When LendingTree asked 2,000 Americans earlier this year whether they were rooting for the housing market to crash, 59% of those aged 18 to 29 said yes.
I understand the logic… when a house feels out of reach, a crash looks like the only way in.
The picture in their heads is simple - stocks and house prices fall and everything gets cheaper… while the job and the salary stay exactly where they are.
Life does not work that way.
The last time prices fell like this, the S&P 500 dropped 56.8% between October 2007 and March 2009. On a $300,000 portfolio, that is a loss of about $170,000. It did not reach a new high until March 2013.
In that same downturn, unemployment went from 5% to 10% and roughly 8.7 million American jobs disappeared. Plus 3.8 million homes were lost to foreclosure.
So yes, everything did get cheaper. The same event also cut paychecks and made banks far harder to borrow from.
The bargains are real, but you just have to walk into a burning building to collect them, with every headline worse than the last and your employer standing in the same building.
I know how this looks from the inside. In March 2020 I was in Hanoi under lockdown, my business was collapsing and my portfolio was down. Shares were on sale. I used the capital I had left to sell put options on stable companies, which means getting paid today for agreeing to buy shares at a set price later. What I could do with that sale depended entirely on what I had already set aside.
A discount belongs to whoever still has cash and a paycheck when it arrives.
So build a buffer in two places. In your portfolio, hold part of it in cash or a money market fund, which lends money out for very short periods to very safe borrowers and pays you interest while you wait. In your life, keep your spending far enough below your income that a lost paycheck gives you time to find the next one. If prices fall and stay down, you are the one with options. Someone living at their limit today has none… and that is a LOT to risk on the hope of a sale.
Oliver