Bay Area Real Estate Crash Coming? A comparison of 2008 vs 2020 - Spencer Hsu, Realtor - a podcast by Spencer Hsu, MBA Tech Realtor
from 2023-12-14T09:44:00.688129
Every Tuesday, I post a topic of questions I commonly get from clients. The most commonly asked question is whether this recession will be as bad as 2008 for the real estate market which I give a strong no.
It's important to understand what happened in the past. Politics aside,
homeowners were overleveraged. 1) Banks knew the properties they had to absorb had no equity so they wanted to get it off the books as fast as possible 2) Loans were too easy to get so people were buying way more properties than they should've without showing income docs. Risky behavior deserved to be punished. 3) Because banks were a major part of this disaster, their balance sheet was very toxic.
What is happening this time around?
Recession is caused by a virus.
1) Most loans over the decade, especially in the Bay Area, required 20%+ down payment.
2) Tremendous amount of homes have 50%+ equity
3) Banks are allowing homeowners to get mortgage relief relieving immediate stress for those that need it. I suspect the Bay Area forbearance figure is significantly less than the national figure of 6%
4) This time around, real estate is considered a safe haven versus other asset classes including Bonds, Stocks, and Gold.
If you are afraid of the downside, buy in locations that are strong due to schools or work commute. Even during the worst real estate caused recession, certain cities dropped only 15%.
They key is about perspective and what your time horizon is.
If you are nearing retirement and cant afford to wait several years, now is a great time to sell while the prices are high. The medium term is uncertain. Long term remains positive.
If you are a home owner and you plan to own for several years, the trend aligns with what has happened over the last 30 years (5-6% increase annually).
Remember what your goals are and don't let this distract you from achieving your goals. If you are a renter, you are still paying someone else's mortgage which is a guarantee negative return.
Have any questions? Reach out and let's talk about your real estate situation anytime!
Feel free to find a time on my calendar and we can talk about anything.
If you’re interested in buying, selling, or investing in residential or commercial real estate in the 📍SF Bay Area, contact me today!
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My Background: Born and raised in the Bay Area, I spent 11 years as Technology Sales Manager before becoming a Realtor. Having personally invested and done renovations through house flips in the Bay Area, I wanted to help busy professionals in the Bay Area tech industry find their dream home by leveraging tech, data and local insights. Our team specializes in creating trusted frameworks of buying, selling, and investing in the Bay Area. In 2022, we are thrilled to share that we have helped 80 clients in the Bay Area with their moves, which positions our team as the Top 1% groups in the country. Looking forward to helping you into your next home and save/earn you more money!
Spencer Hsu, MBA, Realtor
408-547-4590
EXP Realty DRE #02077253
https://www.homesbyspencerhsu.com/
#BayAreaRealEstate
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