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
- 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
- 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