Afraid of a Housing Crash? Real Cap Daily #25
Many economist, talking heads, and YouTubers are out selling the notion that there is a massive housing crash coming. On average, most are calling for a 7-10% fall from the peak next year. Is this a crash or a correction?
Hello, my name is Dennis Maynard. I am a real estate broker in Los Angeles. Please don’t forget to like, subscribe, and follow.
Home prices have reached all time historic highs due to historic cheap financing for the past 10 years. Now the Fed is pulling back from cheap rates. Home prices should fall. I did a video called Rising Rates and Home Prices. You can click the link above for that deep dive.
There were two things that happened during the last 2 years that affected home prices. Massively cheap mortgage rates and a democrat congress flooding the economy with money. Hence, inflation. Now the Fed is trying to take away the candy from the children by raising rates.
Economists from Morgan Stanley, Capital Economics, Moody’s Analytics are all calling for a fall in pricing by 7-10% minimum, but with a recession as much as 20%. If we look at the Case-Shiller Nationwide Home Price Index, from January 2020 to June 2022 the index rose 31%. If pricing using the index were to fall 20%, purchasers in 2020 would still have 10% equity gains. That doesn’t sound like a crash.
But what about the massive spike in foreclosures? For the uneducated, this would be scary right? When put into perspective, the number of foreclosures is still at all time lows since 1979. The overly huge massive end of the world spike in foreclosures at 88,000 total year to date is nothing compared to the over 2 million that occurred in 2009. Thats like giving a whale a tic-tac. Okay, so that doesn’t sound like a housing crash.
I will go into further arguments on this subject in this months market update. If you want to know more on the subject, be sure to subscribe and hit the bell so you will know when I post a video. The housing market, specifically single family, is strong despite slowing sales. Other real estate assets are not so fortunate. We will go over those as issues come up.
If you need any help with buying or selling real estate, please reach out. Working with someone experienced and knowledgable is paramount right now. I’ll see you on the market update.