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Something big is about to happen in the housing market

WhatExit?

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A crash in the housing market seemed inevitable during the early weeks of the COVID-19 recession. However, that bust didn't come to fruition, in fact, the opposite happened: A combination of government support, recession-induced low interest rates, and eager homebuyers set off a housing boom. Since the onset of the crisis, median home prices are up a staggering 24%.

But much of that government aid and support is about to go away. The foreclosure moratorium, which prevents foreclosures of federally-backed mortgages, will come to an end on July 31. Then on Sept. 30, the mortgage forbearance program, which allows some borrowers to pause their payments, will lapse. Since the beginning of the pandemic, over 7 million homeowners have been enrolled in the forbearance program. However, as the economy has improved that number has fallen. As of July 11, there are still 1.75 million borrowers, or 3.5% of U.S. mortgages, enrolled in the forbearance program.

The foreclosure crisis following the 2008 housing crash was so bad, in part, because tens of millions of financially strained homeowners were underwater (meaning a borrower's remaining mortgage balance is greater than the home's value) and had no choice but foreclosure. That's unlikely to be the case for financially strapped homeowners this year. These homeowners are likely sitting on sizable home equity (home value minus the outstanding mortgage), and if they can't repay the mortgage they can simply sell into the currently red-hot housing market.

 

Ace in the Hole

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Very different circumstances from 08, and a very different political climate. The dirty dem's aren't going to let a collapse happen right now...there will be programs, modifications etc happening. I can see some correction, but there won't be a crash in prices like some expect. JMO.
 

OldSchoolBoats

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Unfortunately all you guys that have been rooting for a housing crash will be let down, once again. The end of the forbearance / foreclosure moratorium won't cause a crash. This isn't 2008 and I don't know why so many people just can't understand that. Hate CNN, but this is a great article to read on that.............

 

LargeOrangeFont

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Cooling yes, in some markets that has already started to happen. Crash, no. There is not enough supply and too much equity for there to be a crash.

The article even says there is no reason for people to be foreclosed on.. they will just sell because they are sitting on equity.
 

WhatExit?

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Cooling yes, in some markets that has already started to happen. Crash, no. There is not enough supply and too much equity for there to be a crash.

The article even says there is no reason for people to be foreclosed on.. they will just sell because they are sitting on equity.

More selling = more inventory and that's what will soften the market. That and if interest rates were to rise.
 

LargeOrangeFont

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More selling = more inventory and that's what will soften the market. That and if interest rates were to rise.

Rates rising...that ain't happening anytime soon. And a 10% drop in the market is not a crash. That is Jan 2021 pricing.

My question is who is gonna sell and EXIT the housing market to instead rent? You are better off waiting and getting a loan forbearance/loan modification on your home than being evicted for not paying rent. If someone is selling, they are also likely buying.

The government is not going to let another mass foreclosure event happen, and this is a completely different set of circumstances.
 

HotRod82

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FWIW - I'll be surprised if Biden lets the moratoriums lapse.........They need to keep this Covid crisis going. You guys think the moratoriums ending and the Covid panic currently rising is a coincidence?
 

sintax

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Rates rising...that ain't happening anytime soon. And a 10% drop in the market is not a crash. That is Jan 2021 pricing.

My question is who is gonna sell and EXIT the housing market to instead rent? You are better off waiting and getting a loan forbearance/loan modification on your home than being evicted for not paying rent.

The government is not going to let another mass foreclosure event happen, and this is a completely different set of circumstances.

To me the real question is, How many homes are "at risk" once this forbearance window is over? I may be way off base here, but I just dont suspect there are that many at all. I know its not your ideal sample set, but from the people I know, I dont think anyone is in this situation. Whereas I knew a ton of people in that 08 timeframe that were in a world of hurt, mostly self-inflicted issues (shitty adj rates or got in trouble with the residential ATM)

It feels like most of the middle class (if thats even a thing anymore) faired OK through this. I had a few buds who lost jobs, and found jobs within weeks, if not days. If you were a hustler you did ok.
 

LargeOrangeFont

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To me the real question is, How many homes are "at risk" once this forbearance window is over? I may be way off base here, but I just dont suspect there are that many at all. I know its not your ideal sample set, but from the people I know, I dont think anyone is in this situation. Whereas I knew a ton of people in that 08 timeframe that were in a world of hurt, mostly self-inflicted issues (shitty adj rates or got in trouble with the residential ATM)

It feels like most of the middle class (if thats even a thing anymore) faired OK through this. I had a few buds who lost jobs, and found jobs within weeks, if not days. If you were a hustler you did ok.

No you are absolutely correct. The 4-10% of people still unemployed (varies by area, CA is the highest) don't own homes to begin with anyway.
 

kurtis500

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Get on Google and search ‘coming housing crash’ BUT put in the search dates of 2000 to 2006. You’ll notice not ONE single ‘expert’ saw it coming. This includes all the big financial papers.

Why do they think they know it all now and are so confident? Read the articles and you will see nothing has changed in terms of over-confidence.
 

Cole Trickle

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To me the real question is, How many homes are "at risk" once this forbearance window is over? I may be way off base here, but I just dont suspect there are that many at all. I know its not your ideal sample set, but from the people I know, I dont think anyone is in this situation. Whereas I knew a ton of people in that 08 timeframe that were in a world of hurt, mostly self-inflicted issues (shitty adj rates or got in trouble with the residential ATM)

It feels like most of the middle class (if thats even a thing anymore) faired OK through this. I had a few buds who lost jobs, and found jobs within weeks, if not days. If you were a hustler you did ok.

I think there are a ton of able bodied still employed people that jumped on the forbearance train or took advantage of the situation and pushed out there car payments. They don't see the big picture but it sure was nice to get some free money out of the house for a new boat/rzr while they could.
 

pronstar

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Earlier this year, the NAR stated (I’m recalling this from memory so paraphrasing) “even if all of the homes in forbearance were foreclosed and put on the market for sale, it would only satisfy about 4% of total housing demand”


Sent from my iPhone using Tapatalk Pro
 

Ace in the Hole

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To me the real question is, How many homes are "at risk" once this forbearance window is over? I may be way off base here, but I just dont suspect there are that many at all.

around 2 million max..the number keeps dropping...and even those people can have the payment balance shifted to the back from what I'm seeing reported. I don't think it will make much if any difference.

The rental market however is about to get absolutely rocked.
 

LargeOrangeFont

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around 2 million max..the number keeps dropping...and even those people can have the payment balance shifted to the back from what I'm seeing reported. I don't think it will make much if any difference.

The rental market however is about to get absolutely rocked.

I see the same thing happening for property owners.. payments shifted to the back end, or just direct cash to shore up large corps with lots of holdings. No money is going get into peoples hands..
 

LargeOrangeFont

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There will be no crash or correction..... average homes are 650k, decent homes are 1.2mil and everyone is making 250k / yr.... it's the Catalina wine mixer bro!!

Some people just need to relocate if they can't hang with the cost of living in So Cal.. You've said it before - Other areas are outperforming So Cal with regards to % price increases. Opportunity zones are shifting, and will continue to shift. People will shift to those new opportunity zones. There will always be money to swoop in and purchase that $1.2M house in So Cal.
 

attitude

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There will be no crash or correction..... average homes are 650k, decent homes are 1.2mil and everyone is making 250k / yr.... it's the Catalina wine mixer bro!!
250k that’s it? How are they supposed to pay cash for their new m37🙄
 

c_land

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Cooling yes, in some markets that has already started to happen. Crash, no. There is not enough supply and too much equity for there to be a crash.

The article even says there is no reason for people to be foreclosed on.. they will just sell because they are sitting on equity.

YES. Even if the circumstances were identical related to lending practices and other dynamics of 2008, there is still the factor of today's inventory shortage and elevated demand that did not exist then.
 

EmpirE231

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economical musical chairs have been happening since day one.... look how much the high desert and vegas has grown lol....

I still think a crash is inevitable though. It will be a very short window of opportunity though now due to inflation.... but there will be some deals. People are dumb, and over leveraged in general... sometimes all it takes is 3-5% of "something" to cause that snowball effect. But yes, prices in real estate will bounce back to these higher levels.... but it's not because real estate is on fire, or a great investment currently.... it's because our dollars are becoming worthless.
 

LargeOrangeFont

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economical musical chairs have been happening since day one.... look how much the high desert and vegas has grown lol....

I still think a crash is inevitable though. It will be a very short window of opportunity though now due to inflation.... but there will be some deals. People are dumb, and over leveraged in general... sometimes all it takes is 3-5% of "something" to cause that snowball effect. But yes, prices in real estate will bounce back to these higher levels.... but it's not because real estate is on fire, or a great investment currently.... it's because our dollars are becoming worthless.

Define a "crash". A crash is ALWAYS inevitable.

The High Desert and Vegas have grown because people were trying to flee the high cost of living. It is like saying look how much the IE grew before 2008. People are just moving further out to new markets where they can get a bigger house for cheaper.
 

EmpirE231

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Define a "crash". A crash is ALWAYS inevitable.

The High Desert and Vegas have grown because people were trying to flee the high cost of living. It is like saying look how much the IE grew before 2008. People are just moving further out to new markets where they can get a bigger house for cheaper.

yeah and people will continue to do so....... but there have been a couple housing crashes over the last several decades.

a crash would be a 20-30% decline in values within a semi short period 1-2yrs
 

EmpirE231

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250k that’s it? How are they supposed to pay cash for their new m37🙄

the guys paying cash for M37's.... I'd say 75% of them are legit ballers lol. The other 25% tapped out some home equity, a PPP loan or some inheritance money.
 

BHC Vic

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Rates rising...that ain't happening anytime soon. And a 10% drop in the market is not a crash. That is Jan 2021 pricing.

My question is who is gonna sell and EXIT the housing market to instead rent? You are better off waiting and getting a loan forbearance/loan modification on your home than being evicted for not paying rent. If someone is selling, they are also likely buying.

The government is not going to let another mass foreclosure event happen, and this is a completely different set of circumstances.
So as far as equity I can understand that argument this time. BUT what about the people that pulled that equity to buy another house or worse toys. I know several people that did that. (At least 10) So there should be equity in the house, but now there isn’t. Do they walk?
 

c_land

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I still maintain unrolling the FED's eight trillion dollar balance will trigger something, big or small is what is yet to be seen. They will have to taper MBS purchases at some point.
 

LargeOrangeFont

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yeah and people will continue to do so....... but there have been a couple housing crashes over the last several decades.

a crash would be a 20-30% decline in values within a semi short period 1-2yrs

The last 2 big crashes that meet your criteria were about 40 years apart. We are 10 years post the last one. I don't think it will take another 30 years for the next one but we have a ways to go.

Your definition would only put prices back to where they were 18 months ago, which many here said could go no higher and we were primed for a crash... well the exact opposite happened LOL.
 

LargeOrangeFont

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So as far as equity I can understand that argument this time. BUT what about the people that pulled that equity to buy another house or worse toys. I know several people that did that. (At least 10) So there should be equity in the house, but now there isn’t. Do they walk?

If you pulled money out to buy property (or another appreciating asset), as long as you have a job, how do you lose? Now if you are 1 missed paycheck or one missed rent check away from all of it crumbling, well you probably didn't make the best decision, but there are options that will help - forbearance, refi, etc. You can also sell the new property and get your equity out of it. What reason is there to just walk away when you aren't underwater?

If you bought a toy, sell it (them) now. It is probably worth what you paid. and put the money in the bank. Or start renting the toys out to make them cover their costs or bring in income.

There are plenty of ways to make money if you have assets and are up against it.
 
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Xring01

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The Biden Admin and the Libtards want to stay in power...
Therefore they will do everything in there power to ensure the Stock Market and Housing Markets do ok, if not great...

Now after the next election cycle... thats when I will get very worried. Meaning we probably have 2 more years of free Gov $$$ Spending Programs.

The moment the Gov stops propping up this economy, then we will truly know where we stand. Until then its anybodys guess. But my guess, there will be a sizable correction.
 

riverbrian

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around 2 million max..the number keeps dropping...and even those people can have the payment balance shifted to the back from what I'm seeing reported. I don't think it will make much if any difference.

The rental market however is about to get absolutely rocked.

tell me more about the rental market. Is that a good rocked or bad?
my plan was to ride this out and turn my current house into a rental and then buy a bigger nicer home in the correction.
 

LargeOrangeFont

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tell me more about the rental market. Is that a good rocked or bad?
my plan was to ride this out and turn my current house into a rental and then buy a bigger nicer home in the correction.

The people still with no jobs on the government cheese are the ones not paying rent. They are gonna get evicted as soon as the .gov allows it.
 

OldSchoolBoats

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New home sales are down 20% from June of 2020, and inventory is rising.


If you are considering buying a home, please, please, PLEASE make it a point to NOT listen to CNBC's Diana Olick. She is, and has been, the Queen of Doom when it comes to housing and has been proven wrong time and time again. And, yet they continue to air her senseless commentaries. I am guessing that she has no choice but to be "all in" when it comes to her predictions --- she is in way too deep now to quit.
God only knows how much she cost potential homebuyers who, unfortunately, listened to her (bad) advice.
Allow me to say this again:
The housing market is still strong and appreciating. There will always be an ebb and flow to any market, but all you have to do is look at the year-to-year numbers -- or look at home prices in your area, to see what is really going on.
I have not worked with a single buyer in the past year who has not lost out more than once on a home purchase due to multiple offers. Multiple offers, may I had, that EXCEEDED the asking price, and sometimes substantially so. Ask any Realtor and he/she will tell you, it is going to often take several attempts to find a home that will get an accepted offer.
So, why is this not a "bubble waiting to burst"? There are several factors, but let's start with the tried and true one of supply and demand. Currently, inventory is not strong enough to meet the demands of buyers. It's not complicated: if there are not enough homes for the number of people looking to buy, it creates a more competitive market when it comes to offers being made. The question buyers are asking is not "should we offer full price", it's, "how much over listing price should nor can we offer?".
Reason #2: Continued low interest rates. Interest rates are in the 2's and 3's for 30-year fixed rates -- and if you look at current economic factors, those rates are not going away anytime soon. This is keeping affordability in check -- which is necessary when you consider the rising home values.
Will housing numbers sometimes decline? The answer is "yes". But you have to be able to dissect the numbers to get an understanding as to what and why this can happen. For example, a report might state the following: "housing starts were down last month for the first time in 14 months". Hmmm...that might signal a negative market shift. OR...it might reflect the fact that builders have slowed down due to the lumber shortage (as well as a shortage and delay for getting in appliances made in other countries). Large builder D.R. Horton just put a stop to new construction. Is it because sales were slowing? NO! It is because they are not able to get the supplies they need to build more homes.
So, ask yourself: less housing....will this create greater demand for existing homes being put on the market, or less?? You already know the answer. And greater demand + low inventory = you guessed it, increased prices.
So, be careful what and who you listen to and, at the very least, ask questions and dig a little deeper. Many in the media have self-serving agendas. I am not telling you that all reports are filled with lies or mistruths. I am simply encouraging you to do your homework, especially when it comes to reports from people like Diana Olick, who are often more interested in making the news than reporting it.
 

LargeOrangeFont

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If the market is on solid ground WITF is the Fed buying billions in Mortgage back securities each month?

Pretty much why there won't be a crash anytime soon and many analysts are saying that is not even needed at this point.
 

EmpirE231

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The last 2 big crashes that meet your criteria were about 40 years apart. We are 10 years post the last one. I don't think it will take another 30 years for the next one but we have a ways to go.

Your definition would only put prices back to where they were 18 months ago, which many here said could go no higher and we were primed for a crash... well the exact opposite happened LOL.

so you predict 800k+ average home prices in CA? currently we are @ 700k

18 months ago was considered high, but we've also had run away inflation since then.
 

bldrinker

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If you sold loans or homes would you be telling your customers to wait?
Lol nope. You would preach now is the time to by but buy!

I do not think there will be a crash like 2008.

But I do understand we have been in a market boom for a long time. What goes up must come back down at some point.
There are no large triggers other than what was mentioned above. I feel the forbearance and moratoriums will be part of the snowball.

people of been on shopping sprees for years something has to give.

I spoke to a broker and loan officer recently. The both told me to have money set aside to invest. Opportunity will be coming.
 

LargeOrangeFont

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so you predict 800k+ average home prices in CA? currently we are @ 700k

18 months ago was considered high, but we've also had run away inflation since then.

You said a crash is inevitable, I say that housing costs will keep rising over time is also inevitable, just like they have for hundreds of years.

Yea it will reach $800K at some point. No one buying a house in the last 6 months cares about the inflation over the last 18 months. They just want to move. If everyone cared or was affected by it, no one would be buying any houses right now. Instead there are not enough houses to satisfy the demand.
 

EmpirE231

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You said a crash is inevitable, I say that housing costs will keep rising over time is also inevitable, just like they have for hundreds of years.

Yea it will reach $800K at some point. No one buying a house in the last 6 months cares about the inflation over the last 18 months. They just want to move. If everyone cared or was affected by it, no one would be buying any houses right now. Instead there are not enough houses to satisfy the demand.

well yes it will rise over time.... But in our current market, do you believe prices still have a way to go before a crash / correction (whatever you want to call it)

you do not believe we will have a crash / correction anytime soon........so are you doing everything humanly possible currently to acquire more real estate currently?
 

LargeOrangeFont

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well yes it will rise over time.... But in our current market, do you believe prices still have a way to go before a crash / correction (whatever you want to call it)

you do not believe we will have a crash / correction anytime soon........so are you doing everything humanly possible currently to acquire more real estate currently?

It's gonna level off.. It is already starting to in some areas as I've seen price reductions in the areas I follow.

Is it gonna drop to your "crash" level? No I don't think so. Could it drop 10-15%? Yes I believe that could happen in the next year to 18 months. Like I said that puts us back to late 2020 pricing.
 

BHC Vic

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It's gonna level off.. It is already starting to in some areas as I've seen price reductions in the areas I follow.

Is it gonna drop to your "crash" level? No I don't think so. Could it drop 10-15%? Yes I believe that could happen in the next year to 18 months. Like I said that puts us back to late 2020 pricing.
What’s considered a crash? 20%?
 

EmpirE231

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It's gonna level off.. It is already starting to in some areas as I've seen price reductions in the areas I follow.

Is it gonna drop to your "crash" level? No I don't think so. Could it drop 10-15%? Yes I believe that could happen in the next year to 18 months. Like I said that puts us back to late 2020 pricing.

My crystal ball says that you are wrong

The cool part about all of this, is that nobody knows... and we can both be wrong. The more time goes on, the more you realize that even all the "experts" don't know what's coming next. I would not be surprised to wake up one day, and the dow is down 6k points. We are in very strange times.

what I do know... is that MOST people are not making that much more money than they did pre-covid, and costs have gone to the moon. Costs were already "high" for most people pre-covid. Most people even doing financially well right now, would not be in a position to buy their current home they are in, without rolling in all the "equity" they had into the transaction. My cave man logic tells me this all doesn't make sense, and we will see a swing the other direction. Just like sex.... it is always best right before it ends lol.
 

Boat 405

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The government just printed trillions of dollars of funny money with nothing to back it up. Inflation is on a run away course. Lol



Sure nothing will happen…….smh…

Alas, Im sure everyone here has passive income, perfect life savings, 100% job security, no debt, and savings in gold under their mattress, and will retire at 65 with a fat pension until they die.
 

LargeOrangeFont

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My crystal ball says that you are wrong

The cool part about all of this, is that nobody knows... and we can both be wrong. The more time goes on, the more you realize that even all the "experts" don't know what's coming next. I would not be surprised to wake up one day, and the dow is down 6k points. We are in very strange times.

what I do know... is that MOST people are not making that much more money than they did pre-covid, and costs have gone to the moon. Costs were already "high" for most people pre-covid. Most people even doing financially well right now, would not be in a position to buy their current home they are in, without rolling in all the "equity" they had into the transaction. My cave man logic tells me this all doesn't make sense, and we will see a swing the other direction. Just like sex.... it is always best right before it ends lol.

Everyone has been saying what you are saying for 6 years. You’ll be right eventually.

If what you said is true, no one would be buying houses right now. If people are rolling their “equity” into there moving transactions, they aren’t gonna get foreclosed or walk away. That is a major difference and why there won’t be a “crash” as things cool off. People are buying and know in the medium to long term the RE is going to appreciate.

The Dow down 6k points tomorrow at Dow 35k does not mean the same as it did when the Dow was at 14k. Even if that happened it would take awhile to affect housing. The last crash it took 6 years to bottom out, and the Dow was already recovering as RE hit its lows in 2011-2012.

Not everyone can afford to live in So Cal. It is increasingly becoming the land of the haves and have nots, with nothing in between. I wouldn’t advise any new home buyer to buy a house here in today’s conditions.
 
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Dennis-19

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Some people are naïve and that doesn't change. Many homeowners had equity last downturn and they got greedy or remained too optimistic that they would get to keep their homes or that values wouldn't drop and they lost all the equity when the inventory rose and values dropped. I'm sure it will happen again. I had people in 2007-2009 that didn't listen who could have cashed out and moved on, but they didn't and had to face short sale or foreclosure. Oh and it wasn't just people who shouldn't have had loans in the first place, a lot of people who "did everything right" got burned.

I am not sure what will happen, but this train is eventually going to run out of steam.

SB 1079 is a bit concerning. CA is now able to out-bid any trustee sale winner. Communism on the horizon?
 
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LargeOrangeFont

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Some people are naïve and that doesn't change. Many homeowners had equity last downturn and they got greedy or remained too optimistic that they would get to keep their homes or that values wouldn't drop and they lost all the equity when the inventory rose and values dropped. I'm sure it will happen again. I had people in 2007-2009 that didn't listen who could have cashed out and moved on, but they didn't and had to face short sale or foreclosure.

I am not sure what will happen, but this train is eventually going to run out of steam.

SB 1079 is a bit concerning. CA is now able to out-bid any trustee sale winner. Communism on the horizon?

You are leaving out one important piece of the story.. why were they no longer able to make payments? You just don’t get foreclosed on at random.

They either lost their job, didn’t refi their ARM or both.

Neither of those conditions exist today. With low rate fixed mortgages, and economy holding jobs for now.

Nor is their excess vacant inventory devaluing home prices.
 
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