Explain the 50% Bloodbath Coming to Real Estate This Year

[@michaelchen7832]

The idea that multifamily could crash 50% while single-family homes stay strong is completely unrealistic. If multifamily prices dropped that much, their yields would become so attractive that investors would flood the market, stabilizing prices well before they hit rock bottom. No rational investor would pay a premium for single-family when multifamily offers better cash flow and scalability at a discount. In real estate downturns, capital migrates toward assets with the best risk-adjusted returns. Multifamily assets benefiting from economies of scale and consistent rental demand would become the obvious choice. Investors would bid up multifamily prices long before they could sustain a 50% drop. Real estate markets are interconnected you can’t have one segment collapse without ripple effects. A 50% crash in multifamily would shift demand away from single-family, putting downward pressure on those prices as well. The capital always chases the best risk-adjusted returns, and multifamily at half-price would dominate. This scenario ignores the basics of supply, demand, and investor behavior. Markets don’t operate in isolation.

[@waterbug1135]

Markets do operate differently in the social media world. These same dudes wouldn't buy in a 50% drop. They're always afraid of a crash and when a crash does happen they're afraid it will keep dropping. I was buying during the 2008 crash. There wasn't any competition. I was buying on the way down in 2009 and it was scary AF. I was down a lot in values in 2010-2016 but rents were good as people still had good jobs, just lost their house.

[@OneRentalataTime]

Ok

[@TheFn9mm]

This would not happen in a couple of weeks or even months, it happens in years, once it takes hold, banks are afraid to lend, and like waterbug says, most people will be fearful, not enough brave investors to stabilize the market once it starts going down, some people are listing their multifamily here (CA) with the mortgage payment 50 percent more than what the whole property rents even at market rents, so you have to cover the balance of mortgage plus taxes, maintenance/capex, vacancies which is unsustainable. That is not an alligator, that is a prehistoric dinosaur like alligator unless you pay cash and then you lose on the current CD/Treasury yields.

[@michaelchen7832]

@@OneRentalataTime A 50% crash would require a systemic event akin to 2008, with widespread over leverage in the sector, rapid defaults, and no viable buyers due to frozen credit markets. Even then, institutions like private equity funds, sovereign wealth funds, or REITs would likely step in, especially with dry powder reserves waiting for distressed opportunities. A 50% crash implies that liquidity-both capital and buyer interest has evaporated. This would happen only in a scenario where investors are so paralyzed by fear or risk aversion that they believe the asset class is fundamentally broken. Typically, investors step in at 20-30% discounts, stabilizing the market before deeper declines. A crash of this magnitude would ripple across real estate sectors. Single-family homes and other asset classes wouldn't remain unaffected.

[@legendbe2023]

I am with you on this one. Capital is like water flowing and it flows toward lower ground in a free market. I don't see a scenario where mutifamilies drop 50% while single families remain unchanged. It is possible that multifamilies drop 10 maybe 20% whatever number it should be to reflect the new holding costs due to higher rates while single families remain unchanged due to fixed rates. Beyond that, multifamily rent has to be overly cheaper than singles which does not make sense since they offer roughly the same sheltering function.

[@DionTalkFinancialFreedom]

Great stuff

[@OneRentalataTime]

Thank you

[@anneabeingpresence7642]

Merry Christmas Michael.

[@OneRentalataTime]

Merry Christmas

[@pauljensen4773]

"The unconference" Love it.

[@OneRentalataTime]

Lol

[@angel_arreguin]

Great share TYLG 👍🏻 I skate to where the puck is gonna be, and not where it has been - Wayne Gretzky

[@OneRentalataTime]

Exactly

[@CarlosGomez-qs9bm]

🎉🎉love this segment of One Rental at a Time

[@OneRentalataTime]

Thank you

[@drewm1277]

You look like you could be Mr Beast's Dad lol Love the discussion

[@OneRentalataTime]

My daughter is older than him

[@JDT738126]

Happy Friday guys looking forward to 2025!

[@OneRentalataTime]

Me too

[@JackStewartEnjoysRealEstate]

I thought the Vegas event was 400, or did the total have to get turned back, or did I just mis hear?

[@OneRentalataTime]

I cut it to 300

[@JackStewartEnjoysRealEstate]

@OneRentalataTime oh I'm sorry to hear that.

[@bobconder3163]

With a bad economy and all the apartments being added…. Put high rates in the mix and we are for several years of a real estate downturn. And the comparison to any other era like the 80s Dismisses the higher property taxes, higher home insurance and skyrocketing maintenance and upkeep we have now. They will just pile into these new apartments and yes the rent will be still be high !!

[@OneRentalataTime]

Thank you

[@gachauni9083]

It would take a stock market crash to take down the real estate market.

[@OneRentalataTime]

Thank you

[@robertcashman5429]

13.4 % on the 10year for final top. Likely years away of course, but will be that high and reset everyone's perspective and expectations similar to what happened 40 years ago.

[@OneRentalataTime]

Wow!!! Glad I have fixed rate debt

[@nathanabraham8762]

Lmao if mortgage rates go up and true wages remain stagnate turn over for housing will be like 2 million for the year

[@OneRentalataTime]

Never boring

[@anniealexander9616]

What happens if we have mass deportation?

[@OneRentalataTime]

Inflation is possible

[@DionTalkFinancialFreedom]

More Americans will take the jobs those deported left. But they will have to be paid more. (Since we took away the slave labor) More US citizens making more money will be inflationary.

[@armandgalleon8077]

The question is, are americans willing and able to take the job?

[@anniealexander9616]

@armandgalleon8077 Definitely, those Americans let go from Tyson want there jobs back. The company I used to work for, has a ton of them because they are like slave labor. But whites are turned down.