Are we at the top of the real estate market right now? Are we in the midst of a real estate bubble that is about to pop?
The simple answer is yes. The real estate market in the United States has gone up and up for years after the long recession, but we are now very likely at the top, and prices will soon drop precipitously in the coming market crash. Of course, I would be glad to be wrong, but I’ve spent over 40 years reading the signs, and the signs have been pretty clear for the last couple of years.
Could the market go up further? Of course, and by definition a bubble is like a balloon that gets fuller and fuller, and you think it’s going to pop, but it holds even more air, and then you squint and step back, because you’re sure it’s going to pop big now, but sure enough it holds more air. And then when you think it won’t pop, it does.
For two years now we’ve watched houses sell in hours or days, and in many markets for $50,000 to $200,000 above listed price, and often with 10 to 87 competing offers. The inventory in most markets across the U.S., including Sequim, WA, is so depleted, buyers can’t find any home they would buy. When one comes on the market, it is a free-for-all and insanity can ensue.
Californians have been beyond desperate, so their escape from California is one of the most urgent moves of their lives as they sell in California for above listed price (who in the world is going to buy in California now?) and try to find a home they can buy with cash immediately. Many of these buyers are not only paying above listed price in cash, but some are waiving all contingencies to be competitive.
I have a degree in economics with a speciality in monetary policy, I practiced law for 20 years, and became an estate planner, an asset protection consultant, and a Registered Investment Advisor, and I traded myself for years in stocks, options, and futures. I started in real estate over 40 years ago, and I’ve been running my own real estate brokerage for about a dozen years now. I’m an exclusive buyer’s agent for buyers from around the country.
I share this because I want you to know I have some credibility in calling this market top. Of course, I could be wrong, and I’m not setting a specific date. No one ever calls a top precisely. What’s important is to be able to recognize the numerous signs of a market top and use that information to make wise decisions.
What this would normally mean, at least in a normal real estate market, is that it is not a time for buyers to buy. But this is anything but a normal market. California, Oregon, New York, and many metropolitan areas in the U.S. are imploding, and if you don’t know that, you’re probably not tracking these things as I am every single day of the week.
The Bond market is in an all-time massive bubble. Wall Street mutual funds, tech funds, exchange traded funds, and almost all individual stocks are grossly overpriced. Interest rates are artificially low, and prepped for a massive leap. When interest rates jump, the U.S. Federal debt will not be payable. Right now we are printing more money than any time in history, and the U.S. Dollar is about to lose it’s International position as the reserve currency of the world. The Dollar will crash. At about the same time, Wall Street will crash, and retirements funds will lose 70% or more in a matter of months.
What would I do if I was heavily invested in the stock market or any funds on Wall Street? If my entire retirement or a major portion of it was in stocks and bonds, I would feel extremely at risk. I would feel far safer if those funds were put in a retirement home or homes. Granted, a market crash will hit real estate prices too, but at least if you own real estate free and clear, it won’t go “poof” on you and just disappear.
If you’re invested in precious metals and cryptocurrencies, good luck, because those markets are all controlled. If you have a lot of money in bank accounts, the FDIC no longer covers private accounts up to $250,000 because of a change made in about 2008 when they prioritized securitized accounts on Wall Street. Even so, with less than 1% of Federal Deposit Insurance Funds, there won’t be enough to cover all Americans’ bank accounts. Not even close. The banks will just close their doors. The ATMs won’t work. You’ll be sitting at home wondering how to get your money, but you won’t be able to.
The millions of tenants who lost their jobs and haven’t been paying rent are in trouble, because they can’t live free forever. The homeless population is exploding in major cities. Landlords who have worked hard their whole lives to save and invest in rentals for their retirement are losing all their equity and their life savings. The millions whose mortgages are in forbearance will likely end up in foreclosure.
Experts have been detailing the destruction of vast quantities of agricultural fields in the U.S. and in China and in Africa. Trillions of locusts have destroyed major crops in Africa. The supply chain of food around the world has also been seriously disrupted because of the International shut downs as a result of Covid-19. Not me, but experts around the world are calling a massive worldwide famine in our future.
There’s a depression coming bigger than anything we’ve seen in this generation. Millions of businesses have permanently gone out of business because of the shut down of businesses in the U.S. Malls around the country are closed and many will never re-open. Inner cities like Seattle, Portland, and New York are imploding and local politicians seem intent on finishing the destruction with policies that an eighth-grader knows are dumb.
The current administration in Washington is intent on opening our borders and letting millions in and allowing them to vote, to receive government assistance, and to stay. Criminals are entering in massive numbers. Drug trafficking and human trafficking across the border dramatically increased. Where is the common sense? This is my point. America is in trouble, and a crash is coming, probably in 2021, but if not in 2021 in 2022.
Am I recommending that buyers still buy in Sequim? Yes, but I’ll tell you why and how. You can’t just buy any home for any price. And you have to have a reason it makes sense to pay top dollar in a market like Sequim. If you’re escaping from California, and you just sold your home for $2.97 million cash, it makes total sense to buy a $700,000 home in Sequim for cash, all contingencies waived (assuming you’ve got an Exclusive Buyer’s Agent with my experience to protect you).
It makes sense because for many right now, getting the heck out of Dodge (i.e. any city in California) is the first priority. And if you think things are bad in California now, wait another year. You may not be able to sell your California home at any price in a year. So now is a good time sell there, get out of there, and move to a safer place like Sequim.
Even if there’s a crash and real estate prices take a tumble, if you’ve sold high and bought high in Sequim, it’s a wash, but you probably got the same quality home in Sequim for 1/3rd the price, so it would be a good exchange. On top of that, Sequim is a safe place if the economy crashes. It’s much safer as a community without the exposure to the metro crimes that will skyrocket out of control in a crisis, and the chaos that will ensue in metropolitan areas. Remember, cities like Seattle are cutting the police budget, so police will not be available in a mass emergency. In addition, in Sequim you can plant a garden, fish, hunt, burn wood, and store food and keep a backup generator. Try doing all that in a city that implodes.
There are so many signs, and I’m not going to discuss all of them here, because then this would be a book instead of a blog article. But the manufactured home industry is sending the same warning signs to us. Here’s a video worth watching if you want to see the proof.
What we’ve seen in the Northwest is home listings and sales following the same pattern. Listings don’t last long, get multiple offers above listing price, and the inventory is depleted to desperately low levels so buyers cannot even find a home in many areas. This interactive graph shows you the number of showings per listing for those that get sold through the Northwest MLS, which covers most of Washington State. You can drag your mouse across the chart to see the interactive numbers.
As you can see, we’re seeing nearly 40 showings on some homes.
The market cannot continue on it’s current trajectory, and if you are planning to sell, you’d better get that done fast before prices crash. If you are buying, you could wait, unless you need a place to live and can sell high and buy for much less in a market like Sequim. Many of my California buyers are telling me its less about price now than it is getting a home to live in around Sequim. They just want out of California and to get settled in a good safe place like Sequim.
But this is not a market for the novice buyer, nor for the faint of heart. I’m not just trying to persuade you to retain me as your Exclusive Buyer’s Agent. I’m saying this is not the time for you to hire an inexperienced Realtor. These are dangerous waters to navigate, and uncertain times. Be careful out there. You didn’t work your whole life to make a big mistake now.
Chuck grew up in remote Alaska, graduated from the University of Alaska with a degree in Economics and Teacher Certification, and after teaching high school for two years, went to law school at Gonzaga University in Spokane, Washington. He served four years as a Captain and JAG in the USAF at Nellis AFB in Las Vegas. After practicing real estate law for 20 years in Washington, Chuck founded iRealty Virtual Brokers covering Sequim and the beautiful Olympic Peninsula. He is the author of 2,200 real estate articles and a dozen real estate books, and he produced over 100 real estate videos. Chuck combined his love for real estate and technology to create a massive Internet presence, and his articles and videos and books have been viewed by millions. Chuck is a well recognized real estate expert and his counsel is sought by other brokers and practicing attorneys around the country. Buyers from New York to Hawaii and from Florida to Alaska seek him out to retain him as their buyer's agent, and home owners around the State of Washington seek him out because of his new Flat Fee Listing Service.
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