To Crash? Or Not to Crash? Real Estate Market Update 2021 - 2022
Recently, I have been seeing a lot of worrying and fear mongering in the media and social media about the real estate market (and in many markets). In this post, I want to give you my predictions on what will likely happen in the next 12-24 months. I also rant about a few things/patterns that I see that DO remind me of the 08' crash.
So, what will happen? Will the Federal Eviction Moratorium create a lot of foreclosures? Or, will the market keep reacting to the current conditions that have us in growth?
To recap this post, we'll be covering these 4 topics:
Federal Eviction Moratorium and Will there be another crash like in 08?
Has the market slowed down?
What's going on with the money phycology?
What should you do?
Federal Eviction Moratorium and Will there be another crash like in 08?
In short, I do not think there will be a crash. The main reason why NOT is because most homeowners have plenty of equity! In 2008-2012, that was not the case (they were negative). That's the huge difference. For example, if homeowners can't pay the mortgage, they can put it on the market and sell it for a good price. Why would they default?? They wouldn't. If the market gets flooded with listings, then the market could and would adjust down (hello, that's normal!!) and it would eventually turn into a buyer's market. But that's not a crash. If renters continue to not pay rent, the landowners can just get a new lease - or they could sell. There is plenty of demand for rentals and plenty of demand for fresh listings..
Rates are still low (below 3%). Rent is still high, there are plenty of jobs available. Why would there be a crash? If you think there is a crash coming, what is your market data? Leave your predictions in the comments.
Has the market slowed down?
Yes - Somewhat. I'm still seeing multiple offers and homes selling for over asking price, but there are fewer offers. Occasionally, I even see price reductions! Imagine that?! The market could not possibly continue at the same pace from earlier this Spring/Summer - it was a frenzy! It was exhausting. It was unfair for the average home buyer who could not compete with cash, and crazy terms like appraisal guarantees, no inspections, $20-$80k over asking price offers and sweetheart deals for sellers. Thankfully, that is calming down.
Here are a few points about the Market
Updated and modern homes are still hard to win offers for.
"Sanctuary-Homes" with pools, amazing backyards and outdoor living spaces are more desirable than ever! Get your checkbook out!!
We're noticing that Agents are overpricing homes that are outdated so you can negotiate on those.
I've been able to negotiate-down on Zillow listings - they just want to get a deal done 😂.
There are a lot of inexperienced agents and some horrible lenders out there, so watch out! Get approved with a great lender (not some online train-wreck of a lender).
Hire a great real estate agent. Like #SeanandBlanca. We have all of the strategies to help you navigate this market!
What's going on with money and psychology?
It's a free country but I think people are not valuing the dollar and that worries me. This part DOES REMIND me of 2008 and it's being overoptimistic. And it's not just young people. I said that in the video but, that's not accurate - it's many people. Now is the time to make investments and start businesses. I see people blowing a lot of money on food, alcohol, cars, boats, travel, and weak assets. If we're not careful, we could end up like the roaring 20's.
What should you do?
Regarding real estate, if you're buying a house, plan on living there for 3-10 years. Buy a house with good potential and a good floor plan. Stay away from busy roads, strange layouts, and make sure the neighborhood is desirable - not crime-ridden. Buy a home that fits your lifestyle. For example, if you travel a lot, consider a townhome. If you buy a townhome, make sure they allow rentals. Just call us! We'll make sure you find a great home! Here is a link to get started with our team - https://forms.gle/N5cG7VhcSVQvXTRg7
Other points to consider; Make a 3 and a 5 plan. Get positioned with a recession-proof business (not some hobby that won't make any money). If you're not good with finances, get someone to help plan it for you. If you're not experience with business, ask for advice from a mentor (someone with a track record of success) before you dive into things. Start acquiring some assets, not just liabilities that lose value. Instead of drinking and eating 1/2 of your $$, pay off that credit card. Resist the consumerism-crowd, they'll be broke in the future.
Blanca and I are here to help for all of your real estate needs. We're also a great resource for our friends, clients and referring partners. Don't be shy. Reach-out with any questions... We're here to help.
Sean - 651-336-7612
Blanca - 651-503-1302
