You may have been hearing that housing prices are about to crash and that prices are already falling. This storm will not hit all areas with the same force. It is a fact that if this does occur, the housing cash will not hit all regions equally. I contend big Mac mansions will take the bulk of the beating. Also, coastal areas where the prices have rocketed to the moon are subject for a pullback. Weather and environmental concerns remain an issue as do regulations on how they must be rebuilt following storm damage. In a recent video, MHFIN explores the growing concerns about a potential real estate market crash, focusing on insights from economist Robert Shiller. In this video, they draw parallels to today’s market, particularly in the southern United States. They focus heavily on why some experts believe we may be headed for another housing downturn.I, on the other hand, believe the first pullback in prices has started but after the nervousness subsides, some sectors of the market will do rather well. This is a situation of supply and demand. Finding safe stable reasonably priced housing with amenities remains in short supply. During times of economic uncertainty, people who want to move and buy, will seek safety.Older modest homes fall into this category, especially homes modest in size. They also have lower taxes and insurance. A big factor in where support will come in has to do with cash buyers. If enough people are able to get out of the markets with a fair share of their wealth, many will be cash buyers. Many of these buyers are older and ready to downsize. Another huge bonus is not having to do massive and expensive remodeling. Sellers best not wait as home prices may fall 50-80% says economist and best-selling author, Harry Dent. Using data from the past as well as looking at the type of people that buy comprise the housing market he argues a wild market is about to unfold. Still, in a rant, he claimed even if a bust occurs it is likely the Fed will crank out massive amounts of liquidity in an effort to limit the pain. Around 23 minutes into this Sachs Reality video, Dent turns his attention to demographics. I see this as another factor supporting “certain types” of housing. Many of the large numbers of baby boomers who are retiring are in their last homes. They are downsizing and want safe stable reasonably priced housing with amenities. I argue this might even give off-the-coast retirement communities in the south a boost. When looking into the numbers, I was surprised at how affordable they are.The older well established communities, often located around seven miles inland, avoid the recent rise in construction cost and in some cases are better built than their newer rivals. In the last few years, efforts to save money and the use of cheaper materials have reduced the quality and longevity people want. Yes, the type of housing, and location matter, if and when a housing crash does occur, the housing crash will not hit all areas equally. States with warm weather and low taxes will do best. Looking at the cost of living in one Florida community, the average HOA fee of around $500 a month took care of all the exterior maintenance and more, plus it provided a slew of amenities. This includes walkways, lakes, and an extensive community center. This means, that cash buyers with one or two hundred thousand dollars, could enjoy retirement living for far less than renting an apartment just about anywhere. More By This Author:Trump’s Economic Advisers Send Mixed MessagesThe Fed Should Not Follow The Path Of The BoJRevisiting, “This Time Is Different”
