Are the Lights Going Down on Real Estate?

Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343

Are the Lights Going Down on Real Estate?


You know what's on a lot of my clients' minds right now?  No, not Journey of the the 1970's, but the real estate downturn of 2007/2008.  Many of these prospective buyers are getting a sense that maybe this is the top of the market and that perhaps they should sit things out and wait for real estate to go on sale --- just like it did during the downturn.  I have some advice for them, but it has little to do with market prognostication.  In fact, I'll be the first one to admit that my predictions aren't any better than the next guy's --- even if I am a better writer than him. 


The Frontiers of Your Pre-Approval

Any decision to buy a home should have less to do with gambling on the direction of the housing market and more to do with three key aspects of your own financial profile:

  1. How much can you afford for a housing payment each month?
  2. How much do you have available to put down?
  3. How long do you see yourself in the home?

The first two are more finite (er, have less to do with Infinity...), but the last one does involve some guessing.  I'll make it easier for you though.  If you can't see yourself in any home or any geographical area for more than at least five years, buying a home gets exponentially more risky because you may not have the time to outlast market cycles.  That notwithstanding, understanding these three personal finance attributes relative to the alternative, which for most means renting, is the KEY to getting a realistic grasp on whether or not you can advance to making predictions about home values, interest rates, etc.  By modeling boundaries of all of these aspects, you can really get a sense of whether home ownership is a good fit and you can largely remove the emotion from the analysis.  For now, this is a good thing.  There will be time for emotion later, like when you start visiting open houses.


Escape from Your Fears About Another Recession

It's time to ditch the idea that we're going to see another 2008-style real estate crash.  The circumstances that preceded that time and event simply do not exist today.  Back in the run up, highly unqualified buyers got a seat at the table with everyone else, by way of stated income loans and zero down programs with artificially low payments.  The mettle of these owners was tested when the easy money dried up and the home values went down.  Predictably, many of them walked and by doing so, dumped a glut of property onto an already over-stressed market.  Take comfort in the fact that over the last decade, buyers have had to practically give blood to get a mortgage and even when they did, they competed against all-cash buyers for the very same dearth of homes.  These folks have a whole lotta skin in the game and it will take many more torpedoes to get them to abandon ship should we start to see home values retrace.


One last thing before we go our separate ways.  What I saw happen in 2008 through 2012, when prices did go down, was the opposite of what our too-smart-for-himself borrower might be thinking after reading the above and essentially shrugging it off.  When prices declined, buyers stopped buying.  Instead of trying to predict the top, they shifted and tried to predict the bottom and more often than not, missed on both occasions.  So, control what you can control and focus on your status and not the market's.  Those who have historically purchased when they had to and could have fared far better, supported by observation over my career, than those who waited and then never did.  The lights are not going down on real estate, but the wheel in the real estate sky keeps on turning and buyers will need to make adjustments too.  You might even say this is an Evolution.


Send her my love, 



Robert J. Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 Fax: 415-366-1590

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate's Human Resources Department.


Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood ChicagoIL 60613 - (866) 934-7283


Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Thom Abbott 10/10/2018 06:59 PM
  2. Fred Griffin Tallahassee Real Estate 10/11/2018 06:45 AM
  3. M.C. Dwyer 10/11/2018 10:15 AM
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Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

I wouldn't mind seeing sellers humbled a bit...Good for the market if they are

Oct 11, 2018 06:33 AM #24
Sajy Mathew
Coldwell Banker Residential Brokerage - Lancaster, PA
Making your real estate dreams become a reality!

Great read and many good points touched on.  If you can afford to buy a home now, take the leap and do it.  Holding on to time the market at its lowest or highest may not work out for the Buyer.

Oct 11, 2018 07:03 AM #25
Ron Aguilar
Continental Mortgage - Saint George, UT
Mortgage & Real Estate Advisor since 1995

Rob, excellent post. I have always carefully mentioned the concept of buying with logic rather than emotion to potential home buyers. Another concept is avoiding peer pressure when buying...

Oct 11, 2018 07:39 AM #26
Chuck Willman
Utah Homes - Alpine, UT
Utah Homes

Such a solid post, Rob. So much of this market's engine runs on perception and the reality is that if people need to purchase a home they should do so on the merits of that decision.

Oct 11, 2018 08:55 AM #27
Greg Mona
eXp Realty - Scottsdale, AZ
Professional Real Estate Representation for YOU!

Wonderful post, Rob Spinosa! You've hit on many points that were and are so true. As some of the others have chimed in that have been on this earth for a while, I recall buying my first condo in 1982 as an early 20-something, and the best rate I could get was a 3-year fixed ARM at 17.99%! That is NOT a typo! It would then adjust after 3 years and could go UP as much as 5% per year after that! Two things; first, I sold the condo way before the 3 years were up, and second, interest rates fell shortly after that anyway. I remember in the late 1980's after purchasing my first single-family detached home, and my neighbor, who was a mortgage broker, helped me refinance into a 15-year fixed mortgage at "only" 8.95%. I felt like I won the lottery that day!  His words were, and I quote, "you'll never see interest rates this low again!". So for those buyers who are under 40 or so years old who think 5% is a "ripoff", be very glad you are a consumer now versus 36 years ago!

Oct 11, 2018 09:01 AM #28
John Wiley
Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

Great information shared and good analysis of the current market.

Our job is to keep our finger on the pulse. Check the vital signs of the real estate market. There is always a time and place to make adjustments, but we should not go into panic mode.

Thanks for sharing.

Oct 11, 2018 09:08 AM #29
Doug Kaller
Academy Mortgage, Reno, NV - Reno, NV

The only people who lost were those who sold. Most homeowners who purchased at the height of the market have equity today. You have to live somewhere and you are either paying your own mortgage or someone elses. 

Oct 11, 2018 09:26 AM #30
M.C. Dwyer
Century 21 Showcase REALTORs - Felton, CA
MC Dwyer-Santa Cruz Mountains Property Specialist

A great post, and great comments in response.      Looks like you've allowed the re-blog button so I'm going for it gratefully!

Oct 11, 2018 10:06 AM #31
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Great points Rob! I think we as agents have oversold the idea of a home as an investment vehicle! A buyer’sdecisions should be made based on a home as a place to live! Anybody that sits around trying to catch the right place in the cycle, will almost surely not hit it right!

Oct 11, 2018 10:18 AM #32
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Well done post and perspective, Rob. It’s a shame people start to panic when things change, and especially when the media starts using words like “crisis.” The best thing we can do is watch the market closely and provide education to our clients and explain to them what it all means so they can make informed decisions. 


Oct 11, 2018 10:26 AM #33
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Congrats on the well-deserved Feature, Rob Spinosa ... as always, you nailed it.  And as someone with many years under my belt, I agree that there are always highs and lows, twists and turns to housing and prices.  Best to focus on what you DO have control over ... do your homework ... and make a decision about buying accordingly.  Thanksfully, there are good pro (such as yourself and those on AR) to help with the decision-making ...


Oct 11, 2018 01:31 PM #34
Eva B. Liland Century 21 Doug Anderson
Century 21 Doug Anderson - Lancaster, CA
Glad to be of Service 661-714-1643

You touched on some very valid points, buying a home is a great way to get out of renting. You either pay rent to help someone else build equity or start building your own, the choice is yours.

Oct 12, 2018 06:47 AM #35
Anne Corbin
Long and Foster - Lake Anna - Spotsylvania, VA
Serving Lake Anna & Central Virginia

I'm a Journey fan BIG TIME and laughed at all the references to the hit songs of this great rock group. Perfect timing, especially with Steve Perry's new album justs coming out!!! Like Steve Perry, real estate is timeless and always comes back around.

Oct 12, 2018 07:25 AM #36
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Hi Rob, another great post. I'm planning to send a link to it toa couple of potential buyers who sat out early this year. They might want to re-think and find themselves a home.

Oct 12, 2018 12:39 PM #37
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

I am entering my 5th decade in real estate, having started in the 1970s. My Chicago Title amortization schedule from 1978 doesn't even show interest rates below 6%.

The people who will struggle are usually those buying their first home. Because every 1/2% increase in interest rates for them loses $50K or so of purchasing power in Sacramento.

Oct 12, 2018 01:20 PM #38
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Great post!  Couldn't agree more. Our demand in Phoenix includes the estimate that 90,000 people moving here every year through 2025 thanks to our jobs market.  Housing will be in a hosrtage.  I plan on retiring about that time so it will be interesting to see what has happened.  

Oct 13, 2018 08:53 AM #39
John F Muscarella
Broker/Owner, Venice, FL, Florida's Suncoast

Enjoyed your post Rob.  I would like to see a small correction to humble some sellers.  In Florida new construction is moving ahead unabatedand sales in new communities brisk.  Lower inventory of resales affecting lower end of the market some.  But even seeing some light here.  Though I am concerned about the near term health of the economy due to poor or in some cases ill informed judgements by our politicians.

Oct 14, 2018 08:28 AM #40
Stephen Turner
Burkentine Realty Group (Burkentien Builders) - York, PA

Some great points. those who try to time the market, usually never win. Also, once you have become a homeowner, there is no such thing as a buyer's or seller's market to wait for as you'll typically be involved in both sides as you move up or down.

Oct 14, 2018 02:04 PM #41
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Rob, great post and congrats on the GOLD STAR ...

I would have to say yes and when Amazon and other platforms start selling RE it will be the beginning of the end ;o(

Your post has been featured to the group:



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Oct 14, 2018 02:32 PM #42
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.

Clients need to speak with a good and trusted lender first.  This is always the jump off point for the home searching process.  

Oct 17, 2018 01:20 PM #43
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Rob Spinosa

SVP of Mortgage Lending, Marin County
Can I Get a Jumbo Loan with 10% Down?

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