Impending Recession and Selling Our Condo

[Anonymous]

You can't predict a recession no more than you can predict the weather long term. Rates are low now so now would be a good time to do it. The "recession" may not even happen or at least anytime soon. People try to say 2008 will happen again and it won't due to several regulations in place that weren't in place prior to 2008.

[Anonymous]

Anonymous wrote:In 2009, in this area there were still bidding wars. I'd be more concerned because of how many condos there are and new ones built.

Well yes, a few bidding wars for properties that were being fire-sold.

The same thing happened post 9/11. For about 3 months, urban condo prices in east coast cities dropped sharply. But volume was very low. If you had to sell, you were screwed. Once the initial shock wore off, prices rebounded so fast (except for parts of NYC) that people forget it ever happened.

Lastly best thing for the market will be Trump re-elected. Worst would be Sanders. Warren pretty bad too. Biden would be OK. Just my opinion of course.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:As we've seen time and time again. The beltway is immune to recession.

No, it's not. I picked up my house at a huge bargain in 2009.

Maybe you did. But statistically, most areas inside the Beltway suffered minimally from the 2009 recession.

OP, someone on another thread pointed out humans have short memories and in this case many people only remember the 2009 recession when they think of recessions. That was an extremely bad recession for a variety of reasons, but most recessions are far less painful and last less longer. The current underlying economics suggest if there is a recession it will be short lived and barely noticeable for many people and will be forgotten in a year or so. Panicking is not a sensible solution. You're more likely to lose money trying to prepare for an elusive recession than to stick it out and weather it.

Did you live here and own real estate during the recession? I think not.

[Anonymous]

Anyone who tells you that housing prices will drop significantly in the next year in the event of a recession does not understand enough about the housing market to be trusted.

If there's a recession this time, it's unlikely to be primarily a financial crisis. So, access to credit will not decline much. Moreover, interest rates will almost surely reach historic new lows which supports continued growth in asset prices such as housing that are primarily financed by leveraged debt. And, housing supply growth has been anemic for years, unlike the rapid supply increases of the early 2000s which deepened the 2008 crisis.

Could housing prices be relatively flat? Sure. Could the luxury housing market soften more? Sure. But with the exception of 2008 (a financial crisis that formed in the housing sector), national housing prices have never declined significantly in the event of a recession. There's absolutely no fundamental reason to believe that they will do so this time, and several fundamental reasons to believe that they won't.

-An economist

[Anonymous]

Anonymous wrote:Anyone who tells you that housing prices will drop significantly in the next year in the event of a recession does not understand enough about the housing market to be trusted.

If there's a recession this time, it's unlikely to be primarily a financial crisis. So, access to credit will not decline much. Moreover, interest rates will almost surely reach historic new lows which supports continued growth in asset prices such as housing that are primarily financed by leveraged debt. And, housing supply growth has been anemic for years, unlike the rapid supply increases of the early 2000s which deepened the 2008 crisis.

Could housing prices be relatively flat? Sure. Could the luxury housing market soften more? Sure. But with the exception of 2008 (a financial crisis that formed in the housing sector), national housing prices have never declined significantly in the event of a recession. There's absolutely no fundamental reason to believe that they will do so this time, and several fundamental reasons to believe that they won't.

-An economist

After 2008 I trust economists about as much as I trust the ouija board in my attic.

[Anonymous]

Being old, and having been through several recessions in different housing markets, my big takeaway is that the condo market reacts very differently than the single-family housing market. They say that "they aren't making any more land," but it is easier to increase the supply of condos in a given market (even a city). Also, there is a long lead time on big buildings, so new buildings tend to keep coming on the market, even after the recession has hit.

If a condo market gets even a bit oversupplied, and buyers are very cautious, the condo market can take a real hit, even when the single-family housing market stays flat. I'm not an expert on the DC market, but there do seem to be a LOT of new buildings. I would say that location REALLY matters in this instance. Condos on Pennsylvania Avenue are likely to be fine. The more recently-gentrified the neighborhood, the more risk.

[Anonymous]

Anonymous wrote:

Anonymous wrote:As we've seen time and time again. The beltway is immune to recession.

No, it's not. I picked up my house at a huge bargain in 2009.

Me too!

Got mine for 475K, now they are going 700-725K. However this has been quite a long run up for the last 10years!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Anyone who tells you that housing prices will drop significantly in the next year in the event of a recession does not understand enough about the housing market to be trusted.

If there's a recession this time, it's unlikely to be primarily a financial crisis. So, access to credit will not decline much. Moreover, interest rates will almost surely reach historic new lows which supports continued growth in asset prices such as housing that are primarily financed by leveraged debt. And, housing supply growth has been anemic for years, unlike the rapid supply increases of the early 2000s which deepened the 2008 crisis.

Could housing prices be relatively flat? Sure. Could the luxury housing market soften more? Sure. But with the exception of 2008 (a financial crisis that formed in the housing sector), national housing prices have never declined significantly in the event of a recession. There's absolutely no fundamental reason to believe that they will do so this time, and several fundamental reasons to believe that they won't.

-An economist

After 2008 I trust economists about as much as I trust the ouija board in my attic.

HAHA, isn't that true!

[Anonymous]

Anonymous wrote:Anyone who tells you that housing prices will drop significantly in the next year in the event of a recession does not understand enough about the housing market to be trusted.

If there's a recession this time, it's unlikely to be primarily a financial crisis. So, access to credit will not decline much. Moreover, interest rates will almost surely reach historic new lows which supports continued growth in asset prices such as housing that are primarily financed by leveraged debt. And, housing supply growth has been anemic for years, unlike the rapid supply increases of the early 2000s which deepened the 2008 crisis.

Could housing prices be relatively flat? Sure. Could the luxury housing market soften more? Sure. But with the exception of 2008 (a financial crisis that formed in the housing sector), national housing prices have never declined significantly in the event of a recession. There's absolutely no fundamental reason to believe that they will do so this time, and several fundamental reasons to believe that they won't.

-An economist

This is exactly right. Real housing prices in this area might decline. Nominal prices will most likely not. And if there is a recession -- even though many indicators remain solid so far -- it will most likely be shallow and brief, along the lines of 2001.

But the condo is less resilient than the SFH market.

[Anonymous]

So I sat in on a WBJ real estate discussion in crystal city with major developers and SME from GMU were on the panel. Interestingly enough, they brought up the impending recession as a topic. I was surprised by there comments. Our area by 2030 will have a shortage of over 5000 for sale housing units of affordable housing not to mention the rental markets housing shortage. Not to say our properties won't take it hit, but it may mean a switch between either selling or renting the place until the market clears up. Or understanding that during the next recession, it will just take longer to sell. Which isn't abnormal since the only reason the process has spread up is because of the housing shortage.

[Anonymous]

Anonymous wrote:Being old, and having been through several recessions in different housing markets, my big takeaway is that the condo market reacts very differently than the single-family housing market. They say that "they aren't making any more land," but it is easier to increase the supply of condos in a given market (even a city). Also, there is a long lead time on big buildings, so new buildings tend to keep coming on the market, even after the recession has hit.

If a condo market gets even a bit oversupplied, and buyers are very cautious, the condo market can take a real hit, even when the single-family housing market stays flat. I'm not an expert on the DC market, but there do seem to be a LOT of new buildings. I would say that location REALLY matters in this instance. Condos on Pennsylvania Avenue are likely to be fine. The more recently-gentrified the neighborhood, the more risk.

Agree. I bought a condo in a good neighborhood in 2004 and sold it for $10k less in 2011. Condos are just weird like that. You can make a bundle or you can lose a bundle in the same market, depending on how well the building is managed and how healthy the association finances are. Are you prepared to be in a position where you absolutely must move for a new job or something, right at the time the association leverages a $1000/mo special assessment for some catastrophic issue? Good luck getting a buyer to take on that albatross.

I get so frustrated with the obsession to buy anything you can, as soon as you can, just to say you own a property. I advise people to buy once and hold forever. Better to rent in the exact neighborhood you want while investing elsewhere until the time is right to buy your forever home. Some people spend their entire lives renting and still manage to live good lives. Really think about your priorities.

A lot of the focus on affordable housing in the DC area is about homes that can house families. While there is definite a shortage of 3br apartments / condos / affordable houses, DC is bringing an endless supply of shoebox condos to the market. Think very carefully about what your money will get you today, and what your competition will be if you try to sell that same place in five years.

[Anonymous]

Where is your condo located?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Being old, and having been through several recessions in different housing markets, my big takeaway is that the condo market reacts very differently than the single-family housing market. They say that "they aren't making any more land," but it is easier to increase the supply of condos in a given market (even a city). Also, there is a long lead time on big buildings, so new buildings tend to keep coming on the market, even after the recession has hit.

If a condo market gets even a bit oversupplied, and buyers are very cautious, the condo market can take a real hit, even when the single-family housing market stays flat. I'm not an expert on the DC market, but there do seem to be a LOT of new buildings. I would say that location REALLY matters in this instance. Condos on Pennsylvania Avenue are likely to be fine. The more recently-gentrified the neighborhood, the more risk.

Agree. I bought a condo in a good neighborhood in 2004 and sold it for $10k less in 2011. Condos are just weird like that. You can make a bundle or you can lose a bundle in the same market, depending on how well the building is managed and how healthy the association finances are. Are you prepared to be in a position where you absolutely must move for a new job or something, right at the time the association leverages a $1000/mo special assessment for some catastrophic issue? Good luck getting a buyer to take on that albatross.

I get so frustrated with the obsession to buy anything you can, as soon as you can, just to say you own a property. I advise people to buy once and hold forever. Better to rent in the exact neighborhood you want while investing elsewhere until the time is right to buy your forever home. Some people spend their entire lives renting and still manage to live good lives. Really think about your priorities.

A lot of the focus on affordable housing in the DC area is about homes that can house families. While there is definite a shortage of 3br apartments / condos / affordable houses, DC is bringing an endless supply of shoebox condos to the market. Think very carefully about what your money will get you today, and what your competition will be if you try to sell that same place in five years.

I get that frustration but following that logic gets a lot of people priced out as they wait a decade for rock-bottom prices that never come (think $400K for a SFH inside the beltway) and then...well they're this guy kicked out of his rental at 65.

https://www.sfgate.com/technology/businessinsider/article/San-Francisco-artist-kicked-out-of-apartment-6807971.php

He could have skimped and bought that apartment in his 30s. Now the entire building (in terrible condition) has sold out from under his feet at $1.3M.

[Anonymous]

Anonymous wrote:So I sat in on a WBJ real estate discussion in crystal city with major developers and SME from GMU were on the panel. Interestingly enough, they brought up the impending recession as a topic. I was surprised by there comments. Our area by 2030 will have a shortage of over 5000 for sale housing units of affordable housing not to mention the rental markets housing shortage. Not to say our properties won't take it hit, but it may mean a switch between either selling or renting the place until the market clears up. Or understanding that during the next recession, it will just take longer to sell. Which isn't abnormal since the only reason the process has spread up is because of the housing shortage.

I’ve seen the switch from condos to rentals during a recession, and I’ve seen people get caught in the middle — a building that’s half sold as condos and then the building developer can’t sell the rest and they get rented out.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Being old, and having been through several recessions in different housing markets, my big takeaway is that the condo market reacts very differently than the single-family housing market. They say that "they aren't making any more land," but it is easier to increase the supply of condos in a given market (even a city). Also, there is a long lead time on big buildings, so new buildings tend to keep coming on the market, even after the recession has hit.

If a condo market gets even a bit oversupplied, and buyers are very cautious, the condo market can take a real hit, even when the single-family housing market stays flat. I'm not an expert on the DC market, but there do seem to be a LOT of new buildings. I would say that location REALLY matters in this instance. Condos on Pennsylvania Avenue are likely to be fine. The more recently-gentrified the neighborhood, the more risk.

Agree. I bought a condo in a good neighborhood in 2004 and sold it for $10k less in 2011. Condos are just weird like that. You can make a bundle or you can lose a bundle in the same market, depending on how well the building is managed and how healthy the association finances are. Are you prepared to be in a position where you absolutely must move for a new job or something, right at the time the association leverages a $1000/mo special assessment for some catastrophic issue? Good luck getting a buyer to take on that albatross.

I get so frustrated with the obsession to buy anything you can, as soon as you can, just to say you own a property. I advise people to buy once and hold forever. Better to rent in the exact neighborhood you want while investing elsewhere until the time is right to buy your forever home. Some people spend their entire lives renting and still manage to live good lives. Really think about your priorities.

A lot of the focus on affordable housing in the DC area is about homes that can house families. While there is definite a shortage of 3br apartments / condos / affordable houses, DC is bringing an endless supply of shoebox condos to the market. Think very carefully about what your money will get you today, and what your competition will be if you try to sell that same place in five years.

I get that frustration but following that logic gets a lot of people priced out as they wait a decade for rock-bottom prices that never come (think $400K for a SFH inside the beltway) and then...well they're this guy kicked out of his rental at 65.

https://www.sfgate.com/technology/businessinsider/article/San-Francisco-artist-kicked-out-of-apartment-6807971.php

He could have skimped and bought that apartment in his 30s. Now the entire building (in terrible condition) has sold out from under his feet at $1.3M.

We all wish we’d bought real estate in San Francisco 34 years ago. But that guy had a great deal on a rent controlled apartment that he thought would last forever. All that article demonstrates is how rent control screws up the real estate market. No one is saying that, if your timing is perfect, you can’t make a lot of money buying condos. What we are saying is that the supply of condos (and demand, for that matter) is much more variable and elastic than single family homes. It is simply not as safe an investment.