I just don’t see nominal home values dropping significantly. The only time that happened was in 2008/9, and was more related to mortgages and foreclosures than market fundamentals.
If we go by history, real (inflation adjusted) home values do drop in a lot of recessions, so that’s a motivation to keep your powder dry and look for bargains towards the end of the cycle. The mantra of the media (right AND left) is that there’s a housing shortage which buttresses any market force to drive down prices.
That may well be true. The assumption, there, is that demand is fixed. And it’s not. Times get tough, and what was an investment in an airBNB nowcomes on the market because the municipality outlawed rentals. What was a young graduate looking for his first house becomes a starving waiter looking for two roommates. Parents that were flush with cash renting a nice apartment for their daughter at a fancy college becomes sweet-cheeks living at home and going to state college.
The demand side worries me. We’ve gotten so used to increasing stock markets, a booming job market and cash-out refinancing increasing out life style that anything more than a brief hiccup would have serious demand implications.
