The U.S. Housing Market Crash Is Officially Here

For I think about a year now I've been predicting that prices are going to fall 35% to 50% of peak prices. A lot of others here have said that's not going to happen, it's a great time to buy, blah, blah, blah. I challenge all of them to make an actual call as to what percent the market is going to fall before turning around. I predict close to none of them will actually do that.

30, that's going a bit far. Whatever measure of nationwide HPA you use, it won't be half as bad this time as last time.

My answer was to the question "What about the Manhattan market?"

Gotcha.

@ 30yrs_RE_20_in_REO: my own guess: another 15-20%.

Am curious what others think.

While I am not informed enough to have a view on whether or not a general housing market crash might be in the near future, I don't think this article makes a compelling case based upon the referenced data that we are in the midst of a general housing market crash. It also seems to overstate Robert Shiller's predictions.

As I have stated many times, I do believe that NYC, and particularly Manhattan, will face significant downward pricing pressure for the reasonably foreseeable future.

30 - What year are you referencing as peak pricing? 50% price drop seems extreme. Perhaps for those aspirational prices that never actually traded.

They said the same thing in 2009, then it came 3 QE's, and we all witnessed what had happened.

This time, QE4 just started........

@30 you're getting a bit brash, if I recall your predictions in 2009 for the real estate market was a continued decline. That one didn't work out.

That said predicting short-term economic trends with any certainty, very rarely works out. Any anonymous poster can make a prediction about the market, I wonder how valuable these opinions are? I prefer to rely on the likes of Robert Shiller and especially Jonathan Miller (for New York City). Even these very wise folks don't always get it right, but they are immersed in the markets for the most part.

After a fairly active early fall, we've seen things slow down quite a bit over the last couple of weeks. As always there have been exceptions, one of our listings recently went into contract after about two weeks, 40 showings and 5 bids. Certainly not a proxy for the market at large, however an actual recent data point to go along with some of the dogs that have been posted as examples of declines here.

What I do know? Markets have been declining since about 2015 or 2016. Interest rates are very attractive, overall economy seems to be pretty healthy, equity markets at all-time highs (even as there are record numbers of withdrawals) happy to say I'm not one of those: ) barring any 'black swan' type event, I've seen things a lot worse.

Here's a running list of what we've been up to this year;

http://www.theburkhardtgroup.com/transactions

Keith Burkhardt
TBG

So Keith, what's your actual prediction? Where is the market going to bottom?

Predictions are bit useless unless you can provide a very specific time frame for the event that you're predicting. Real estate prices will fall "30 to 50%", if you're telling me that's going to happen in the next 3 months, perhaps I can act on it and it becomes useful. Otherwise it's just blah blah blah... It's like saying short Apple stock it's overvalued and going to fall..yeah probably at sometime in the future it will fall. But if I would have shorted it a year ago I'd still be waiting...

To paraphrase JP Morgan when asked what the market was going to do, 'markets go up and markets go down'. I'm not a trader of real estate, nor trader of stocks for that matter. I buy and hold for the long term, and if I can't hold long-term, then I don't buy.

So for the most part I take predictions by individuals with a grain of salt.

Keith Burkhardt
The Burkhardt Group

So, when you tell people "it's a great time to buy" do you explain to the what you really mean is that "the market has been going down for 4 years, things have gotten worse recently, and I have no idea how much further it's going to fall, but at some time - I don't know when - it will start going back up again"?

If I were to be a client, I would only expect broker to give me truthful and competent current market condition overview, neighborhood color, comp vs recent sales and current other listing, recommendation on bid price / strategy, and perhaps an objective buy vs rent with transparent assumptions. A broker can’t guarantee anything about the future. Anyone who tells they can predict the future with reasonable accuracy is running large pots of money for a fee or perhaps smaller sums for themselves (Sam Zell, Ken Griffin and many smaller size successful real estate investors, traders) and is not a real estate broker. Imagine a client who listened to a bearish real estate broker in 2009/10. Of course, there may be people who expect their broker to wipe their behind and blame them for all decisions they make in their life including real estate purchase.

Even fiduciary investment advisors only recommend reasonable asset allocation - and the advice is typically some percentage long equity. They are the only professionals who have full financial picture, risk tolerance, and asset allocation insight and can potentially advice on whether it makes sense for you buy a home.

And most buyers can perhaps get good information of differing market views by reading these threads, market reports by various brokerage houses, street easy monthly market recap etc, read about economy on various public sources, and make up their own mind after receiving valuable advice from real estate broker on the type of topics I mentioned above.

Before I stop talking to myself, I asked a famous Asset Management CEO:
Why doesn’t industry offer more asset allocation advice and charge for it?
Answer: Most people who are willing to offer asset allocation advice to non Ultra-wealthy investors are no good, it is very hard to be right for market timing even for the best (barring a few well known billionaire hedge fund managers), and very few clients want to pay for it for this very reason.

I dont think any manhattan correction falls more than a 20% to 25% range max. If real estate were as liquid as stock I couldnt rule out 50%, but it isnt.
2/3 years of troubled asset transaction timeframes is a long time.

What are the principal factors this 2-3 year pullback/range-bound trading?

Is it TCJA? Millionaire tax? PPSF appreciation getting beyond regional GDP output support? Chinese capital control? If you can map some of these, I think you can get a better sense of how/if we may bottom...