John,
I got into the foreclosure business in 1983. Those were the days, when people were trading notes, gems, whatever.
This time it may be different. Remember how high interest was back then, when prime went over 20? With rates this low, there isn't much Greenie can do if housing runs into problems, not that he really has any real power to start with.
At current levels, the market does not need to go down for many borrowers to be in trouble. Take the American Airlines employees as an example. They took an average of what, 20-30% pay cut? Now they are struggling.
How about the appraisers, real estate agents, loan hacks? They are so overleveraged using the 6 figures income they are making today as if there is no end? Buying rental properties with negative cash flow that will take a big appreciation each year just to break even? It doesn't take much to push many over the edge.
Could we have a soft landing? May be.
Would it be abrupt, like 1989? Who knows.
By the way, carranza, location location location is wrong wrong wrong. Location plays a little part in value, as long as they are in any of the major markets, not the ghost towns that Kim Bassinger bought. Timing Timing Timing is what real estate is all about. Just think, anyone can dart board any real estate in 1992 and chances are they made a fortune. On the other hand, one can buy the absolute best location today, what do you think of the chances of making money in a few years? |
