Are We Entering a New Real Estate Market Downturn?

By
Real Estate Attorney with federalfinanciallawgroup.com

The $64,000 question seems to be arising again..."Are we entering a new housing market downturn"?  

I had two occasions this week when the caller emphatically stated that another downturn is imminent and these are well informed industry experts.  Many prognosticators believe that the next slump is set to begin.  Many are unaware that the Dodd Frank Act not only permits sub-prime loans...it pretty much requires them.  

A client in Nashville, TN was advised by his mortgage broker that he can refinance his loan but the broker believes that he should wait because of a looming downturn.

Naturally, when you do the same thing again and again, you can expect the same result.  Sub-prime loans clearly have a higher default rate and it appears that the number of defaults of such loans is on the rise. As an aside, sub-prime auto loans are entering a dangerously high default rate.

I have a number of wealth and asset protection clients who are either divesting real estate holdings and/or limiting the impact of a perceived future downturn. It almost seems that the situation is analogous to the animals reacting before a storm.

 

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A client in Netherlands is already asking me to look for opportunity in Las Vegas...he is that certain and I pay attention to him because he was correct in '08 - '09 and he got out before the worst of the damage occurred. He believes, and I concur, that the next downturn will have an even greater global consequence than the last cycle. I recently visited Mexico, Portugal and Spain on real estate scouting missions and the developers were positive and upbeat. However, the real estate brokers were not as optimistic. They talked the talk but it was easy to read between the lines because the concern was written all over their faces.

So, what does everyone believe? Anyone seeing any signs...good or bad?  Seems like the cash buyers are already beginning to hover!! 

Paddy Deighan J.D. Ph.D

TimeshareLawyers

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Comments (7)

John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Paddy Deighan JD PhD Lately, people asking the same question!

Jan 22, 2016 12:26 PM
Joan Dickie
Keller Williams Premier Realty - La Crosse, WI
Keller Williams Premier Realty

My franchise leaders have been talking about this for some time.  My market center has started to prepare for a shift, but I'm not sure they are preparing for a downturn.  I think they are preparing for a deeper sellers market.  I can see where foreign investors are much more sensitive than domestic might be.  If foreign investors get skittish and sell off, you are right, we will have problems.  Some of these larger REITS have quite the holding of single family homes.

Jan 22, 2016 12:47 PM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Ouch, we did not even see coming out of the slump yet, and you are talking about yet another one?

Are we going to see light at the end of the tunnel... ever?

Jan 22, 2016 01:37 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

We might be on an 8-month cycle. I do have a little bit of hope for the next couple years.

Mar 01, 2016 01:39 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Jon Kolsky I can see what you're saying but I'm generally optimistic about the hustle. Good luck in everything that you do!

Mar 01, 2016 01:42 PM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Paddy Deighan JD PhD ~ this is a great question to ask. And thanks to Laura Cerrano I'm here (I get confuesd with Jon Zolsky, Daytona Beach, FL all the time.) I wish we knew the answer, that would make things a lot easier on all of us. The way I see it- it doesn't take much to get the ball rolling in the other direction and eventually it will roll in the other direction

Mar 02, 2016 01:16 AM
Paddy Deighan MBA JD PhD
federalfinanciallawgroup.com - Vail, CO
Paddy Deighan J.D. Ph.D

my concern is that the default rate is climbing again and credit is tightening...and Dodd Frank REQUIRED more sub-prime loans, Also the auto rate default is climbing as is student loan defaults

Mar 02, 2016 01:55 AM

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