Will we see a Housing Market Crash in 2021?

Naples Vacancy Rates 2021. Market Crash.

Is the housing market going to crash? If we go back to the great market crash in 2008 we can compare.

The home demand in 2008 was caused by too many people that were given loans who could not afford them. These were known as Ninja loans (no income, no job or assets). When people couldn’t pay the bank it started a chain reaction. The subprime loan fails ➡ bank fails ➡ derivative markets fails ➡ stock market fails ➡ market and the economy goes into the great recession.

If there’s enough interest I’ll do a write up of all the things that are causing demand in general to go up. And all the factors that are causing supply to go down. This is the main driver of the sky rocketing home prices that we’re seeing.

The main difference between this price explosion and the one in 2008 is that the people buying these houses are generally affluent. They are a lot less likely to foreclose. These are savvy buyers. They understand that prices are going to continue to go up for some time. They have savings and pensions. Many are from the baby boomer generation ready to find their dream house to retire in.

Additionally the mega corporate real estate investing conglomerates like Black Rock have deep pockets. They are outbidding regular buyers sometimes as much as 40,000. They understand that real estate is a better hedge against the impending inflation than other investments, and it’s not as volatile as crypto currency. These savvy investors would not be investing so heavily if they thought the market could drop rapidly like we saw in 2008.

So I disagree with people who think we’re going to crash hard like 2008. All markets happen in cycles and yes eventually even we will have a correction, but I don’t think it will crash.

What do you think? Let me know in the comments.

Thanks,

Dave

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