Major housing crash coming this winter or sooner

[twocoach]

Any "good" news on housing is on borrowed time. Most of the activity has been with people buying cheap homes in rural areas or places outside the urban cities. People are leaving places like LA, NY, Seattle in high numbers and that is what is giving this false impression that housing is recovering. Almost no one is buying in the expensive cities, and the riots are making it even harder to sell homes in these areas.

There's so many debt bubbles that are likely to burst after the election that this housing crash could end up being worse than what happened in 2009-2012. Student loans, car loans, credit cards, mortgages -- all of these are a ticking time bomb.

I think it's a great thing to see some people head out of the big cities and spread out a bit. Take their educations and their next generation occupations and spread them out through America. There's a great opportunity for some companies to take advantage and reshape how they operate. More and more jobs need to be workable from anywhere. And there has to be more ways to make a living while staying in smaller communities.

There's a shit ton of money out there. It's just flowing through loopholes into offshore accounts and not doing it's part in our communities. Siphon off some of that and pump it back through the guts of our society.

[Deleted User 310]

Probably no more amusing as it was when last winter came and went with no crash.

Do you feel the housing market is rock solid?

In 2020,it would be foolish to describe anything as "rock solid". But I do feel that many banks are much better equipped to withstand a hit like this after 2009. Banks got smarter about who they gave money to. Frankly, a settling of thw housing prices could be good to get that a little closer to attainable for more people.

I don't think any drawback will be a crash.

3 concerning things:
-skyrocketing national debt
-potential for inflation
-inability to keep interest rates this low forever

All 3 of those things are concerning and could lead to a housing crash either directly or indirectly.

Yes, from an LTV (loan to value) perspective the banks are being more cautious...but they are still doing plenty of 85%-90%+ LTV loan....and yes, from an appraisal/appraised value perspective the banks are being more cautious...but an appraisal is just a piece of paper. Even a 5%-10% drop in home values, which wouldn't necessarily be a "crash" can set off a chain reaction that potentially could result in a crash.

I am not a doom and gloom guy, but there are plenty of concerning aspects surrounding the housing market.

[Cascadia]

Only two options

Rock Solid!

Or

Major Crash!

[twocoach]

https://www.cnn.com/2020/09/14/investin ... index.html

[jfish26]

I think what was missed in the doom and gloom analysis (vis a vis the housing market, anyway) is that this particular downturn was going to disproportionately impact (to this stage, anyway) groups that are relatively low-home-ownership to begin with.

[Walrus]

Mortgage delinquencies just hit highs that were last seen in 1979. There's a lot of nonsense in the media about a "housing boom", but only the fools will buy into it. When this goes, it's gonna go.

[Cascadia]

https://www.cnn.com/2020/09/14/investin ... index.html

Who needs facts when you have YouTube?

[Sparko]

Mortgage delinquencies just hit highs that were last seen in 1979. There's a lot of nonsense in the media about a "housing boom", but only the fools will buy into it. When this goes, it's gonna go.

I have been looking at the Kansas real estate market and it is unbelievable in rural markets right now. So many incentives have driven folks who really can’t afford it to buy. Interest loan rates for banks is basically zero, but buyers with questionable means are paying premiums that will certainly cause a crash sooner rather than later-the larger economy is very sick. Wall Street is fantasy island too.

[Deleted User 310]

In some central IL markets that i work in prices are up for houses under 200k-ish....in other makets prices are way down for houses $500k-ish and above. Like houses that were purchased/appraised for $750k+ just a few years ago are now selling for $100k+ less, which is wild.

The rates being low won't hurt people buying now until they go to sell in 5+ years when rates will likely be way higher. Rates can't stay under 3% forever. It just isn't sustainable.

I wonder what will happen to the people buying houses now who can afford a little extra house because of the low 30yr rates they can get, but who won't make a significant dent in their principle balance over the next 5-10yrs....then they go to sell and rates are significantly higher which will drive down the price people are willing or able to pay for their house. That could create a snowball effect of bad things.

And that doesn't even address the issue that will be caused by the need to either significantly raise taxes for almost everyone and/or the risks of inflation occuring due to the insane spending occuring by the govt. and how that will also impact housing prices/delinquencies/foreclosures in various ways. Eventually the impact of insane spending will be felt in numerous ways, there is really no way around it.

So far we haven't seen a significant rise in delinquencies in my area or with loans my bank services...tbh at the moment we are more concerned with monitoring commercial real estate owners and residential RE landlords, as they tend to go bottom up quicker. Personal residence foreclosures take a lot of time and there are a lot of obstacles to prevent banks from actually foreclosing on people. So i expect that will lag.

I am not sure if i feel people moving from large cities to less densely populated areas will be significant enough to offset some of the potential negative effects of covid/inflation/etc. And any area it helps you would think it would hurt a different area, so maybe a net neutral impact overall? Not sure what i think about that tbh.

But it is pretty much guaranteed that when rates rise home values will drop. Not sure drop will mean "crash", but there is really no playbook on this right now to run off of, so everyone is just sort of guessing it feels like.

[Walrus]

Mortgage delinquency rate hits 21-year high

https://finance.yahoo.com/news/mortgage ... 15848.html

[japhy]

https://www.housingwire.com/articles/fo ... 3-million/

[Leawood]

Why engage the dumbest dumbfuck in Dumbfuckville.

[Deleted User 310]

Fwiw many/most banks have suspended foreclosures on primary residences. Not sure how much of an impact that has on those numbers.

For those not in banking delinquency and foreclosure are not the same thing. Forbearance is sort of rare in pre covid times, but i know we are doing it in certain circumstances for borrowers/property owners who have been impacted by covid. Not sure what the FNMA policy is currently. It is all intertwined. Obviously i think we can all agree that as a whole people are financially hurting right now from the pandemic. As things continue to open up and people get back to work i expect the delinquencies and forbearance rates to improve slightly....but eventually foreclosures will also resume if property owners can't service their debt.

Also, rhe reduction in raw forbearance numbers could be a result of the banks no longer allowing the payments or interest to be deferred...so it isn't necessarily a good thing. We would need more info i suppose. A rise in delinquencies and a reduction of loans in forbearance could actually go hand in hand.

[Walrus]

https://www.housingwire.com/articles/fo ... 3-million/

You do realize that for many of them, it just means their forbearance ended and they are now going to need another extension or be foreclosed on? No, I'm sure you don't -- you thought the Kenosha shooter was a "white supremacist". Also -- HousingWire as a "source" for giving people unbiased info on real estate is like asking a barber if you need a haircut.

[Deleted User 310]

I think people get foreclosure and forbearance mixed up sometimes. Just as they do with delinquencies and foreclosures.

[japhy]

https://www.housingwire.com/articles/th ... -too-soon/

[japhy]

https://www.housingwire.com/articles/lu ... ince-2013/

[jhawks99]

I gotta go with Leawood here.

[Walrus]

Both of those articles have already been debunked. HousingWire, like Zillow, makes their living from housing. Of course they are not going to come out and say it. But hey, don't take it form me. Even the Federal Reserve of St. Louis recently pointed out that the housing market is in trouble.

[Deleted User 89]

when are your prognostications being published nationally?