Every day we get asked this question. Seeing I’ve lived through more crashes than I care to admit, our staff look to me for my opinion. The fact is, we have a different set of variables going on now than we did in the recent crash and also many before. Here are some reasons why I believe there will only be a softening of prices and not a full crash:

1. Supply is still tight—even though home builders have kept building through the pandemic many of the facets of new home building has slowed down
   1. Buyers aren’t going through models
   2. Supplies were delayed for truckers were hauling other supplies.
   3. Banks and Mortgage companies were working remotely and getting documentation was taking longer.
   4. Permits are taking longer for many workers are remote or staffed down
   5. New developments were taking longer for city and bank approval.
2. People have more equity
   1. The negative down payment loans were not allowed (buyers being paid back down payment at closing by seller)
   2. The market crashed so hard and rose so quickly more people we able to get equity and have not used it for other things yet.
3. More oversight of loan and buying process
   1. Appraisers were more conservative for they were put on notice after the last crash to be more detailed in their value approach
   2. Unscrupulous lenders and realtors were jailed after the last crash for there was no oversight of the process. Wage statements were forged, down payments were returned to buyers without bank knowledge and many more little tricks that were used to generate sales.
4. Banks are not as quick to short sale, for they are not overwhelmed with the process.
   1. They now have people that understand the short sale process and how to administrate it.
   2. They have actual departments that will take control of the short sale and minimize the banks loss. (during the last crash it was just get it off the books)
5. There is massive government help to supplement people’s incomes to make their rent and mortgage payments, plus mortgage companies are quick to give forbearance to people in trouble suspending their payments for a time period.
6. If people own rental property they are not dumping them at a large discount, for they know that the market will come back and they are still getting rental income or their tenants are working out a plan of payment.

All in all, the Real Estate and Banking industry got smarter and the last crash is still a recent memory and not forgotten by industry leaders. This time around it’s just not one segment in flux but there is financial chaos everywhere and Residential Real Estate seems to be the rudder.