Real estate decline 2020

Loki131

Pigeon
Colorado is strong, homes selling in 1 day at asking price
Same Where I am. Not enough houses in good condition worth buying here. Anything good is sold same day, and houses that ask too much or need substantial work (think 30 grand amount of work) are sitting on the market for months.
 

Loki131

Pigeon
I have been waiting for a depression for a while now. Sitting on cash to buy a house, and only saw two properties worth getting but missed it. When can we see a deflation on real estate across the board?
 

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Sparrow
I have been waiting for a depression for a while now. Sitting on cash to buy a house, and only saw two properties worth getting but missed it. When can we see a deflation on real estate across the board?
It takes time. Real estate is a lagging indicator. Most people will let go of everything else before their homes.
 

myrica

Pigeon
market is going super well in Turkey to be honest. Especially after government(president really,since its pseudo dictatorship) basically ordered banks to give %0.64 interest rate on real estate loans.
Although at the same time, a house worth 75.000 usd jumped to 100.000 usd :squintlol:
 

!!!???!!!

Sparrow
market is going super well in Turkey to be honest. Especially after government(president really,since its pseudo dictatorship) basically ordered banks to give %0.64 interest rate on real estate loans.
Although at the same time, a house worth 75.000 usd jumped to 100.000 usd :squintlol:
Are there issues with Corona virus in Turkey? The dangers of extremely low interest rates is that it forces people to take insane risks or over leverage like crazy in order to get any sort of return. And then when another crisis hits, rates can't go much lower. This is kicking the can down the road.
 

myrica

Pigeon
Are there issues with Corona virus in Turkey? The dangers of extremely low interest rates is that it forces people to take insane risks or over leverage like crazy in order to get any sort of return. And then when another crisis hits, rates can't go much lower. This is kicking the can down the road.
we dont care much about virus here. Economy > some bullshit virus.
Our pseudo dictator President and his men are hardcore construction guys and they need money. Before virus, there were hardly any propertly sold, so they had difficulty making money. After initial quarantine period has ended, he forced banks to give out these loans to stimulate the market and it actually worked.
A guy who bought house for lets say half a million lira(before these loans were announced),sold it for 800.000 lira in mere weeks(1 usd = 6.85 lira)

Obviously since islamists dont know how to rule a country, economy will fall shortly. Its just a matter of time.
 

Guy80

Pigeon
I have been waiting for a depression for a while now. Sitting on cash to buy a house, and only saw two properties worth getting but missed it. When can we see a deflation on real estate across the board?
I'm liquid too; waiting to buy toys and property for low price..
 

PillBoxer

Pigeon
I didn't look to see if anyone posted this, but the real collapse in the USA, if there is going to be one, will be when the mandated forbearances under the CARES Act expire. The act required the federally related loans backed by Fannie/Freddie or FHA receive a no questions asked 6 month extension with another 6 month extension available upon request. That means failure on these loans at some time between the end of this year and March/April of next year at the earliest. On top of that, most lenders do not foreclose until after 90 days due to certain requirements, so it may even be after that.

But save your money, I see a wild 2021.
 
Fundrise is up 2.5% while the rest of the real estate market dropped, and the structure is solid enough for them to reopen redemptions (withdrawals) as of today.
 

Chisum

Newbie
I didn't look to see if anyone posted this, but the real collapse in the USA, if there is going to be one, will be when the mandated forbearances under the CARES Act expire. The act required the federally related loans backed by Fannie/Freddie or FHA receive a no questions asked 6 month extension with another 6 month extension available upon request. That means failure on these loans at some time between the end of this year and March/April of next year at the earliest. On top of that, most lenders do not foreclose until after 90 days due to certain requirements, so it may even be after that.

But save your money, I see a wild 2021.
Does this mean that the missed payments are added to the end of the loan and the borrower just resumes paying their regular mortgage (like auto lenders have done)? If so that shouldn't affect the average person much at all.

If they take the missed payments and spread them out over 6-12 months on top of regular payments (like cell phone and auto insurers have done) then it could blow up the market.
 

PillBoxer

Pigeon
Does this mean that the missed payments are added to the end of the loan and the borrower just resumes paying their regular mortgage (like auto lenders have done)? If so that shouldn't affect the average person much at all.

If they take the missed payments and spread them out over 6-12 months on top of regular payments (like cell phone and auto insurers have done) then it could blow up the market.
That's up to the lender. Most are pushing the "no-cost" extension, with the payments reverting to the end of the loan, including all the extra interest. A few have done a forbearance period, where the payments are paid at the end of the forbearance period, but most would not have the resources to make that large balloon payment. Either way, it doesn't cover things like insurance/taxes that would be escrowed, and due to US regulations, those must be paid on a yearly basis (since taxes are assessed on a yearly basis).

Top that off, guidance stated that on the aforementioned loans, (the Fannie/Freddie/FHA ones), the borrower has the option to repay these extended payments when the house sells. So many may end up doing just that.
 

Tail Gunner

Hummingbird
Gold Member
When can we see a deflation on real estate across the board?
This is actually a very easy question to answer within +/- two years, based on over 200 years of American economic cycles. Refer to the "The Secret Life of Real Estate and Banking" by Phillip Anderson, a historical treatise that definitively demonstrates that since 1800 the U.S. has experienced a financial panic roughly every 18.6 years (interrupted only by the events of WWI and WWII).

These cycles are typically caused by a progression of low interest rates, loose credit, high debt, a significant real estate peak, and a subsequent contraction of credit, bank failures, and real estate foreclosures. We are now in the stage of low interest rates, loose credit, and high debt. Sound familiar? The price of real estate still needs to peak before it ultimately crashes. We are currently experiencing the mid-cycle slowdown, which is often a recession.

The last such real estate peak occurred in 2008-2009. The next real estate peak will likely occur between 2027-2029, with a recession before then (likely in 2020-2021). If you wish to become a life-long successful investor, then you must properly educate yourself. Knowing the recurrent history of cycles is an elemental part of that education. I wrote a previous post on the topic here:

 
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NoMoreTO

Pelican
While I don't doubt the significance of historical trends,l and the value in educating yourself in this stuff - I would still say Real Estate is local.

As an example, Toronto hasn't had a crash since 1990 and its 2020. I remember in 2010 doing an MBA paper on the Case-Schiller Rent to Price ratio, then combining that against the wages, and Toronto was due for a crash then, according to that model. It ended up skyrocketing for another 10 years after that. When markets were crashing in Florida in 2009, Toronto took a brief pause.

All that said, I own a Condo in Toronto and am considering getting out of it and into land. I just don't trust that these massive business centres with mass immigration will retain their value. Toronto buyers are starting to make their presence known in smaller markets, they are increasingly buying elsewhere, looking for an opportunity that actually yields income. This might be a function of the market being unaffordable so people are just trying to get on the property ladder, but to me this is a clue that I am on the right path.

I do agree that low interest rates and easy debt do cause bubbles. When the bubble pops is hard to say, but often with a recession or high interest rates.
 

Sam Malone

Ostrich
Gold Member
^ RE: Real Estate and local

I've heard from a few sources in my area (western/upstate NY) that homes are not only selling like hot cakes, but above asking price.

- One relative told me that his realtor is practically begging him to let him sell his home, as there's a shortage of homes for sale.

- Overheard another relative speaking to someone else about that person's daughter getting out of a possible purchase because two other buyers got into a bidding war (and the home sold for almost $20K over asking price).

- Yesterday I casually mentioned to my barber that I was thinking of selling my home, he countered that a couple of realtors that come in for haircuts are having record years, and that sellers are getting their asking price at a minimum.

I'm reading the terrain.

I've been fixing up the little things in my home the last couple of months, and I'll be putting my house on the market in the next week or two.

It moves my timeline up a couple of years, but it is what it is.

Even if I rent for the next year, I'd rather see the profit from the house sale now, instead of it depreciating once the market crashes.
 

Arado

Pelican
Gold Member
Condos and commercial real estate in bankrupt cities with civil unrest will likely experience lower prices in REAL (inflaiton adjusted) terms while residential properties in rural and stable areas will likely not decrease much in nominal terms as long as the Fed keep bailing everyone out. Plan accordingly - there is a variety of metrics to measure the RE market.
 

Loki131

Pigeon
This is actually a very easy question to answer within +/- two years, based on over 200 years of American economic cycles. Refer to the "The Secret Life of Real Estate and Banking" by Phillip Anderson, a historical treatise that definitively demonstrates that since 1800 the U.S. has experienced a financial panic roughly every 18.6 years (interrupted only by the events of WWI and WWII).

These cycles are typically caused by a progression of low interest rates, loose credit, high debt, a significant real estate peak, and a subsequent contraction of credit, bank failures, and real estate foreclosures. We are now in the stage of low interest rates, loose credit, and high debt. Sound familiar? The price of real estate still needs to peak before it ultimately crashes. We are currently experiencing the mid-cycle slowdown, which is often a recession.

The last such real estate peak occurred in 2008-2009. The next real estate peak will likely occur between 2027-2029, with a recession before then (likely in 2020-2021). If you wish to become a life-long successful investor, then you must properly educate yourself. Knowing the recurrent history of cycles is an elemental part of that education. I wrote a previous post on the topic here:

Thank you for the information. As of now, I don’t see any reason to be optimistic for the future of the US, so precious metals are my go to investment. I want a good home to live in, and hope the market goes down. Area I am in, we have not had a crash since the 90s...
 

paninaro

Kingfisher
Condos and commercial real estate in bankrupt cities with civil unrest will likely experience lower prices in REAL (inflaiton adjusted) terms while residential properties in rural and stable areas will likely not decrease much in nominal terms as long as the Fed keep bailing everyone out. Plan accordingly - there is a variety of metrics to measure the RE market.
I think the average homebuyer has a weak long-term memory. I just don't think most homebuyers look up the bond rating or financial affairs of the local government in the city they plan to buy in. Civil unrest I can see people being more concerned about, but most of that was weeks ago. There are a few scattered cases lately, but most cities have not seen this in the last few weeks. Buyers have probably forgotten all about that.

However, the result of bankrupt cities and civil unrest could have an effect in the long-term. Civil unrest and underfunded enforcement could lead to a rise in crime rates, and buyers do look at that. Likewise, a city in bad financial shape will cut back on school spending, and school ratings will drop -- something many buyers do look at.
 
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