What Happens if the Housing Market Crashes (& What Could Cause It)

Episode #1,005

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Recession fears are increasing. The stock market has taken substantial hits, housing inventory is climbing, and bank account balances are starting to fall. So, with more economic turmoil, we have to ask: will the housing market crash? And if we get a housing market crash, how bad (or good) will it be for investors? Could we see a 2008-style selloff, or should we be more prepared for small dips worth taking advantage of? Today, we’re asking two top investors these questions, one of whom literally wrote the book "Recession-Proof Real Estate Investing."

J Scott and James Dainard join us on today’s episode to discuss market crash predictions, scenarios, and opportunities for real estate investors. Both J and James experienced the 2008 housing market crash—an economic event almost impossible to forget. But is 2024 shaping up for a sharp decline like 2008, or will we simply see a slower real estate market like most people had expected when interest rates began to rise?

If the market DOES crash, what should you look for to take advantage, and how do you ensure you don’t get caught biting off more than you can chew? J and James break down their game plans if prices fall and why buying now could set you up for wealth ten years from now, IF you can handle the “fear” of buying when others are running from real estate.

00:00 Intro
04:01 New Recession Fears
14:25 Is This Like 2008?
18:06 What Will Cause a Crash
31:11 What to Do During a Crash
36:56 Opportunity for Investors

[athenatong]

Not sure if it’s a sign for recession or market crash, but a new builder reached out offering 65k discount off of the new builds (listing price 315k). However, they told me the contract price is still 315k, and the seller is going to reimburse the delta back to me. Which means the comps are inflated by over 20%.

[florianewu]

Similar criteria when choosing stocks, investments, etc. Ty! Getting prepared! 📚

[RyanIrwinIAC]

Liquidity/reserves reduces fear/panic and poor decisions. Great point James. 💪

[johnc]

People often neglect to mention why lenders were so careless and gave out so many subprime mortgages.

That answer lies in the federal government insuring them against loss.
Little risk of loss in the event of default meant lenders only really had incentive to lend more and more.

In a free market, the lenders themselves would have taken on all the risk of default and been far more cautious.
Or, they would have had private insurance backing them and the insurance companies would be far more cautious.

People love to blame "the free market, " but it's precisely the fact that we don't have a free market that resulted in all this mess.

Get government out of the economy and you'll have a far more efficient, more stable economic environment.
You'll still have small fluctuations, and a sort of boom/bust cycle, but that's due more to debt.

Allow the economy to self-correct and everything would run far more smoothly.

[jeffmitchell]

Anyone else tired of these “Will the housing market crash” videos? If you are a long-term investor, as I suspect most of us are, then WHO CARES?

If you scroll back to 2+ years ago, these same exact videos were posted (i.e. “Home prices drop: are sellers getting desperate?” From Jul-2022 on the market podcast). This topic is not only meaningless to most investors but damaging to would be investors, as it encourages people to stay on the sidelines and wait. I wonder how many people stayed on the sidelines after that July 2022 podcast. How did that work out for them? Maybe they’ll never be able to buy a home now because they listened to the fear mongering.

[professionalaesthetics]

Foreign interest in US bonds drop keeping the ten year rates high which translates to high mortgage rates for longer. AI disrupts market and buyer pool dwindles. Layoffs cause people to not want to pay all the high property taxes and insurance costs and so they sell. Not sure if it will happen but that’s how if it does I think

[netmaster]

23% year over year, hahaha, maybe in your area. Inventory is up 2, 000% in my area. Homes went from selling the same day 100k over asking to sitting on the market for 3 months with price reductions of 30, 000 to 100, 000. No one is buying because no one qualifies, and no one wants to buy at the peak when they can wait 2 years and get it 30 to 50% off

[ryanraines]

James moved from nws? Where too? Florida?

[moviehipster]

CRASH GASLIGHTING
The sky is falling on Smaller Pockets

[blexaarron]

Housing will never crash again. The US government will have money printed to make sure that the ride never stops.

[AdamWiggles]

From $97k to $475k that's the minimum range of profit return every month I think it's not one for me, no I have enough to pay bills and support my family.

[specialk]

The housing market WILL crash. It's called an economic cycle. It happened in 2008 although this time it is a global crash that will create an economic depression.

[professorprofessorson]

its definitely coming, the crash will be worse than 2008

[moviehipster]

Oh great
Bigger pockets is now the crash bros. Couple of losers Looking for extra attention, because their show sucks.