COULD HOUSING CRASH BE 500% FASTER THIS TIME

Closed Captioning:

good morning good afternoon good evening

folks michael zuber one rental at a time

back with the one and only mr greg

dickerson how you doing sir feeling

great michael how are you today i’m

doing wonderful hey i’ve been thinking a

lot about uh the great recession the

housing crash that you and i experienced

up close and personal last time

when i was going through my kind of

experience my market took five years to

correct

peak to trough was just about 75 percent

i’m looking at what’s going on in

markets like boise and phoenix and vegas

and things of that nature and one of the

things that i’m fairly confident on it

but i wanted to check with you is

any price correction or whatnot

or crash in any market across the

country is going to be much

much much faster this time i do not see

this taking five years so when you say

five years are you talking about

from peak to trough correct peak to

trough five years okay so my markets it

was overnight i mean really

oh yeah yeah i mean you know on the east

coast at dc most areas i mean we saw

we saw the housing market crash like

instantly

pretty much all across the country are

you talking about to hit the bottom in

values or before you start coming back

up no i’m talking so uh fresno’s median

home price peaked i believe in 2007 and

it didn’t bottom until 2012. so five

okay but

you saw an instant overnight just the

market shut off yeah 09 2009 and 10. uh

actually my market was all ahead of that

i think california was ahead of most

markets i think i think our market

started to really the first

10 or 15 were sudden just out of nowhere

kind of you know probably a six-month

window

but it bled on

for quite a while and at least in

california i think that one of the

reasons why

is because everything was a foreclosure

or short sale and as you probably are

aware

in california those those took over a

thousand days to process

so it was just day you know we we i was

buying week after week at cheaper and

cheaper prices i bought the whole way

down because i didn’t know where the

bottom would be it was legitimately five

years yeah yeah so we you know we saw

the same thing in terms of overall

decline okay you know out here and it

started the correction

the deep correction really didn’t start

until i mean literally it went off a

cliff in 2009 i mean things were still

really good okay so now

yeah yeah yeah things were still robust

up until 009 then it just fell off a

cliff but then we were yeah we had

declining market even appraisers would

put on their reports declining market

yes about four or five years afterwards

okay so yeah getting back up so it did

it’s just call it four years for your

market kind of peak to trough uh just

yeah yeah and then it took another five

years to get back to where values were

in you know the peak which was a 405

before that big run up in 0-9 yeah i

think my market that’s a good point so i

think my market peaked trough was five

years almost almost 60 months i think

was 58 months

to be exact uh and then i think it took

us eight years to get back to

07 prices so it took a while

but this is the important thing for

people to realize i think this cycle is

going to be much faster

some people look at this and go hey

social media is going to make it much

faster i’m like

maybe

i think the reality of why this will be

much faster greg and this is why i

wanted your opinion is because i don’t

think foreclosures and short sales will

be the dominant force

the reason california took forever to

get to the bottom and it felt like a

death by a thousand paper cuts

is because every all seventy percent of

the transactions in my market for about

18 months were either a foreclosure or a

short sale and they took forever to

process so of course transactions went

down and prices kept going lower and

lower and lower and lower

i do not see foreclosures and short

sales being the dominant

in my market certainly probably in most

markets so i think any price correction

or crash in a boise or a phoenix going

to be a lot faster because if you’re

motivated to sell you got to sell and

you know you get out it’s not a it’s not

a thousand day process for a bank what

do you think

so that’s an interesting contemplation

inventory is your issue this time so

what could keep prices from bottoming we

don’t have any inventory so

that’s number one so this could be a

drawn out process where prices could

continue you know if interest rates keep

going up sure if they reverse and keep

going up the economy deteriorates a

little bit and you get into a recession

or recessionary period we still don’t

have any inventory and every market is

different so we’re just talking about

averages yeah so what’s going to keep

prices from dropping quickly is the fact

that you can still borrow money it’s

still available it’s just more expensive

but there’s no inventory so prices we’re

seeing you know declines in certain

markets but is it a real decline because

stuff was priced 20 30 percent above

where it should have been anyways so

it’s coming back to normal and then it’s

got a decline from there so

you know it’s just everything is just so

different this time you really can’t

you know look at what

i mean what are we even talking about

what’s a crash even going to look like

is there could there be a crash you know

values are obviously coming down in

certain markets but like i said in my

market the right stuff is selling

immediately not necessarily with as many

multiple offers not necessarily you only

need one

yeah you only need one yeah it’s really

funny if you saw the june numbers i’m

gonna look forward to the july numbers

june re set a low for days on market

right it went from i think it went from

15 to 13 it might have gone from 17 to

  1. but basically what that means again

these are national numbers if the if the

house is priced right it sells that’s

what it means right that’s that’s the

only way you get a lower days on market

um and really what i look at the market

today

what we don’t have

at least yet is forced sellers

nobody’s forced to sell the debt’s not

blowing up

unemployment’s remarkably low so you’re

not seeing you know mom and dad lose

their jobs and having to pay and even if

you mom and dad do lose their job

for most of them because they have

30-year fixed-rate money it’s cheaper to

stay than move what are you gonna do

rent somewhere and pay more money that’s

not gonna work so they’ll get roommates

and have their sister move in or

whatever so i i just don’t see the pile

of motivated sellers coming every week

every week every week like last time i

could be wrong but

i just don’t see the motivated sellers

uh and thus the inventory is the

inventory is not going to stack up

of motivated sellers i don’t think

yeah would take again you would have to

have the liquidity cycle shut off so you

the only thing that’s going to do that

is you can’t get a loan people can’t

borrow money and as long as banks are

lending as long as interest rates are

reasonable there’s still going to be

demand they’re still going to be buyers

if we went into a real recession and had

a real contraction on jobs people

started losing their jobs at scale

companies going out of business and if

banks all of a sudden stop lending or

just got so expensive that it didn’t

make any sense then then you would see

some things happen because there are a

certain number of people that are going

to sell and things like that the other

thing that’s happening right now this

would take time to play out is that

adjustable rate mortgages are on the

rise right we’re we’re hitting with

those than anything else people are

taking he locks out instead of

refinancing or taking he locks to tap

equity sometimes those are adjustable so

there are some things that if interest

rates continue to rise you get recession

inflation stays hot for a while uh there

are some you know things that could

trigger some pressure for some people

but again correct that’s years from now

there just isn’t enough inventory out

there there aren’t enough sellers there

aren’t enough people in that position

right now and if you flooded the market

with two million homes they probably all

get sold yeah certainly all across the

country

yeah i think there’s a couple of i think

there are some markets that are

unfortunately flooded with eye buyers i

don’t know if you’ve seen these stats

but it looks like in phoenix arizona

open door has over over 10 percent of

the active listings that’s a problem i

think it’s similar in sacramento and

maybe i mean open door is 10 of these

things they don’t have they are they are

yeah sorry my mistake yeah they they are

and uh and they’re selling below the

median and

it’s it’s a problem right i think there

are markets that where i buyers went

overboard in fact i did a whole video on

the compensation models were wrong and

thus they got what they deserve but yeah

i mean

open doors in a really bad spot you know

what they should be doing probably is

reaching out to a hedge fund and going

hey

how would you like a thousand arizona

single-family homes and they should just

do one deal and be done take their

losses and move on well i’m sure they

did so they had a lot of options they

could have refinanced they could have

issued more stock they could sell to an

investment fund but the problem is

phoenix is a declining market so

nobody’s buying it yeah that’s not

priceless because their prices are too

uh you know too high right now so you

know again

real estate’s hyper local every market’s

different so we’re talking what we’re

talking about corrections and this is

the other national average correct you

go to phoenix that market looks very

different than my market absolutely it

looks yeah

looks very different than you know san

diego yeah right so for sure it really

depends on where it’s at and

last time arizona and nevada those were

you know vegas those were some of the

biggest markets that took the biggest

hits first

um you know in terms of housing as well

as the coast and the second home markets

and things like that so those are the

ones to watch

yeah i think i think again any any kind

of adjustment in housing this time in

the bubble markets is going to be much

faster i don’t see the cascading five

years even in phoenix i think there will

be a point where open door gets to it

and says hey they’ll just sell the units

off to someone i think they’re going to

just

i think that’s going to have to happen

and then thus the market will adjust

open door frankly

inflated the market let me just tell you

this so i have a couple of wholesalers

that work in phoenix and for the last 18

months

the running joke in the wholesaler

community is just call open door they’ll

overpay that’s what they said

when you when you go into a poker room

and you don’t know who the sucker is

you’re the sucker and open door was the

sucker in phoenix and now they got to

pay the price but that’ll be cleaned up

they’re a public company they’ll they

have a quarterly at the end you know

quarterly report at the end of the

quarter and they’ll go oh we just

reserved for bad debt we’ve got to issue

some new shares bingo bango wash away

you know blackstone bought a thousand

phoenix home and we’ll do better next

time yeah they just have to write them

down nobody’s accountable nobody’s

responsible so it doesn’t matter it’s

all the shareholders that take a beating

but

that’s where they’re headed and that’s

the key they just haven’t been able to

write them down far enough fast enough

yet because they have you know they have

rules and guidelines they have to follow

in terms of how much they can write down

those assets but at some point that’s

where it starts right exactly

liquidating at 50 cents on the dollar

and then that affects other values and

that’s kind of how that trickle-down

effect happens but still that’s just

that market oh no it’s very hypo local

yeah yeah yeah that’s not an a they’re

not an it’s not a national thing i i

still don’t see the pain nationally at

least in 2022. but yeah it don’t happen

i mean at the end of the day there’s

just not enough inventory and there’s

still too much demand and the only way

to flip that is you have to have

interest rates above significantly

higher sustainable length of time that’s

when things will adjust and it you know

it’ll take time but this is a very

unique time it’s very different than any

other time on a lot in a lot of ways in

this country right now it’s just

fascinating i mean it’s just

unbelievable yeah and again rates are

backing up right now they’re not going

higher and again they’re they’re you

know

sub five in many markets it’s pretty

wild so anything that happens this time

will be much faster we don’t have

cascading we don’t have thousand day

foreclosure processes dominate we don’t

have

i read a stat from black knight one less

than one percent of transactions are

distressed meaning foreclosures or short

sales in my market in oh i think it was

  1. i think it was 2010. 75 of all

transactions were distressed

not happening this time so greg do me a

favor where can people find you yeah

greg dickerson.com that’s where all my

info is go check it out thank you buddy

i appreciate you

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