Around 2008, a typical property dropped to half its value, then doubled and tripled in the next five-six years. Just buy it and rent it out on a time limited contract while you wait for the property rebound.
Why do you say that?
There seems to be this idea among younger individuals online that because prices jumped so quickly that a correction is inevitable, and it’s just not. There’s a ton of demand still out there, and the second any sort of meaningful dip is perceived all those buyers will be right there.
Prices went up because a shit ton of money was printed with sub-3% rates. Why would any sane person with a 3% mortgage ever sell, especially when inflation is 9%? It’s quite literally free money.
I agree in general that waiting on the sidelines doesn’t guarantee you a better price later. The problem of there being other buyers wanting to scoop dips providing price support would only be fixed by those buyers loosing liquidity, which would likely impact any individual waiting on the sideline too.
Prices sky rocketed as money was printed, now the shine has worn off and the fundamentals don't support sky high prices. With much the same story as a number of countries - interest rates causing cost of living hikes and wages not keeping place, the "sure bet" of the housing market is no longer, and the prices have dropped.
https://tradingeconomics.com/new-zealand/housing-index
NZ was living off that "they'll never go down" attitude. The people that bought in the last year are starting to hurt, and unfortunately/fortunately (depending on which side of the coin) the sentiment just starts shifting. Once it starts shifting, people get nervous - over confidence bidding is out the window. Even though we (theoretically) have a supply and demand issue, even though construction costs are sky rocketing, people start realising they don't need that 4-5 bedroom monster, or that 2nd holiday home that they can air bnb out.
Seriously at one point during I think it was 2021 - I was in a c/md level position, and our house went up more than I earned in one year - we're talking a fairly standard 3 bdrm house - nothing fancy. That was spectacular... that spurned on a lot of "mom and pop" investors to go nuts buying houses, when they shouldn't have. And now they're looking into negative equity territory.
My house has dropped more than a years income since it peaked. That's an average 4 bedroom place in Palmy.
Because they can no longer afford their morgage as the economy goes to the gutter and they get laid off + their purchase power gets eroded due to inflation? Or they got a new job, but now they have to relocate? Many reasons.
There's the idea among the older generation that just because assets have been in a secular bull market, that they will continue to rise up in price, and it's probably not the case.
[1] https://calculatedrisk.substack.com/p/new-home-sales-decreas...
People who stretched to buy at the peak of the market end up upside down, refinancing gets harder, selling takes longer, foreclosure starts… 2008 all over again.
May not be likely, but wouldn’t be surprising
Take what theses official mouthpieces say with a pinch of salt, because part of their box of tools is jawboning on TV. Fake it till you make it policymaking.
In any case, we definitively do not have millions of people sitting on ARMs that just went from from 2% to 7% like we saw in '08.