The Expert Podcast

What goes up must come down right? Well maybe not. That's a cliche people say it all the time and when prices of things go up people say well it's got to come crashing down. Stocks went up, it's going to come down. Real estate went up, it's going to crash. In reality there has almost never been a long period of time when any type of financial asset has crashed permanently. There's been some real estate setbacks. 2008 it was a crash, it only lasted a few years. The real estate crash of 2008, if you bought a house at the peak in 2008 and then it crashed, you would be back in equity within three years. Most of those homes that crashed in price by 2011 or 2012 were right back where they were in value. Stock markets have had crashes, usually within a few years it's right back where it went to. No type of assets have really gone below.

So why are we saying this? Well if you've been watching this channel for the last four or five years we've been talking about real estate and people have been predicting well real estate's in a bubble, it's going up, houses are crashing. And we always said you know overall real estate's not going to crash, it's not going to go down. Sure there may be some local markets where it got a little bit too frothy and it might settle back a little bit. There may be some individual homes or properties that are overpriced and they have to get repriced, that's different. There may be some neighborhoods that were hot and that then they cool off a little bit but for the most part the prices aren't going to go down. Same thing with stocks, stocks have always gone up overall. They may not go up at the same rate of inflation, there may be other explanations but they always go up.

So what about real estate? If you are thinking about holding off on buying a house because you think real estate's going to crash, here's the article Housing Wire: there's no housing crash coming according to the data. Homeowners are in a great spot with very little stress in the data. So what they're saying is if you buy a home, buy real estate, you're going to be safe from a crash. Now whether it makes sense for you to buy a property versus rent, different story. But if part of the reason you're holding back is because you think well I don't want to buy because the price might go down and I could lose money, then this kind of blows it out of the water.

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And even if it did, we've said this before a lot of times, look if you buy a house for let's say $400,000 which is about the average price of a house, even if it goes down in price, if it goes down 10% that would go down $40,000 which would be unheard of, it's not like you have to write a check and pay $40,000 out of your pocket. It just means that the hypothetical value of your house that day is lower than what it was a year before. You don't have to pay the money, it's not a loss out of your bank account. If you keep living in that house nothing changes. Your bank account doesn't change, your payment doesn't change, your income doesn't change, nothing changes.

In fact if the house does go down in value you probably will make more money. Why is that? Well your property taxes and your insurance many times are based on the value of the house so if your value goes down that might be a good thing because you pay less property tax, as long as you're going to keep the house. If you were going to flip the house then yeah you could be in trouble, but you shouldn't be buying a house to flip if you're going to be living in it.

So don't worry about the housing crash according to the experts. All the data is in the article, we'll put the article in the links, you can read it for yourself. Sure there is a concern about home price because it's your biggest investment, but if you're thinking that the reason you don't want to jump into a home is because there might be a crash, look within yourself to see if maybe that's an excuse for some other reason you don't want to buy a house that you're using as a mask to prevent you from participating in the upward track of real estate.

Even if in 2021 when the market was very very bubbly, very very elevated, if you bought a house in 2021 after the price had spiked, you'd be okay today. You would actually have made a profit still in the last three years. There's almost no time in the last 10 years that if you bought a house you wouldn't have been in better shape than if you didn't buy that house for most properties as long as you select the right house. Look prices went up in 2020 and 21 a lot, a real lot, some places it doubled, but if you bought a house even at that peak you'd be okay today and that's probably going to be the case going forward according to this article.

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