When will the current Real Estate bubble burst?

[Korrywow]

I think that prices have just plateaued for now and there is more upside...

[waltworks]

Barring a recession (I'm assuming we are talking about the US), it won't burst at all, it'll just stagnate for a decade or so. If there's a recession, watch out below - affordability is pretty maxed out at this point.

Inventory is way up in all the hot markets and sales are way down but most still have <6 months of supply so there's not yet much downward pressure on prices.

I wouldn't be surprised by a 25%-ish correction in most markets. I also wouldn't be surprised by many years of negligible or slightly negative (in real terms) appreciation. I would be very surprised by further price increases outside of specific local (ie Crystal City+Amazon) circumstances.

Usual caveats about my crystal ball apply, of course.

-W

[SnackDog]

Hard to see upside with interest rates where they are and where they are headed. Not sure how this is actionable unless you are a slow flipper.

[tralfamadorian]

1) All real estate is local.

2) Where can I get one of these real estate magic 8 balls?

[Laserjet3051]

Barring a recession (I'm assuming we are talking about the US), it won't burst at all, it'll just stagnate for a decade or so. If there's a recession, watch out below - affordability is pretty maxed out at this point.

Inventory is way up in all the hot markets and sales are way down but most still have <6 months of supply so there's not yet much downward pressure on prices.

I wouldn't be surprised by a 25%-ish correction in most markets. I also wouldn't be surprised by many years of negligible or slightly negative (in real terms) appreciation. I would be very surprised by further price increases outside of specific local (ie Crystal City+Amazon) circumstances.

Usual caveats about my crystal ball apply, of course.



-W

walt, I would concur with everything you said but would like to point out (bolded above) that some really hot markets, such as LA/SF/SD/NYC, (where demand outpaces supply by a wide margin) may experience a greatly muted/dampened correction. Key term in your quoted sentence is "most," further supporting the notion that RE is always LOCAL.

[Steeze]

We just bought a coop in Queens (nyc), offer accepted the day before amazon campus was announced . We bought 10% below asking, 20% below original asking price. Between HQ2 and the lower offer, I am hoping we can cover closing costs and inflation when we sell in 3-5 years. No expectations for a big upside. If it wasn’t going to lower our housing costs by about 500/mo I probably would have kept renting.

[waltworks]

walt, I would concur with everything you said but would like to point out (bolded above) that some really hot markets, such as LA/SF/SD/NYC, (where demand outpaces supply by a wide margin) may experience a greatly muted/dampened correction. Key term in your quoted sentence is "most," further supporting the notion that RE is always LOCAL.

It's worth following those markets if you're curious about them. I generally just check CalculatedRisk periodically to follow along. I'm no longer a RE investor ("I always sell too soon", ala Rothschild) but if prices dropped enough I might be again.

If current trends continue, demand will in fact fall behind supply in even those super hot spots next year. It'll be interesting to see what happens then.

-W

[marty998]

1) All real estate is local.

2) Where can I get one of these real estate magic 8 balls?

Thank you. Why do people think that prices move the same everywhere in the world?

Our little bubble has already popped and prices are tumbling fast. Keeping my toes dry waiting for bargains because next year they'll be plenty to start being had here. There isn't any rush though.

[YttriumNitrate]

In my little corner of the world, real estate prices are significantly impacted by Chicagoans buying vacation houses or trying to get away from Illinois taxes. If the US stock market keeps dropping, and Illinois taxes stop rising, then housing prices in my area will go down.