AL and FL Mortgage News

Housing Crash Coming Soon? - A Broker's Opinion

May 24th, 2022 2:01 PM by Devin Murray

The Uncomfortable Question(s):  Is a housing crash happening in late 2022 or maybe 2023? Are we in another 2006-2007 area right now? 

In the last 26 months I have spent countless nights and many hours researching data regarding this and related questions for my customers, my family, and anyone else who could potentially learn and benefit for current and future generations.  I will use this post as a beginning to cut right to the point but suggest the nature of highly misunderstood topics such as credit, income, wealth, money, assets, and liabilities among those who might believe otherwise.

Short, Partial Answer:  My answer is NO, not like we saw in 2008 and certainly not at all for the same reasons so it will not look the same. 

Quick background:  As a young banker in 2004, broker in 2005 in Florida I hated subprime lending and can count on one hand how few of those loans I ever begrudgingly wrote.  Much needed regulation to protect the consumer and the yes banks came about with Dodd-Frank circa 2009 after the mortgage fraud scheme was uncovered from Main St. to Wall St.  This and similar legislation created ATR (the ability to repay) and basically terminated subprime mostly.  For the savvy no non-QM didn’t take its place. 

Recent history:  In 2020 and in to 2021 we allowed our country to make decisions that violated our constitution, and our people weren’t paying attention to science or data because we allowed fear to prevail.  Our government began injecting trillions into the economy as stimulus without production which began the acceleration of inflation and this was modeled in most places (except India).  Around that same time our Federal Reserve Bank began loading their balance sheet with MBS and bonds propping up the rate market causing mortgage rates to drop below 3% for about 21 months.  But did we really need any of this?

Enter in Wall Street demonizing the oil and gas industry, ESG (you thought the Equifax algorithm was bad?), and politics related to pipelines to leases and what this all spells is not fundamentally fundamentally about a housing crash at all.   We had an opportunity to get access to super cheap mortgage money, housing prices went through the roof and we all received some stimulus money but are we paying attention to what this all really means?  

So what about housing?  I have made a business and career out of studying what other people do good and bad.  Without being in my industry you can do the same.  Follow the money.  I would suggest digging what actions companies like Blackrock and Vanguard have been doing since 2020, what rates they are borrowing at compared to consumer mortgage rates we at that time, and most importantly learn where does their money come from? The journals tell us home equity is at an all time high of $9 trillion but I would ask is that really good for you in all aspects.  Why or why not?  YouTube has a lifetime of quality answers if you steer clear of the legacy outlets.

What about my market?  The most abused word in media is “the housing market” so don’t pay that much attention when year hear it.   We give free valuation tools like a home value report to help people make decisions so it is impossible for me or the news to define your market or tell you what is going on there.  Email us an address and we will send you a report to help you understand more about your home, zero strings attached. 

Noteworthy trends:  Ultimately there is a net migration away from states like California and most the New England toward Texas, Tennessee, Florida and the Southeastern US primarily because those places are less free than others.  By that I mean legislation isn’t friendly to new construction, prices have been historically higher than the rest of the country, property and income taxes are higher, and ultimately the cost of living is much higher than other places.  If you look to areas within these states where living costs are lower, where jobs are and will continue to be, I suggest that these places will not feel the major impact of whatever is coming or with comparable severity and the inverse is true if stagflation continues.    

Market correction, small or large is inevitable.   It is no secret prices jumped basically everywhere nationwide and that needs to come back down to stay in pace with wages.  When it comes to “affordable housing” that battle will continue to be worse into 2024 if what economists say is true.  With the Fed’s actions of quantitative tightening from Jan-May 2022 and mortgage rates nearly doubling, supply is already rising at higher price points even in markets in Florida and Alabama which I monitor very closely.     

What next?  I wrap up my mess of an answer to say that it is most important that we stop, look across multiple generations and educate ourselves as to what is actually happening and ignore the fearmongering.  Let’s stop wanting to be entertained and pay attention to each other for the benefit of each other.  

Fact is you need a place to live and real estate and finance are a beautiful tool to build and protect wealth.  If you wait to be told it will be hindsight that tells you our economy is facing major issues and nobody is coming to rescue you financially.   You can sit on the sidelines, blame others, and choose not to participate OR together we can empower each other for the sole purpose of helping one another.  Without motivation of any financial gain, this is my purpose in this life.  You are smart and you can do anything.  Thank for reading along.  

Please subscribe to the blog, check out the Better Together vlog and as always let me know what questions you have.

All information contained herein is the opinion of the author and should not be construed as financial advice or any extension of credit.   

Posted by Devin Murray on May 24th, 2022 2:01 PM

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