was saying and laughed along with me. I picked up the tab for breakfast.

Point of reciting that encounter is that when we generalize these topics, we can find many examples that support our position. And, sometimes we accept the pedaled narrative without much examination of our own habits and tendencies, however hypocritical (myself included).

The 20-39 folks I talk to are fully aware that when they entered the workforce, the 50+ folks and generations of single-issue voting tendencies have resulted in fiscal irresponsibility that has each of these youngsters saddled with over $70K of US debt that was spent before these young folks were even old enough to vote. And if you add other future promises not on the books that the 50+ crowd has made to themselves in the way of future benefits, it is triple that amount per millennial. They accept that huge US debt as part of their situation in life. If they whine about it, they do that whining where I don't hear it.

Given their frugality, as has been my anecdotal observation, and comparing it to the lack of financial responsibility (individually and collectively) that I have seen in many of my 50+ peers, along with how much debt we have saddled them with by making future promises to our collective selves, I'm not inclined to comment on the spending habits of younger people. I do admire the priority they (the ones I know) place on time and freedom.

Not sure what this diversion about generational behaviors has to do with a housing crisis. Carry on ........

I've posted this before, but it deserves a reminder for all age groups. There is no doubt, or shouldn't be, that this will have an impact on housing and the entire economy. It already has. But I have seen too much resiliency to believe that it MUST necessarily continue long-term. Innovators will innovate, problem solvers will solve problems. We can take this crisis as an opportunity to come together and come up some incredible solutions, or we can continue to complain.

 

[Scrappy]

Something I have always thought was kind of unfounded is the premise that the concept of "generations" are particularly meaningful. Any proclamation distinguishing boundaries based on year beyond the baby boomers is largely arbitrary.

The first chart is chart of birth rates while the second is raw numbers.

View attachment 134250

View attachment 134252

Look at where the boundaries are drawn for those generations. Sure, there are sort of crests and waves in the raw numbers, but not particularly big ones. When it comes to rates they barely exist.

I guess what I am saying is the concept of "generations" as an identity or characteristic of individuals, is overrated and not particularly useful.

Sorry to deviate from the OP.

I swear if you guys pull a chart on me one more time, I just dare you.

 

[Hem]

I tend to be selfish and think about my bubble. A place like Bozeman is affected more towards the end of a cycle. It took a couple years for the last recession to fully impact our area after the rest of the country. My biggest fear is some heightened exodus of people from these hotspot areas seeking a more insulated area.

 

[ntodwild]

I haven't seen the details, but as was pointed out, many will be able to get a freeze of paying the mortgage. Some indication are for up to a year. Goodness I hope it's not needed for that long. As to whether this applies to second homes used for vacations and rented on AirBnB, who knows.

https://www.npr.org/2020/03/19/8183...y-by-the-coronavirus-may-get-a-mortgage-break

I believe we are headed down this road as well. It will keep folks in their current homes but it is not gonna change the fact that Millions will be on unemployment and surely not in the market for new property. Even when those folks come back into he work force they most likely will have used up all their savings just to stay afloat and will not be in any shape to purchase homes, property, vehicles, RV's and so on. This will wipe out many of those Americans who have done the right thing (save, keep a nest egg, be responsible with their money and finances). Those are the folks who make the largest impact on the housing/real-estate market. Regardless of low interest rates and the obvious sag in home prices over the next year or two many of those folks will not be able to afford a new home and will be struggling to just get caught up & claw their way out of a hole.

This is not a doomsday post or a scare tactic. I just can't see this going away soon, nor do I see the economy coming back at a rocket pace like many in the media and government are claiming. Just the current damage (even if tomorrow we woke up and the sun was shining and Covid 19 magically disappeared) will have a lasting effect on our economy. Just my realistic .02.

 

[Nick87]

I believe we are headed down this road as well. It will keep folks in their current homes but it is not gonna change the fact that Millions will be on unemployment and surely not in the market for new property. Even when those folks come back into he work force they most likely will have used up all their savings just to stay afloat and will not be in any shape to purchase homes, property, vehicles, RV's and so on. This will wipe out many of those Americans who have done the right thing (save, keep a nest egg, be responsible with their money and finances). Those are the folks who make the largest impact on the housing/real-estate market. Regardless of low interest rates and the obvious sag in home prices over the next year or two many of those folks will not be able to afford a new home and will be struggling to just get caught up & claw their way out of a hole.

This is not a doomsday post or a scare tactic. I just can't see this going away soon, nor do I see the economy coming back at a rocket pace like many in the media and government are claiming. Just the current damage (even if tomorrow we woke up and the sun was shining and Covid 19 magically disappeared) will have a lasting effect on our economy. Just my realistic .02.

Agreed. Freeze on a mortgage will help, but families still have to pay for groceries, utilities, insurance, etc etc. Not to mention some with vehichle payments that are more than a lot of mortgages out there. Just because there may not be alarming amounts of foreclosures doesnt mean the price of homes wong drop significantly imo.

 

[VikingsGuy]

 

[Deleted member 20812]

This has largely been my approach for a number of years now.

 

[Hem]

Same with our family. But I love parts of Mexico and it's people.

 

[Nick87]

This has largely been my approach for a number of years now.

This

 

[PrairieHunter]

I tend to be selfish and think about my bubble. A place like Bozeman is affected more towards the end of a cycle. It took a couple years for the last recession to fully impact our area after the rest of the country. My biggest fear is some heightened exodus of people from these hotspot areas seeking a more insulated area.

Vacation homes will be the first to go. Those are the people who support all those flights/airport, overpriced restaurants and breweries, much of Downtown Bozeman, luxury car dealerships, high end contractors, etc...

I personally think areas that have seen a lit of growth the last 5-10 years combined with areas dependent on tourism $ are really going to get hit. Cody, Bozeman, Boise, Front Slope, areas around Yellowstone, etc...

For once places like rural agriculture areas will actually do alright as agriculture will see some benefit from this, beef prices are moving up, going to be a big year for regional/local ag producers, etc... and they have not had much of any growth recently due to horrible grain and beef prices. Might actually see a lot of those kids now adults who moved to the city come back to mom and dads farm to work after they lose their job in town.

Wyoming is in a tough spot as coal is dying, oil is a disaster, tourism is going to be a disaster, schools are broke, limited agriculture, etc...

 

[Hem]

Vacation homes will be the first to go. Those are the people who support all those flights/airport, overpriced restaurants and breweries, much of Downtown Bozeman, luxury car dealerships, high end contractors, etc...

I personally think areas that have seen a lit of growth the last 5-10 years combined with areas dependent on tourism $ are really going to get hit. Cody, Bozeman, Boise, Front Slope, areas around Yellowstone, etc...

For once places like rural agriculture areas will actually do alright as agriculture will see some benefit from this, beef prices are moving up, going to be a big year for regional/local ag producers, etc... and they have not had much of any growth recently due to horrible grain and beef prices. Might actually see a lot of those kids now adults who moved to the city come back to mom and dads farm to work after they lose their job in town.

Wyoming is in a tough spot as coal is dying, oil is a disaster, tourism is going to be a disaster, schools are broke, limited agriculture, etc...

I'm not so certain. The people that spur the growth have money and can endure the financial strain. The wealthy elsewhere as well...eventually the migration will continue to these desirable places. IMO

 

[Old man bob]

Housing was booming big time again here in Phoenix. It is coming to a halt. Just like 12 years ago i fear , luckily I am not in that buss. anymore. The wealthy will prevail again when this is over and scoop up all the houses when they get cheap. Good luck to all. This is something we never seen so hard to predict the comeback, But I think its gonna be Bad for quite awhile. The goverment can only help so much for so long..................BOB!

 

[SAJ-99]

Vacation homes will be the first to go. Those are the people who support all those flights/airport, overpriced restaurants and breweries, much of Downtown Bozeman, luxury car dealerships, high end contractors, etc...

I personally think areas that have seen a lit of growth the last 5-10 years combined with areas dependent on tourism $ are really going to get hit. Cody, Bozeman, Boise, Front Slope, areas around Yellowstone, etc...

For once places like rural agriculture areas will actually do alright as agriculture will see some benefit from this, beef prices are moving up, going to be a big year for regional/local ag producers, etc... and they have not had much of any growth recently due to horrible grain and beef prices. Might actually see a lot of those kids now adults who moved to the city come back to mom and dads farm to work after they lose their job in town.

Wyoming is in a tough spot as coal is dying, oil is a disaster, tourism is going to be a disaster, schools are broke, limited agriculture, etc...

I think Bozeman benefits from the university. University towns tend to be more immune from economic shocks. However, Bozeman is closely tied to Big Sky. Just my opinion and no hard data, but I think a lot of those BS vacation homes are tied to Texas oil and Silicon Valley. I have predicted that venture capital had hard reality coming for the last two years, but investors keep throwing money at bad ideas. We will see if this changes anything.

 

[Carnage2011]

Spoke to a realtor yesterday regarding an apartment complex I was looking at. He said he’s fielding a fair amount of calls from people from larger cities looking for a nice rural place to get away from people. He also said he had one guy call wondering if there were any places available that had underground bunkers. Strange times!

 

[AvidIndoorsman]

Spoke to a realtor yesterday regarding an apartment complex I was looking at. He said he’s fielding a fair amount of calls from people from larger cities looking for a nice rural place to get away from people. He also said he had one guy call wondering if there were any places available that had under bunkers. Strange times!

Have a number of real estate transactions I'm looking and I have no idea what to think right now.

 

[Carnage2011]

Have a number of real estate transactions I'm looking and I have no idea what to think right now.

It’s a weird deal right now with RE. I have a rule when buying apartments that if half the units are rented and it makes my payment then I consider it. I also make sure I have at least 25% down or the risk just seems too high.

 

[nontyp]

Vacation homes will be the first to go. Those are the people who support all those flights/airport, overpriced restaurants and breweries, much of Downtown Bozeman, luxury car dealerships, high end contractors, etc...

I personally think areas that have seen a lit of growth the last 5-10 years combined with areas dependent on tourism $ are really going to get hit. Cody, Bozeman, Boise, Front Slope, areas around Yellowstone, etc...

For once places like rural agriculture areas will actually do alright as agriculture will see some benefit from this, beef prices are moving up, going to be a big year for regional/local ag producers, etc... and they have not had much of any growth recently due to horrible grain and beef prices. Might actually see a lot of those kids now adults who moved to the city come back to mom and dads farm to work after they lose their job in town.

Wyoming is in a tough spot as coal is dying, oil is a disaster, tourism is going to be a disaster, schools are broke, limited agriculture, etc...

Agriculture is really not benefiting, even though it would seem that way logically. yes beef prices are going up, but cattle prices are low and moving lower. The middle men are making money and the farmers are not. Corn and soy prices are terrible and have been for a several years. Many producers are selling land and filing bankruptcy. The ag economy has been horrible for a while. In fact Trump already “bailed out” soy producers due to his trade wars.

 

[BigHornRam]

This hard truth about the mortgage markets isn’t being told

Real estate industry sees no problem, hears no problem, speaks no problem, writes Keith Jurow.

www.marketwatch.com