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Originally Posted by Biggd
What's happening is because of extremely low interest rates and the run up in the stock market people are taking money out of their primary residences and buying second homes in cash at an alarming rate.
When we have a recession, and we will have one again, what will people do to save their primary residence from foreclosure if they can't keep up the payments? Do they sell their primary residence which could have a bigger mortgage than the sale would bring in or do they sell their second home with no mortgage for less than what they paid for it?
In past recessions vacation area's got hit the hardest and recovered the slowest but we are in a place where we've never been before in our economy so it will be interesting to see how this plays out.
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Great post.
Another thing to add to the unique situation is since the 2008 real estate crash is a lot of builders got out or went bankrupt. So there is a shortage of housing in general. It’s pretty hot in lots of places besides vacation areas. The low supply is a big part of rising prices.
A lot depends on “Pandemic 2.0”, and right now that’s not looking good at all.
I think a normal recession would not be so bad. But we could see the worst economic crisis ever a year from now if we see another COVID winter like the last. I think there is a 50-50 chance of that happening.