Back in 2008, the real estate industry went down the tubes, and it stayed there through 2009 and 2010. Prices kept dropping, and things got worse and worse. During those years, I had conversation after conversation with other real estate investors, and the question everybody kept asking was, “How bad is it going to get?”
One of the reasons investors were so blindsided by the crash of 2008 was because we didn’t have the robust data gathering back then that we have today. If we had data back then like we have today, more people would have seen the problems coming a long way off.
Flash forward to 2020. The investors who are looking at the data see a crash coming in slow motion. On the other hand, the investors who aren’t looking at the data think everything is OK.
The reason things are going to get worse in the near future is because there is going to be a huge wave of properties hitting the market in the coming months. These looming properties that have not yet hit the market are what we call “shadow inventory.” Millions of homeowners are behind on their payments, and millions of renters are behind on their rent. Eventually, the piper will have to be paid.
Mortgage companies will foreclose, and frustrated landlords will get fed up and unload their properties so they can invest their money elsewhere.
When inventory is low (like right now), prices stay high. This is why so many investors and realtors think everything is fine. It’s common for houses on the market to get multiple offers. But when the market is flooded with inventory, prices drop and unsold properties can sit for months. That’s why I’m telling all my closest friends that now is the time to get rid of all your problem real estate assets. Fortunately, there are still people willing to scoop them up.