https://www.marketwatch.com/story/heres-the-hard-…
Read the article above, don't know how legit it is with the data, but I also don't know a ton about RE so I was hoping someone could shed some light on the situation?
Off shoots and questions I have:
Was the housing crisis actually solved or are homes still underwater/loan modification keeping people? Are people buying too much house/are housing being built with too many amenitites that people can't afford? Will people who have mortgages on multiple AirBnBs be affected?
For whatever it's worth, I've been following the SFR prices in my (expensive coastal) market and have seen virtually no price reductions. Spoke to several residential brokers who say that things are still selling above asking. Showings are a challenge but it's not having an impact so far.
I find it really hard to believe that the economic disruption that's happened won't take a chunk out of housing prices. But this has all happened so incredibly fast that it will probably take time for the pain to surface.
Barry Ritholtz had a podcast the other day on this subject that was interesting: https://podcasts.apple.com/us/podcast/masters-in-business/id730188152
EDIT: I figured I should respond to the article you posted too... And I think it's largely BS. Author seems to be arguing that a lack of transparency in (read: their lack of understanding of) the mortgage market means that we are on weak footing? This is ridiculous by nearly every metric: loan to values and debt service to income ratios are nowhere near comparable to what we saw in the prior run-up. People don't default on their loans because the servicing rights are sold to some shady character, they default because they either can't afford their payments, or owe more than the home is worth - neither of which are going to happen in anywhere near the volume they did during the GFC. You can argue that debt has fueled another run-up in housing prices, but it's largely due to the cheap cost not the aggressive terms available.
Housing prices don't really decrease until there are "forced" sellers. If a home-owner is moving for convenience (or some other elective reason) they aren't likely to be the first ones to sell their home for less than their neighbor did last year. In 2008 that happened for a number of reasons: first, borrowers were overleveraged and need to sell because they couldn't make their payments, then the foreclosure wave came and banks needed to move houses off of their books quickly so they sold for lower prices, then the economy crashed, unemployment went to 10% and people lost their jobs and could no longer afford their (even reasonably leveraged) homes, and had to sell to stay afloat. Today, the leverage is much more reasonable, and housing markets have been pretty healthy, so I don't see a wave of foreclosures that is going to gap prices down 10, 20, 30+%. However, the last part, where people lose their incomes and need to sell their homes, is certainly a concern. This is coming from someone in an expensive coastal market, but the first wave of impact of this crisis has been on the lower end of the income distribution, so it is more likely to impact renters than owners. Coupled with the fact that the government is stepping in to blunt the impact here, I wouldn't expect a wave of forced selling that is going to cause mass decreases in housing prices. That being said, uncertainty is through the roof, spreads have blown out (so mortgage rates aren't falling in line with treasurys yields), and everyone's portfolio is worth 70 cents on the dollar vs. a month ago, so I would expect a slowdown in demand. Even when thing start to normalize, there will be some headwinds against further increasing prices.
Good point, will have to check out the podcast. Thanks
Real estate is cyclical and for most markets is correlated to the general economy. Big picture if the middle class loses wealth through asset depreciation and forced deleveraging then houses are cheaper
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