October 18, 2021 at 2:45pm | Mac Rogers
Will there be an October housing crash just like the stock market in the past? If you've lived long enough or maybe you are a student of finance history, you know that a lot of not so good things happen in October. I wonder since the forbearance moratorium is ending at the end of September, could  this be the case with housing this October?

Check out these links:
https://www.investopedia.com/terms/o/octobereffect.asp
https://learn.roofstock.com/blog/cities-with-highest-mortgage-delinquincy

Now the October effect that has happened in the stock market could hit the real estate market because the mortgage forbearance program is ending this September 30th and the Biden administration said they won't be extending it anymore.

Well, here's what I'm afraid might play out. For me, there are a few things I look at.
1. I don't believe that we are short 4,000,000 housing units. If you've watched my other videos, I stated that I think this number is inflated. I think there are a lot of wanna be buyers that get counted, that for one reason or another can't really buy and therefore I think should not be counted. These are the unrealistic buyers that whatever price is presented to them, they want to pay lower and also buyers that gets scared when the market goes down. Again I think that 4,000,000 is inflated.

Second thing I'm looking at is that we've gotten used to these low inventory levels that I believe this is embedded in our psyche right now and any increase in inventory no matter how small will have a massive impact on buyers. I've seen how fast buyers mindset change. If very little inventory has been coming in on the market then they see a change. An increase, no matter how slight that change is, they start thinking or get a wait and see attitude.

Number 3. Everything is magnified by the media and therefore when something gets reported, hardly anyone tries to find out what the context is. And I go back to what I just mentioned regarding inventory. The latest report says that inventory is increasing. But the media doesn't tell you that the increase is not significant. But because most people just read the headline "inventory increasing" they think all hell is about to break loose and they start acting like it.

And number 4, because of my previous 3 reasons, how long will these positive equities last especially for those that are in trouble and do end up needing to sell. Think about this, say you have a bunch of regular sellers in one particular neighborhood selling, then you have maybe one neighbor that was in forbearance and they need to sell quick in order for them not to get foreclosed. Maybe they price their home a little bit more aggressively than the competition?

Right now, that's what I see starting to happen. People talking about an October housing market crash just like what has happened in the past with the stock market. And it's because of the combination of everything that I have mentioned. And if that's the narrative that is being pushed out there, it could be a self fulfilling prophesy. Might not all happen in October. In fact it could be in 2022 but this could be the beginning. What do you think will happen in the housing market come October? I'd like to hear your thoughts so please comment below.

Mac Rogers
Broker
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