How bad was it back in the day? Will it ever get this bad again?
This was my first REO listing in 2008.
For comparison, the home next door sold for $482,000 about a year ago.
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
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- 682 S. Coast Hwy 101, Suite #110
Encinitas, CA 92024 - (858) 997-3801 call or text
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CA DRE #01527365, CA DRE #00873197
This is what the real estate marketplace should look like. I know it seems cruel to say things like that but its truly what needs to happen again.
Banks are colludeing + choosing to not foreclose when “homeowners” stop paying their mortgage. By doing this housing maintains it’s current “value”. Sprinkle in high levels of inflation and like magic banks are bailed out on mortgages that “homeowners” can start making payments on again because they’re earning higher amounts of $$$.
In reality people aren’t making any more $$$. They’re just getting paid in larger amounts created by inflation. (10 years ago a burger cost $5, today a burger costs $15) you might be making more $$$ but everything costs more so nothing has changed in your buying power.
But banks now can close their books out without foreclosing.
Winners in an economy like this are those that purchased assets before inflation kicked in and those people that leveraged themselves to their eyeballs to “own” assets. Both groups need to sell assets to realize their gains. Or maybe we’ll all just become a nation of reverse mortgages + people never really own anything we just “rent” from the banks.
If we went back to this, the devastation it would create for the real estate industry and economy, especially now, would be catastrophic. This idea is not something we should ever publish, think about or put out into the world.
Prices sure do need to come back to reality to make housing more affordable but not to a point where the economy would be so vacant that only the richest of our society and institutional entities end up owning the bulk of the housing inventory.
My comment was directed at Shadash not the original post.
I sold 72 of these in 2009, and barely got by. I needed Donna + two full-time assistants to process the onerous paperwork for the banks.
But I honed my craft on how to handle a bidding war! We received 10-20 offers on most.
We can only kick the can into the future so many times. Eventually someone needs to pay the tab.
Personally in my lifetime I’ve seen 4 real estate downturns.
1st was late 70’s early 80s + building condos was what everyone was doing. Developers made lots of $$$ but once Volker came in and upped interest rates into the mid teens development immediately stopped. Many times you’d see cement slabs/basements poured but nothing else and sites completely abandoned.
2nd was the early 90’s this wasn’t really a downturn just a constant sideways slide with prices not really going up or down.
3rd was in the late 90’s early 2000’s after the Tech bubble burst there were properties all over that went down in price.
4th was in the Housing / Finance crash in the 2008-2009 timeframe where lehman brothers went belly up + the Banks were bailed out.
In each instance there were always buyers looking to purchase properties in the downturn.
Just like Jim is doing Realtors need to accept the current market reality + Sellers move forward as quickly as possible. The musical chair game is slowing down + getting ready to stop.
Between 1990 and 1994, the 30-yr fixed rate went from 10% to 7% which tempered the drop and made it more like a sideways slide.
The Fed did it right then. Man, have they screwed up since!
Marc said “ If we went back to this, the devastation it would create for the real estate industry and economy, especially now, would be catastrophic. This idea is not something we should ever publish, think about or put out into the world.”
The last sentence is the really disturbing one, Marc. We can’t “publish” or even “think about” letting prices, and the market, correct itself?
I can see his point about not wanting to have real estate dominated by the elite. We are pretty close to that already.
Maybe we have become so accustomed to the “elites,” banks, hedge funds, Wall Street, etc., being bailed out that we can’t even imagine a REAL correction where the chips just fall where they will, and should. But that is what we need, and at some point, that is what we will get.
“The last sentence is the really disturbing one, Marc. We can’t “publish” or even “think about” letting prices, and the market, correct itself?”
Welcome to cancel culture.
What Marc is trying to do is get an admin to ban the comments they dont like.
I knew several people that bought up their eyeballs in the early 2000s + lost them all. It will be interesting to see this one play out.
But that is what we need, and at some point, that is what we will get.
I’m not so sure about that. As much as I’d like to see it happen too, it seems a long ways off.