Thread by @heydave7

I interviewed Bruce Norris from @thenorrisgroup who I’ve been following for 15 years and is one of the best in understanding real estate trends and prices in California and Florida.



Here’s why Bruce doesn’t think a real estate crash is coming any time soon.

First, lenders have generally been much more conservative in lending compared to the type of lending that led to the 2008-2011 housing crash. This means less likelihood of default.

Second, interest rates are at historic lows and are attracting new buyers wanting to lock in a fixed housing expense for 30 years.

Third, COVID only increased demand for houses as many wanted a house w/backyard (over an apartment) to work-from-home.

Fourth, gov't trying to prevent foreclosures w/ forbearance, and typically foreclosures need to reach about 40% of total sales in a market to impact comps heavily (ie., a crash). But 40% rate is hard to reach when homeowners have equity and lending requirements have been strict.

Fifth, the affordability index (ie., in California) still has a ways to go to to reach peak lows. Generally, the cycle top is reached in California when affordability index hits a low of 17%, but we’re at 28% or so.

Sixth, places like Texas and Florida are experiencing huge migration tailwinds and demand for housing is very high.

Overall, if you’d like to learn more about the reasonings shared above, here’s my full interview with Bruce Norris. It took me over 6 months to get this interview and excited to share it.

Each market is different so many of these observations are generalized and might not pertain to certain markets. In other words, each real estate market has its own unique characteristics that impact market conditions.