[thinking about buying a house in LA, wait for RE crash?]

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sjl333
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[thinking about buying a house in LA, wait for RE crash?]

Post by sjl333 » Tue May 05, 2020 11:56 am

Hello all,

I am in the process of accumulating a decent downpayment on a home. I noticed that the real estate market has been solid during this crisis - and has even gone slightly up. So my question is - should I wait to see how things turn out with the RE market due to COVID, i.e. wait 6-18 months to see if there will be a crash - and then jump in? - or should i jump in as soon as I have enough of a downpayment (i.e. in about 3-4 months)?

thanks in advance.

Edit: I am in the market for purchasing a house in LA county. Everything still seems a bit over-priced at this moment.

[thread title edited by admin alex]

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Blueskies60
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Re: do you expect there to be a housing market crash? If so, when?

Post by Blueskies60 » Tue May 05, 2020 12:09 pm

I'm in a similar boat ~ curious to see what Bogleheads think about the future of housing costs in the US due to Covid....

livesoft
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Re: do you expect there to be a housing market crash? If so, when?

Post by livesoft » Tue May 05, 2020 12:25 pm

I'll just speculate here since I rarely get an opportunity to do that.

I think there will be little to no change because people need to live somewhere and there has not been any real bubble happening to distort prices. Folks who have homes will not want to sell, nor will sell at reduced prices, and renters will still have to rent or buy. Construction of new homes could be affected and go down, but builders love to build because that's what they do.

I know folks who have contracts with developers and some have delayed projects, but others are still going full blast especially since "construction" is an essential industry.

I know a landlord in Las Vegas. While the landlord may not be collecting the full rent from renters, the renters are not moving out either.

And as always: Location. Location. Location.
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arf30
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Re: do you expect there to be a housing market crash? If so, when?

Post by arf30 » Tue May 05, 2020 12:28 pm

Unlikely to be a "crash", people will just sit on their homes instead of selling them. Prices may decline in some places but real estate is highly regional.

mega317
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Re: do you expect there to be a housing market crash? If so, when?

Post by mega317 » Tue May 05, 2020 12:30 pm

Generally for your residence I'd recommend buying based on factors other than "the market".

In my area I haven't noticed any construction impact, all the projects we have been watching around town are still going. Also lots of new work seems to be happening like a recent addition of a bike lane on a busy coastal road that took like 2 days out of the blue.

When you say LA is overpriced that is compared to what? A lot of people want to live there, supply and demand.
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London
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Re: do you expect there to be a housing market crash? If so, when?

Post by London » Tue May 05, 2020 12:30 pm

Obviously location is the number one factor. After that, price point will matter.

Starter homes, affordable by those with the least amount of financial security will be impacted. However, those homes are most likely to be scooped up by landlords if they fall, so that may backstop the price a bit.

Mid market homes will also be impacted by those with job disruptions and to those who own small businesses. Generally these are not that appealing to landlords.

High end homes may see a dip but should rebound first.

Of course, I’m know nothing.

KlangFool
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Re: do you expect there to be a housing market crash? If so, when?

Post by KlangFool » Tue May 05, 2020 12:32 pm

OP,

1) There are 30+ million unemployed now. Before you think about buying a house, you need to make sure that you are not either unemployed and/or out of business soon.

2) Why do you think you will not be affected by this recession? This is a more interesting question here.

KlangFool

P.S.: I am among those that may be unemployed in a few months.

mega317
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Re: do you expect there to be a housing market crash? If so, when?

Post by mega317 » Tue May 05, 2020 12:32 pm

I wonder if we can look to the rest of the world for insight here. Many areas are ahead of the United States on the curve. What's the housing market done in northern Italy? Even other parts of the country--New York and Seattle have expensive real estate and are well ahead of LA. What happened to prices in New York? I don't know.
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alfaspider
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Re: do you expect there to be a housing market crash? If so, when?

Post by alfaspider » Tue May 05, 2020 12:34 pm

WSJ had an interesting article indicating that prices have not really gone down because supply of homes on the market have gone down. People are pulling listings for existing homes and builders are putting the brakes on new projects. Whether that condition persists will depend on the speed of any recovery. Your guess is as good as mine what things will look like in six months.

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arcticpineapplecorp.
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Re: do you expect there to be a housing market crash? If so, when?

Post by arcticpineapplecorp. » Tue May 05, 2020 12:37 pm

speculating here.

no idea.

construction wasn't considered essential in my state, but as of last Friday, has now been allowed again.

heard on markeplace morning report one of the last few days I walked to work (so March?) that there was a shortage of houses before the crisis and since construction would stop temporarily due to covid, that would only exacerbate a potential shortage. You know how supply and demand works, right? So a lack of supply to meet demand would keep prices high, was the general consensus. makes sense.

For the market to crash (good ol supply and demand theory again) wouldn't there need to be a glut of houses? The way this could happen (and did in the last situation in 2008) was a high number of foreclosures (thereby too large a supply to meet demand).

Will that happen (mass foreclosures)? Possibly. Hasn't yet. There are moratoriums on evictions and foreclosures for nonpayment of mortgages for a few months as I understand it. So I wouldn't think there'd be mass foreclosures until later in the year, and that's only if employment doesn't increase, which it already is starting to as some states/counties with lower case counts are starting to remove some limitations with guidelines remaining.

so in summation...who the heck knows?
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MrsRoos
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Re: do you expect there to be a housing market crash? If so, when?

Post by MrsRoos » Tue May 05, 2020 12:39 pm

I think many businesses will struggle to stay open after this pandemic is over, which means the unemployment rates will still be high. Unemployed folks may not be able to afford mortgages nor pay rent, especially in HCOL areas. I'd be curious to see a Q2 housing report from a real estate firm to see Q1 vs Q2 trends and 2Q19 vs 2Q20 trends. Of course, as many have said here, the RE market is really localized so YMMV. I expect a dip in housing pricing but then again, this is pure speculation.
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SD2SR
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Re: do you expect there to be a housing market crash? If so, when?

Post by SD2SR » Tue May 05, 2020 12:46 pm

I personally don't foresee a crash in the style of TGR, with mass foreclosures, REO, etc. I do think there's going to be a bit of a refinance boom for those who are able to, with rates at historic lows and lots of surplus equity from the prior bull run. Agree with others here that those fortunate enough to own their homes are likely to sit in place (see above on refi), though with unemployment in the tens of millions and increasing layoffs in white collar sectors, you could see a real buyer's market emerge out of folks' need to downsize.

Just be really careful right now--not just on building up your down payment, but in being extra-conservative about how much of a TOTAL monthly payment (not just mortgage principal & interest, but also taxes, insurance, etc.) you can afford.

OffGridder
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Re: do you expect there to be a housing market crash? If so, when?

Post by OffGridder » Tue May 05, 2020 12:47 pm

Stay on course to purchase a house in the next few months, if you like the area and neighborhood you are targeting, plan to live there at least 5 - 10 years and you believe your employment situation is going to remain stable for the foreseeable future.
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Re: do you expect there to be a housing market crash? If so, when?

Post by BruDude » Tue May 05, 2020 12:48 pm

I've been in the market for a new house and nearly signed a contract before COVID came around. Prices in my area haven't budged. Sellers are just waiting it out and builders have yet to offer any type of significant incentives (in fact, most aren't offering any at all). The neighborhood I was looking actually increased their lot premiums and are somehow still selling.

There may be a small decline but I don't see anything near the scale of 2008 despite the high unemployment rate. Back then it was a totally different story because people hadn't put down any money on their houses and just decided to dump their high interest rate mortgage and go into foreclosure when they had no skin in the game. Prices have rebounded so with people having more equity and the low interest rate environment, it's a different ballgame.

Nobody knows anything though. As soon as I hit the "Submit" button on this post the market will probably drop 10%.
Last edited by BruDude on Tue May 05, 2020 1:07 pm, edited 1 time in total.

ballons
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Re: do you expect there to be a housing market crash? If so, when?

Post by ballons » Tue May 05, 2020 12:49 pm

For what it is worth, zillow is already predicting 2-3% decline this year.
  • 100,000 or more reduced pool of renters and home owners. (may hit 200,000)
  • Estates sales will bring down comps. i.e. great grandson liquidating grandma's 1.9M California home
  • SALT still dead
  • 10,000 boomers turning 65 each day, isn't slowing down any time soon.
  • Flippers are hurting.
  • Airbnb'ers are hurting bad.
  • Commercial real estate is hurting bad
  • 30 Million are out of work
+

Housing is in another bubble at all time highs:
https://fred.stlouisfed.org/series/CSUSHPISA

Don't worry, your real estate agent will tell you it is a great time to buy.
http://housingbubble.blog/

BuyandHold37
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Re: do you expect there to be a housing market crash? If so, when?

Post by BuyandHold37 » Tue May 05, 2020 12:56 pm

I think there will be a decrease, but no "crash". If anything, hard assets will be a haven in the event of a sustained or drastic market downturn.

There was already an inventory shortage before all of this started....less people want to sell their house because they have nowhere to go, and they can't even replace what they already have for even money. Better off sitting tight and not taking on additional significant debt from an upgrade.

Also because of the uncertainty of Coronavirus and the ensuing recession, less people are changing jobs, which causes a good bit of the annual shuffle between now and the end of summer. So demand will be less, but the inventory (supply) situation will not get any better either, and in fact will probably get worse.

JMHO

tea_pirate
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Re: do you expect there to be a housing market crash? If so, when?

Post by tea_pirate » Tue May 05, 2020 1:09 pm

ballons wrote:
Tue May 05, 2020 12:49 pm
For what it is worth, zillow is already predicting 2-3% decline this year.
  • 100,000 or more reduced pool of renters and home owners. (may hit 200,000)
  • Estates sales will bring down comps. i.e. great grandson liquidating grandma's 1.9M California home
  • SALT still dead
  • 10,000 boomers turning 65 each day, isn't slowing down any time soon.
  • Flippers are hurting.
  • Airbnb'ers are hurting bad.
  • Commercial real estate is hurting bad
  • 30 Million are out of work
+

Housing is in another bubble at all time highs:
https://fred.stlouisfed.org/series/CSUSHPISA

Don't worry, your real estate agent will tell you it is a great time to buy.
http://housingbubble.blog/
Good post. Many US-based Bogleheads clearly live under a rock when it comes to the financial situation of the bottom 90% of their countrymen. There's simply too many Americans living paycheck to paycheck, and leveraged with debt out the wazoo for housing prices to not be impacted if this sparks a lasting recession after everything reopens.

Lending standards haven't declined to the levels of '08, but they're certainly getting close to dredging the bottom of the barrel. I personally know people who have bought homes in the last 2 years for 0 down and 6%+ interest. Some were able to buy at 5x their income by juicing their paychecks with OT for as many as the lender required to see, so it looked like they made way more money when those 3 paychecks or whatever were extrapolated over a year.

I'm outside Boston. I think homes in my area are roughly 25% overvalued.

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TomatoTomahto
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Re: do you expect there to be a housing market crash? If so, when?

Post by TomatoTomahto » Tue May 05, 2020 1:12 pm

My neighbor just sold his house at a very good price. That’s a sample size of 1, but I’ll take it as a sign of a non-crash. We are near Boston, not the most gently hit with the virus.
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runner540
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Re: do you expect there to be a housing market crash? If so, when?

Post by runner540 » Tue May 05, 2020 1:17 pm

BruDude wrote:
Tue May 05, 2020 12:48 pm
I've been in the market for a new house and nearly signed a contract before COVID came around. Prices in my area haven't budged. Sellers are just waiting it out and builders have yet to offer any type of significant incentives (in fact, most aren't offering any at all). The neighborhood I was looking actually increased their lot premiums and are somehow still selling.

There may be a small decline but I don't see anything near the scale of 2008 despite the high unemployment rate. Back then it was a totally different story because people hadn't put down any money on their houses and just decided to dump their high interest rate mortgage and go into foreclosure when they had no skin in the game. Prices have rebounded so with people having more equity and the low interest rate environment, it's a different ballgame.

Nobody knows anything though. As soon as I hit the "Submit" button on this post the market will probably drop 10%.
Housing market moves in slow motion unlike stock market. People will refuse to lower prices until they have to.
The median down payment has been only ~5% for a while - not a lot of skin in the game. Lenders were allowing up to 50% DTI, etc.

ponyboy
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Re: do you expect there to be a housing market crash? If so, when?

Post by ponyboy » Tue May 05, 2020 1:24 pm

Nope..if anything, prices will increase. I have friends who work at a high end cabinet factory. Its currently closed yet orders are coming in, around $600k/week worth. There are dealers all around the country and people want new kitchens. Wait till things are back to normal. There's going to be a explosion of people wanting to spend money.

WS1
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Re: do you expect there to be a housing market crash? If so, when?

Post by WS1 » Tue May 05, 2020 1:34 pm

runner540 wrote:
Tue May 05, 2020 1:17 pm
BruDude wrote:
Tue May 05, 2020 12:48 pm
I've been in the market for a new house and nearly signed a contract before COVID came around. Prices in my area haven't budged. Sellers are just waiting it out and builders have yet to offer any type of significant incentives (in fact, most aren't offering any at all). The neighborhood I was looking actually increased their lot premiums and are somehow still selling.

There may be a small decline but I don't see anything near the scale of 2008 despite the high unemployment rate. Back then it was a totally different story because people hadn't put down any money on their houses and just decided to dump their high interest rate mortgage and go into foreclosure when they had no skin in the game. Prices have rebounded so with people having more equity and the low interest rate environment, it's a different ballgame.

Nobody knows anything though. As soon as I hit the "Submit" button on this post the market will probably drop 10%.
Housing market moves in slow motion unlike stock market. People will refuse to lower prices until they have to.
The median down payment has been only ~5% for a while - not a lot of skin in the game. Lenders were allowing up to 50% DTI, etc.
I’m not sure I understand. A high DTI certainly shows decreased capacity to handle an income shock but a down payment just kind of “spent money” and has nothing to do with my ongoing ability to make payments.

runner540
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Re: do you expect there to be a housing market crash? If so, when?

Post by runner540 » Tue May 05, 2020 1:51 pm

WS1 wrote:
Tue May 05, 2020 1:34 pm
runner540 wrote:
Tue May 05, 2020 1:17 pm
BruDude wrote:
Tue May 05, 2020 12:48 pm
I've been in the market for a new house and nearly signed a contract before COVID came around. Prices in my area haven't budged. Sellers are just waiting it out and builders have yet to offer any type of significant incentives (in fact, most aren't offering any at all). The neighborhood I was looking actually increased their lot premiums and are somehow still selling.

There may be a small decline but I don't see anything near the scale of 2008 despite the high unemployment rate. Back then it was a totally different story because people hadn't put down any money on their houses and just decided to dump their high interest rate mortgage and go into foreclosure when they had no skin in the game. Prices have rebounded so with people having more equity and the low interest rate environment, it's a different ballgame.

Nobody knows anything though. As soon as I hit the "Submit" button on this post the market will probably drop 10%.
Housing market moves in slow motion unlike stock market. People will refuse to lower prices until they have to.
The median down payment has been only ~5% for a while - not a lot of skin in the game. Lenders were allowing up to 50% DTI, etc.
I’m not sure I understand. A high DTI certainly shows decreased capacity to handle an income shock but a down payment just kind of “spent money” and has nothing to do with my ongoing ability to make payments.
It doesn’t impact ability to make payments but low down payment or equity impacts willingness of some people to make payments. I was responding to BruDude’s comparison to the previous housing downturn.

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Re: do you expect there to be a housing market crash? If so, when?

Post by marcopolo » Tue May 05, 2020 1:52 pm

livesoft wrote:
Tue May 05, 2020 12:25 pm
I'll just speculate here since I rarely get an opportunity to do that.

I think there will be little to no change because people need to live somewhere and there has not been any real bubble happening to distort prices. Folks who have homes will not want to sell, nor will sell at reduced prices, and renters will still have to rent or buy. Construction of new homes could be affected and go down, but builders love to build because that's what they do.

I know folks who have contracts with developers and some have delayed projects, but others are still going full blast especially since "construction" is an essential industry.

I know a landlord in Las Vegas. While the landlord may not be collecting the full rent from renters, the renters are not moving out either.

And as always: Location. Location. Location.
Just anecdotal, but while builders love to build, they do need customers.

We just had a custom home built (finished about 2 weeks ago). Our builder had 3 projects scheduled to start when ours and one other one he was building concurrently finished up. He told me the other day that 2 of the 3 have put their projects "on hold". This was after having signed contracts. I would imagine projects in earlier stages are also being shelved.
Caveat: We are in a prime vacation destination, so i suspect some of these are second (or third homes), so may be it is more pronounced here.
Once in a while you get shown the light, in the strangest of places if you look at it right.

delamer
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Re: do you expect there to be a housing market crash? If so, when?

Post by delamer » Tue May 05, 2020 1:56 pm

Based on the expectations of medical experts, we are in for a 2nd wave of the pandemic in the fall/winter.

So even if the housing market does OK and those currently employed stay that way for the next few months, I expect things to deteriorate when the 2nd wave hits.

We are in the process of moving to our retirement home and are very anxious to get our current home on the market before things get worse.

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Re: do you expect there to be a housing market crash? If so, when?

Post by Dottie57 » Tue May 05, 2020 1:56 pm

SD2SR wrote:
Tue May 05, 2020 12:46 pm
I personally don't foresee a crash in the style of TGR, with mass foreclosures, REO, etc. I do think there's going to be a bit of a refinance boom for those who are able to, with rates at historic lows and lots of surplus equity from the prior bull run. Agree with others here that those fortunate enough to own their homes are likely to sit in place (see above on refi), though with unemployment in the tens of millions and increasing layoffs in white collar sectors, you could see a real buyer's market emerge out of folks' need to downsize.

Just be really careful right now--not just on building up your down payment, but in being extra-conservative about how much of a TOTAL monthly payment (not just mortgage principal & interest, but also taxes, insurance, etc.) you can afford.
+1. I think TGR was a once in a lifetime financial system crisis all revolving around the mortgage business.

I wish prices would go down too. There is a condo complex I would love to live in.

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Re: do you expect there to be a housing market crash? If so, when?

Post by fredflinstone » Tue May 05, 2020 2:03 pm

I thought prices would have fallen by now. I even wrote a post a few weeks ago called "Deflation is everywhere." But I try to keep an open mind and the reality is that home prices have not fallen in my neighborhood. Only a few houses have sold in recent weeks and none were deeply discounted. Will prices collapse in the future? I have no idea.
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rich126
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Re: do you expect there to be a housing market crash? If so, when?

Post by rich126 » Tue May 05, 2020 2:07 pm

Unless a miracle occurs and the virus mysteriously disappears or becomes harmless, housing will drop, it has to drop. You got tons of people that either are currently unemployed or will be furloughed once companies reach certain dates (due to bailout rules). You got United that will be getting rid of many thousands of employees (at all salary levels), BA was talking about 13,000, Virgin Air may be bankrupt, you got people who turned AirBnB into a full time job, etc.

Some of those jobs are high paying but others are lower paying but it all contributes to being able to afford housing. Sure people have to live somewhere but that is no more true today than it was in 2008 and tons walked away from mortgages and homes. At some point landlords either need to collect rent, or sell their rentals.

Now whether it is a 10% drop or much larger is another story. Many places were already over priced and a correction was overdue. Low interest/mortgage rates are somewhat meaningless to someone with no or greatly reduced income.

And if states that are reopening hit a second severe way of cases, then things will just get worse. Hopefully that won't happen.

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Re: do you expect there to be a housing market crash? If so, when?

Post by livesoft » Tue May 05, 2020 2:07 pm

marcopolo wrote:
Tue May 05, 2020 1:52 pm
Just anecdotal, but while builders love to build, they do need customers.

We just had a custom home built (finished about 2 weeks ago). Our builder ...
I guess I was not writing about small-time custom builders, but about the big ones that build out projects with 100 to 500 homes.
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Re: do you expect there to be a housing market crash? If so, when?

Post by White Coat Investor » Tue May 05, 2020 2:08 pm

sjl333 wrote:
Tue May 05, 2020 11:56 am
I am in the process of accumulating a decent downpayment on a home. I noticed that the real estate market has been solid during this crisis - and has even gone slightly up.
No it hasn't. Rents aren't being paid, deals aren't happening, those that are happening are only happening at significant discounts etc. Not one of my real estate investments is doing well the last two months.

As far as retail consumption housing, those prices tend to be sticky and there's always a lag there.

As far as whether YOU should buy a house now or later, that probably depends more on what is going on in your personal life than what is going on in the housing market. But as far as trying to time it by figuring out in advance if prices will be higher in 2020, 2021, or 2022, you'll need a functioning crystal ball to determine that. I don't have one and the majority opinion of Bogleheads responding to this thread certainly is not one.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

livesoft
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Re: do you expect there to be a housing market crash? If so, when?

Post by livesoft » Tue May 05, 2020 2:08 pm

rich126 wrote:
Tue May 05, 2020 2:07 pm
Unless a miracle occurs and the virus mysteriously disappears or becomes harmless, housing will drop, it has to drop. You got tons of people that either are currently unemployed or will be furloughed once companies reach certain dates (due to bailout rules). You got United that will be getting rid of many thousands of employees (at all salary levels) ....
Just because someone is unemployed does not mean they do not need a place to live. Also, it can take years to foreclose on someone not paying their mortgage.
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NotTooDeepLearning
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Re: do you expect there to be a housing market crash? If so, when?

Post by NotTooDeepLearning » Tue May 05, 2020 2:09 pm

I hope there's a price crash. As a millennial with a graduate degree and a solid government job I still feel like a nice house is far beyond what I can afford.

visualguy
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Re: do you expect there to be a housing market crash? If so, when?

Post by visualguy » Tue May 05, 2020 2:17 pm

Talking about the housing market without specifying location (many of the comments here) is meaningless... These are local markets.
Last edited by visualguy on Tue May 05, 2020 2:18 pm, edited 1 time in total.

AZAttorney11
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Re: do you expect there to be a housing market crash? If so, when?

Post by AZAttorney11 » Tue May 05, 2020 2:17 pm

Do I think there will be a housing market crash? No. Do I think home prices will decline to 2008 - 2011 levels? No. But there are 30 million Americans out of work in the last six weeks. The housing market doesn't move nearly as fast as the stock market (in either direction) and it's a lagging indicator. People have to have somewhere to live, and the unemployment benefits and actions taken by Congress and the Fed are way ahead of where things were in 2008, but I absolutely believe home prices, overall, will be lower in 12-18 months. I don't see how housing stays flat, let alone increases, with 30 million unemployed, notwithstanding the social safety net measures that are going on.

Of course, there will be great variances depending on location, price point, and employment prospects in your area. Around here, homes at the higher end of the market are softening a fair amount and volume is way down across all price points.

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Re: do you expect there to be a housing market crash? If so, when?

Post by AZAttorney11 » Tue May 05, 2020 2:19 pm

livesoft wrote:
Tue May 05, 2020 2:08 pm
rich126 wrote:
Tue May 05, 2020 2:07 pm
Unless a miracle occurs and the virus mysteriously disappears or becomes harmless, housing will drop, it has to drop. You got tons of people that either are currently unemployed or will be furloughed once companies reach certain dates (due to bailout rules). You got United that will be getting rid of many thousands of employees (at all salary levels) ....
Just because someone is unemployed does not mean they do not need a place to live. Also, it can take years to foreclose on someone not paying their mortgage.
It can, but in many jurisdictions it happens in a matter of months. Well under a year. With all of the government intervention, I expect many homeowners will cling to whatever aid they can get to stay in their homes, but for a number of folks who are already in a precarious financial position, such actions usually are only delaying the inevitable.

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Re: do you expect there to be a housing market crash? If so, when?

Post by randomguy » Tue May 05, 2020 2:24 pm

arf30 wrote:
Tue May 05, 2020 12:28 pm
Unlikely to be a "crash", people will just sit on their homes instead of selling them. Prices may decline in some places but real estate is highly regional.
In 2007-9 how many people just sat in their houses and waited it out? When you are unemployed, how are you paying the mortgage and property tax? If we end up with a long stretch of high unemployment (say 10%+), I could see that really cutting into demand. Heck what about if unemployment drops but all those people are making 20% less. What will that do to house prices? Or of course low interest rates result in a housing boom:)

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Re: do you expect there to be a housing market crash? If so, when?

Post by bogledogle » Tue May 05, 2020 2:52 pm

As someone who has been holding on to cash for downpayment, I am hoping for a drop in prices. I think the unemployment rates and pay cuts will ensure the market will drop over the next year. But, the drop would be in specific communities that rely on certain industries. In the Bay Area, I would think this may not have a major impact but will slow the market down. A second outbreak could make things much worse.

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Re: do you expect there to be a housing market crash? If so, when?

Post by quantAndHold » Tue May 05, 2020 2:55 pm

Real estate is all local.

There was a housing shortage in LA County before this. I suspect there will still be a housing shortage after this is all over. While it’s going on? No idea how it will play out.

As things currently stand, the market seems to be frozen in place. People have taken their places off the market because they don’t want to deal with the logistics of showing and selling a place in COVID times. Landlords can’t evict, and also can’t really sell, because of the difficulty selling a nonperforming property. So the market is pretty much frozen.
Yes, I’m really that pedantic.

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Re: do you expect there to be a housing market crash? If so, when?

Post by willthrill81 » Tue May 05, 2020 2:58 pm

Not at all. In fact, I wouldn't be surprised if we see housing prices increase over the next year. The reason comes down to new housing starts, which have fallen off a cliff. People's need for housing won't go down, so if the supply doesn't increase, then that puts upward pressure on prices.

Throughout the lockdown, we've still seen most homes sell in a matter of days, often for above asking price.
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Re: do you expect there to be a housing market crash? If so, when?

Post by 7eight9 » Tue May 05, 2020 2:59 pm

If lending standards and requisite downpayments increase the pool of prospective buyers should decrease. This could have an impact on housing prices.

As the country struggles through the economic impact of the coronavirus, numerous mortgage companies have raised their lending standards to protect both borrowers and themselves. Now, one of the largest mortgage lenders in the country is joining that list.

JPMorgan Chase this week is increasing its minimum lending standards to require nearly all borrowers to have at least 20% down in order to buy a home. Beyond that, Chase is also raising its minimum FICO credit score to 700 on purchase mortgages.

Put simply, if a borrower doesn’t have a 20% down payment and a FICO score of 700 or above, they will likely not be able get a loan from Chase to buy a home. According to Chase, those lending standards also apply to refinances on non-Chase mortgages.

https://www.housingwire.com/articles/ch ... uy-a-home/
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Re: do you expect there to be a housing market crash? If so, when?

Post by willthrill81 » Tue May 05, 2020 3:01 pm

7eight9 wrote:
Tue May 05, 2020 2:59 pm
If lending standards and requisite downpayments increase the pool of prospective buyers should decrease. This could have an impact on housing prices.

As the country struggles through the economic impact of the coronavirus, numerous mortgage companies have raised their lending standards to protect both borrowers and themselves. Now, one of the largest mortgage lenders in the country is joining that list.

JPMorgan Chase this week is increasing its minimum lending standards to require nearly all borrowers to have at least 20% down in order to buy a home. Beyond that, Chase is also raising its minimum FICO credit score to 700 on purchase mortgages.

Put simply, if a borrower doesn’t have a 20% down payment and a FICO score of 700 or above, they will likely not be able get a loan from Chase to buy a home. According to Chase, those lending standards also apply to refinances on non-Chase mortgages.

https://www.housingwire.com/articles/ch ... uy-a-home/
I think that Chase has reacted more strongly than most other lenders. They stopped taking new applications for all HELOCs a while back. I don't know of any other major banks that are doing that. They seem to be leaning very heavily on CYA at the moment.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: do you expect there to be a housing market crash? If so, when?

Post by 7eight9 » Tue May 05, 2020 3:09 pm

willthrill81 wrote:
Tue May 05, 2020 3:01 pm
7eight9 wrote:
Tue May 05, 2020 2:59 pm
If lending standards and requisite downpayments increase the pool of prospective buyers should decrease. This could have an impact on housing prices.

As the country struggles through the economic impact of the coronavirus, numerous mortgage companies have raised their lending standards to protect both borrowers and themselves. Now, one of the largest mortgage lenders in the country is joining that list.

JPMorgan Chase this week is increasing its minimum lending standards to require nearly all borrowers to have at least 20% down in order to buy a home. Beyond that, Chase is also raising its minimum FICO credit score to 700 on purchase mortgages.

Put simply, if a borrower doesn’t have a 20% down payment and a FICO score of 700 or above, they will likely not be able get a loan from Chase to buy a home. According to Chase, those lending standards also apply to refinances on non-Chase mortgages.

https://www.housingwire.com/articles/ch ... uy-a-home/
I think that Chase has reacted more strongly than most other lenders. They stopped taking new applications for all HELOCs a while back. I don't know of any other major banks that are doing that. They seem to be leaning very heavily on CYA at the moment.
Wells Fargo is late to the party but late last week they stopped taking HELOC applications.

Wells Fargo to stop granting home equity lines amid uncertainty: sources
Wells Fargo & Co, the largest U.S. mortgage lender, said on Thursday it will temporarily stop accepting applications for home equity loans given the economic uncertainty fueled by the COVID-19 pandemic.
The suspension will stay in place until bank executives have better sense into what the economic recovery will look like, bank spokesman Tom Goyda said in a statement.

https://www.reuters.com/article/us-heal ... SKBN22C3OM
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Re: do you expect there to be a housing market crash? If so, when?

Post by willthrill81 » Tue May 05, 2020 3:13 pm

7eight9 wrote:
Tue May 05, 2020 3:09 pm
willthrill81 wrote:
Tue May 05, 2020 3:01 pm
7eight9 wrote:
Tue May 05, 2020 2:59 pm
If lending standards and requisite downpayments increase the pool of prospective buyers should decrease. This could have an impact on housing prices.

As the country struggles through the economic impact of the coronavirus, numerous mortgage companies have raised their lending standards to protect both borrowers and themselves. Now, one of the largest mortgage lenders in the country is joining that list.

JPMorgan Chase this week is increasing its minimum lending standards to require nearly all borrowers to have at least 20% down in order to buy a home. Beyond that, Chase is also raising its minimum FICO credit score to 700 on purchase mortgages.

Put simply, if a borrower doesn’t have a 20% down payment and a FICO score of 700 or above, they will likely not be able get a loan from Chase to buy a home. According to Chase, those lending standards also apply to refinances on non-Chase mortgages.

https://www.housingwire.com/articles/ch ... uy-a-home/
I think that Chase has reacted more strongly than most other lenders. They stopped taking new applications for all HELOCs a while back. I don't know of any other major banks that are doing that. They seem to be leaning very heavily on CYA at the moment.
Wells Fargo is late to the party but late last week they stopped taking HELOC applications.

Wells Fargo to stop granting home equity lines amid uncertainty: sources
Wells Fargo & Co, the largest U.S. mortgage lender, said on Thursday it will temporarily stop accepting applications for home equity loans given the economic uncertainty fueled by the COVID-19 pandemic.
The suspension will stay in place until bank executives have better sense into what the economic recovery will look like, bank spokesman Tom Goyda said in a statement.

https://www.reuters.com/article/us-heal ... SKBN22C3OM
I hadn't heard about that one.

We had considered opening a HELOC (just in case) after paying off our mortgage back in February. But if we did, I think that we'd go through a local credit union.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: do you expect there to be a housing market crash? If so, when?

Post by Golf maniac » Tue May 05, 2020 3:13 pm

quantAndHold wrote:
Tue May 05, 2020 2:55 pm
Real estate is all local.

There was a housing shortage in LA County before this. I suspect there will still be a housing shortage after this is all over. While it’s going on? No idea how it will play out.

As things currently stand, the market seems to be frozen in place. People have taken their places off the market because they don’t want to deal with the logistics of showing and selling a place in COVID times. Landlords can’t evict, and also can’t really sell, because of the difficulty selling a nonperforming property. So the market is pretty much frozen.
Agree, all markets are different. There will be a lag that may take a year or more to happen for your market. I would not put off a purchase if my job was rock solid and we found the perfect house. No one knows how quickly or slowly the economy will bounce back.

You need to be talking to others in your local market and reading about your market. Think about your local economy and who are the employers. Will they be impacted? I was in Charlotte NC in 2008 when all the bankers were let go. We knew the market would go down, but it took until 2009 and later to see the full impact.

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Re: do you expect there to be a housing market crash? If so, when?

Post by Ramjet » Tue May 05, 2020 3:23 pm

BuyandHold37 wrote:
Tue May 05, 2020 12:56 pm
I think there will be a decrease, but no "crash"
This is my thinking as well. I could see a 2-5% decline for the next two years or so. If unemployed or under-employed for an extended period of time many I believe would consider selling their home.

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Re: do you expect there to be a housing market crash? If so, when?

Post by Hockey10 » Tue May 05, 2020 4:31 pm

marcopolo wrote:
Tue May 05, 2020 1:52 pm
We just had a custom home built (finished about 2 weeks ago). Our builder had 3 projects scheduled to start when ours and one other one he was building concurrently finished up. He told me the other day that 2 of the 3 have put their projects "on hold". This was after having signed contracts. I would imagine projects in earlier stages are also being shelved.
Caveat: We are in a prime vacation destination, so i suspect some of these are second (or third homes), so may be it is more pronounced here.
+1

I would expect the vacation home market to be hit hard. With 30 million+ newly unemployed and millions of others worried about losing their jobs, I can't see many people taking the chance at this point in time on a vacation home.

Also, for those that fly to vacation homes, I imagine that there are many who won't be willing to get on an airplane for a very long time.

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Re: [thinking about buying a house in LA, wait for RE crash?]

Post by TomatoTomahto » Tue May 05, 2020 4:37 pm

Something like 9 months from now . . .

Remember the (apocryphal?) birth boom 9 months after the Blackout in NYC? That was small potatoes 😁
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: do you expect there to be a housing market crash? If so, when?

Post by marcopolo » Tue May 05, 2020 4:43 pm

Hockey10 wrote:
Tue May 05, 2020 4:31 pm
marcopolo wrote:
Tue May 05, 2020 1:52 pm
We just had a custom home built (finished about 2 weeks ago). Our builder had 3 projects scheduled to start when ours and one other one he was building concurrently finished up. He told me the other day that 2 of the 3 have put their projects "on hold". This was after having signed contracts. I would imagine projects in earlier stages are also being shelved.
Caveat: We are in a prime vacation destination, so i suspect some of these are second (or third homes), so may be it is more pronounced here.
+1

I would expect the vacation home market to be hit hard. With 30 million+ newly unemployed and millions of others worried about losing their jobs, I can't see many people taking the chance at this point in time on a vacation home.

Also, for those that fly to vacation homes, I imagine that there are many who won't be willing to get on an airplane for a very long time.
While there are indeed a lot of unfortunate people that are unemployed. I am not sure it is spread evenly across income spectrum at this time.
It seem the really hard hit are service industry jobs, which usually tend to be at the lower end of the income spectrum. I suspect, so far, higher income professions (that would be buying second vacation homes), have not been hit as drastically. That is likely to change if this drags on longer.

As far as people flying to vacation homes. It seems (at least from reports we have been hearing) is that has actually increased. Tourists have completely dried up. But, people with their vacation homes here have evidently been flocking here to get away from more crowded urban areas. There is a 14 day quarantine in place for new arrivals, but there are worse places to be stuck.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: [thinking about buying a house in LA, wait for RE crash?]

Post by mega317 » Tue May 05, 2020 4:49 pm

TomatoTomahto wrote:
Tue May 05, 2020 4:37 pm
Something like 9 months from now . . .

Remember the (apocryphal?) birth boom 9 months after the Blackout in NYC? That was small potatoes 😁
I read something funny, that if there is a baby boom it will be first-borns only. lol
https://www.bogleheads.org/forum/viewtopic.php?t=6212

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Re: do you expect there to be a housing market crash? If so, when?

Post by celia » Tue May 05, 2020 5:31 pm

I would agree with this:
quantAndHold wrote:
Tue May 05, 2020 2:55 pm
As things currently stand, the market seems to be frozen in place. People have taken their places off the market because they don’t want to deal with the logistics of showing and selling a place in COVID times. Landlords can’t evict, and also can’t really sell, because of the difficulty selling a nonperforming property. So the market is pretty much frozen.
Part of the ‘problem’ that no-one has mentioned yet is that realtors aren’t considered essential workers in many places. If they can’t go and show a property, how is it going to sell?

I’ve been selling a property in another state for a relative who died. Winter is a horrible time to find a buyer, especially if things are ‘frozen’ due to the weather. My realtor found me a buyer and we signed a contract. Everything was going fine but a few days before it was supposed to close, the buyer got spooked and walked away because Stay at Home was just beginning and the markets were going down. It was a very uncertain time and I don’t blame the buyer. My realtor took it off the market when we agreed on the terms and didn’t put it back when realtors couldn’t show it. It is now listed again as a new listing but things aren’t moving yet. We just have to give it time so people can figure out if their job is secure and if they want to move.

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Re: do you expect there to be a housing market crash? If so, when?

Post by ballons » Tue May 05, 2020 5:51 pm

tea_pirate wrote:
Tue May 05, 2020 1:09 pm
Good post. Many US-based Bogleheads clearly live under a rock when it comes to the financial situation of the bottom 90% of their countrymen. There's simply too many Americans living paycheck to paycheck, and leveraged with debt out the wazoo for housing prices to not be impacted if this sparks a lasting recession after everything reopens.

Lending standards haven't declined to the levels of '08, but they're certainly getting close to dredging the bottom of the barrel. I personally know people who have bought homes in the last 2 years for 0 down and 6%+ interest. Some were able to buy at 5x their income by juicing their paychecks with OT for as many as the lender required to see, so it looked like they made way more money when those 3 paychecks or whatever were extrapolated over a year.

I'm outside Boston. I think homes in my area are roughly 25% overvalued.

25% gets you back to the last bubble top:
https://fred.stlouisfed.org/series/BOXRSA


https://www.zillow.com/research/prices- ... rus-26975/

Zillow's pessimistic estimate sure looks like a 10% drop.

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