It’s official Boise is the early innings housing bust leader

The first real estate crash I experienced was 1991. Coincides with the recession related to the Gulf War. For the previous 12 months we had seen extreme panic buying. Buyers camping out for days at builder lots to bid on a house that wasn’t yet built. Paying outrageous prices , for the time. All the way to the crash , many were saying there would be no crash because “California’s economy is too big and diverse, if we were a country we would rank #8, bla blah blah. “ Layoffs hit the aerospace military companies in California, Ford and GM closed their plants. Boom. Huge recession. Foreclosures everywhere. I worked for a big bank and in one of my assignments there I managed an REO unit for the bank. We had tons of houses. That lasted 5 years to about 1996. Next crash, 2008, for 12-16 months prior, the same panic buying but this time buying by using risky subprime loans. Stated income. Loose credit guidelines, 500 Fico, no down payment, subprime loan at 6.50% for one year, then adjusts to 9% or higher. Lots of speculation (greed) by people who didn’t understand the risks. Boom again. Biggest real estate bust in history. Oh I forgot to say, the bigger the party the bigger the hangover. Move to now, what have we seen for the last 12-18 months? Extreme panic buying. Lines to see an open house, 50 offers on the same house, and all above asking price. No repairs by the Seller, No termite , no appraisal contingencies. I have never seen that type of desperate activity. Not even in the previous recessions. How big will this crash be? People say, oh low inventory will sustain prices. No. Inventory will grow as houses sit unsold. Already happening. This time around the panic buying was driven by historically low mortgage rates, intentionally driven low by Fed policies. That was the drug this time. It was a big party that lasted almost 10 years, the last 12-18 months saw historic appreciation rates.

But a house to many is not just an investment. its a home and you have to live somewhere. Those folks tend to do the best in a downturn. If you like where you live, you ride it out to the next wave. It’s the flippers, the new investor that kept buying based on continued appreaciation. “If prices start to drop I will sell and still make a profit”. Usually wrong, in the case of investors. Those that bought too many properties and became landlords too fast, and leveraged all of them. Anyway good luck to all.