Why San Antonio May Avoid A Housing Crisis

I'm sure you've heard the well-worn tropes: Past performance does not indicate future results, and the past is prelude. The last big market crash in 2008 has certain signatures that may or may not be present this time around. Below are a few reasons why this time may rhyme instead of being a carbon copy of the last big recession.

1. The Housing Market is Different

I personally got a front-row seat to the last run up and collapse to 2008. I lived in Southwest Florida and was in college back then. I was working on my undergrad degree and working at a high-end hotel. This was 2005.

I first remember one of my co-workers getting a loan on a condo. I didn't know much, but I looked over some of the terms. It was an "adjustable-rate mortgage" instead of a fixed-rate mortgage. Overall interest rates were pretty low, and maybe going higher. I asked if they know what the reset rate would be if the interest rate adjusted up. They didn't know what it meant and would ask about it. I doubt that situation ended well.

The second sign things were not quite right was Collier County real estate appreciating at 33% a year. That's not a typo. Again, I was a college kid that thought he was wiser than his years. Yet, that didn't make sense to me in a long-term sustainable way.

In 2008 housing was THE KEY that triggered the recession. If you haven't watched The Big Short, you really should. It explains pretty well the house of cards built upon housing and Wall Street gambling hard on the graphs continuing to go up indefinitely. Well, it didn't, and Main Street took it in the shorts as a result.

2. A Recession Doesn't Have To Mean A Housing Crunch

In the last 5 US recessions, only 2008 gave housing a big dent in values. Seriously, look it up, I'll wait.

This means the odds are decent that while the San Antonio market which has been hot up until now, will come back strong. In fact, San Antonio mortgage lenders were recently hit hard with applications to refinance when the Fed cut rates. I expect to see a rebound once folks get back to work.

What we will definitely see is a temporary liquidity crunch and lots of things "go on sale." If your income has gone to zero, you need to free up cash right now to keep things moving along. If it gets bad enough, call the We Buy Ugly Houses folks, as they make cash offers on your home.

3. The Rebound Will Be Aided By Pent-Up Demand

In a normal recession, businesses that have mishandled their finances or not run their business well enough, go under. In this case, the gov't ordered many businesses closed. If you own a shopping center, movie theater, restaurant, bar, or hair salon, you didn't do anything wrong. If you're able to ride this out, I suggest a big boost to your business when the lockdown is lifted.

Seriously, I'd love to get a haircut. Then sit down for a burger and a beer. But I can't. Once I can, you better believe I'm going to do so.

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