So easy to assume the worst

Tom Brezsny
- Tom Brezsny

So easy to assume the worst

Continuing the conversation… We’re in uncharted waters at the moment, trying to figure out what the future of the market will look like… This is the busiest, longest running, highest appreciating market anyone has ever seen and the crazier things get, the louder that nagging voice in the back of our heads gets: “When will it all end?” Not to mention: “What will it look like when it does?” 

We’ve been telling ourselves that this crazy market was getting close to being toast since 2017, so our record for accuracy on the matter is a little suspect. Thinking about it though, there are really only four possible paths the market can take moving forward .

It can just keep going up. Like the “long boom” touted by enthusiastic dot.commers in the late 90s, who were convinced that the days of cyclical ups and downs were past and that 20 years of continuous appreciation was coming.  (Of course, they didn’t fare well in that belief. What do you think? We’ve had eight straight years of radical “up”, are we ready for another twelve?) 

It can level out and touch down on a relatively flat runway where prices don’t really fluctuate much higher or lower than the record highs we’ve already attained. (Sort of a cooling off period rather than an actual decline.) 

It can go through a “normal” market adjustment  (as we used to call them),  where aggregate values drop in the range of 10-15% over a two year period,  give or take 6 months. (think early 90s, early 2000s)

It can fall off a cliff and plummet into the depths of a Great Recession like  (2008 – 2010), when prices plunged 40% and Distress Properties (foreclosures/short sales) made up almost 40% of the available inventory.

Anyone want to hazard a guess? I can tell that quite a few members of today’s studio audience are clamoring for Door # 4, fervent in their belief that the market is going to tank any minute now and honestly convinced it’s the safest bet they can make.  

I’ve even been getting solicitations from the National Association of Realtors in my in-box , recently, offering classes on how to become a “Certified Distress Property Expert.”  That’s so I can do more business when the downturn hits the fan even though, by latest count, only 1.1% of existing homes in California are “underwater” with negative equity and nationally only 2.6% of homeowners owe more than their homes are worth. There aren’t enough upside-down homeowners to fuel a robust distress market, not even close!

Next Week:  Why is it so easy to assume the worst? 

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