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Will the Real Estate Market Crash in 2021?
Joe: Hey, it’s Joe Crump. Will the real estate market crash in 2021? I’ve been sending out a few videos on this and my opinion about it because it’s all opinion, it’s all a guess on what’s going to happen. But I think there’s reasons to believe you know, one thing over another. I think it’s unlikely that it’s going to crash in ’21. I think that it’s more likely that it’s going to happen in ’22. But I think it is going to happen. And it could last even longer than that. And I think there are some things that are keeping it from happening right now.
Joe: Because right now we’re in a very interesting market. I put a house on the market and I’ve been selling some of my portfolio recently trying to consolidate some things, selling off some subject to properties to use that money to pay off other subject to properties, you know, and just building a portfolio of free and clear properties which is kind of what I’d like as I get older here.
Joe: So one of the things I’ve found is that the market is really fast wherever I sell a property. Whether it’s in Arkansas or South Carolina or Texas or Indianapolis. They sell really quickly. We’ll put them on the market and 2 days later, 3 days later, a week later they’re gone. And we’re getting very close to our full asking price. And I’m pushing the asking price on everything that I’m selling. So it’s been pretty mind boggling considering all the things that we’re going through with the pandemic, with the 1 in 5 businesses going out of business in this country. With all the people that have been laid off from their jobs, with all the people that are having problems with paying their rent. All those things are happening and yet the real estate market continues to just kind of keep moving, like a juggernaut. It’s just amazing to me.
Joe: So I’ve been thinking about it and I thought well, what could really be doing this? And my theory is it’s because of interest rates. Interest rates have been dropped to historic lows. When I first started this business back in the mid-80s, interest rates were you know, 10%, 11%, 12%. If you got under 10% back then you were doing really great. And if you go back to the 70s before I started, late 70s, interest rates were at 18%, 20% on mortgages. So people could buy very little for their money.
Joe: But now they’re down here 2%, 3%, 4% and historically they’ve been you know, even 5%. But we dropped the rates down dramatically for mortgages and that’s made it possible for people to buy a lot more house for their money and be able to have payments that are pretty low. And that’s created a surge of buyers in the market.
Joe: Now, we don’t have the same kind of loans that are available that were available before 2008 where they had the no income verification loans that all you had to do was be able to fog a mirror to show that you’re alive and you could get a loan. That doesn’t happen anymore and I hope that never happens again because that’s what caused the crash. But we do have these low interest rates. And I think that low interest rates should be the norm. I think it will keep the market strong if we could keep those low interest rates. And if they do that then I think it’s likely that the market will continue to progress and will continue to see people buying properties for quite some time. Even though a lot of people are losing their jobs and you have higher unemployment and you have other stresses to the economy which I think are going continue for a little while.
Joe: But I think eventually we’re going to see the values rise high enough and maybe the values are going to rise because of these lower interest loans and more people are going to be buying so that’s going to create demand in the market which is going to raise the prices, raise the values of those properties and eventually you’re going to get into problems where people aren’t going to be able to afford those properties and then if the market crash and the real estate crash comes like I anticipate that it will eventually because it always does every few years, it always comes, when it does come you know, we don’t know how low it’s going to drop, but when it does drop it’s going to create other opportunities for you as an investor. I think it’s going to happen probably in 2022. But I’m just making a wild guess. I just think that from my experience that’s what I saw happening.
Joe: Back in 2004, 2005 I knew that we were on a bubble at that time and it took it about 3 years in order to actually get there. But it finally did get there and that’s when we had that big 2008 crash. I hope we don’t see the same kind of crash when that happens, but it is possible. And if it does happen it’s going to create some amazing opportunities just like it did in 2008 where we were able to buy properties for 20¢, 30¢ on the dollar. That was amazing for us. And I’d love to see that again, although I don’t really want to see the economy go through that.
Joe: And I want to keep the values on the properties that I own. But even during a crash like that when you own properties the rents didn’t drop very much during that time. So we were able to keep our rents pretty solid during that time even though we had a bump in vacancies that went up, but we were able to keep the rest of it going.
Joe: So this is all speculation. But I think that what I’m going to do is I’m preparing for having capital available so that I can buy properties at a discount when that crash comes. And in the meantime I’m going to be able to flip properties and do the things that I’ve continued to do you know, for that las 30 years. Because that’s what a decent market will do for a real estate investor.
Joe: All right. I hope that helps. Again, just speculation but let’s see how it goes and check this video out again in a couple of years and see if I was right.
Joe: All right. Hit subscribe and hit the bell and it’ll send you a notification every time I send out a video. You can also go to ZeroDownInvesting.com and find out about my mentor program. You can go to PushButtonAutomarketer.com and find out about my automation and you can go to JoeCrumpBlog.com and get my free newsletter and about 700 free training videos that can help you get started.
Joe: All right. Take care.