Wow. According to this article:

The facts are:

• Small banks have massive exposure to real estate (the average small bank has 67% of its assets in real estate)
• Dozens of large regional/national banks (a la IndyMac) are also bankrupt given their extreme exposure to real estate and will also go bust
• The FDIC that has already depleted 10% of its funds in the rescue of IndyMac alone
• Losses are spreading all the way up to prime mortgages and commercial real estate; to unsecured consumer credit (credit cards, student loans, auto loans); ... to corporate bonds ... to CDSs where $62 trillion of nominal protection sits on top an outstanding stock of only $6 trillion of bonds
• In a typical US recession equity prices fall by an average of 28% relative to the peak. But this is not a typical US recession; it is rather a severe one associated with a severe financial crisis

Implications of the facts:

• FDIC will run out of funds and will have to be recapitalized by Congress as its insurance premia were woefully insufficient
• The collapse of many [risk] counterparties will lead to a systemic collapse of this market. Municipalities will go bust, hundreds of small banks, some major money center banks, the entire independent broker-dealer sector will evaporate along with $1-$2 trillion of credit losses.
• Equity prices will fall by about 40% relative to their peak. So, we are only barely mid-way in the meltdown of stock markets.
• Leaving aside the risk of a collapse of the US dollar given this easier monetary policy the Fed Funds rate may end up being closer to 0% than 1% by the end of this financial disaster
• The rest of the world is in for the pain too and as a result, energy and commodity prices will fall 20 to 30% from their recent bubbly peaks.

I know this type of gloom and doom is not the most soothing thing people want to read, but heck, the worst times are when the great transfer of wealth occurs.

I'm no Donald Trump, but anyone can see if the Fed Funds rate drops to 0%, then mortgage rates will eventually come down. Credit market overall will be cheap, except who's going to lend you money? It's very paradoxical. This stagflation might be a challenge to us real estate investors. The deals are good because the rates are cheap, but you can't get the deal because the lenders (if they haven't gone under) are tightening their belt.

These guys make a name for themselves by promoting this "gloom and doom". Of course, it makes sense because negative news sells. If a newspaper read "People in NYC are loving each other", would you read it? I doubt it. If it read, "People in NYC are beating each other to death", I'm sure 99% of the people would stop to read it.

I doubt anyone can forecast what would truly happen. Who knows? Maybe this FHA injection of cash to Freddie and Fannie might deal the final blow to the real estate and cause massive financial losses. To a point WORSE than that of Great Depression. Who knows? Maybe not. Maybe we'll see another mini-real estate boom before finally settling to a point the economy can patch up its wounds.

All I know is, I nor can anyone else predict the future. If you can, don't buy real estate. Buy lotto ticket instead. Much better returns that way. Instead of trying to "time the market", i would rather go in now while it's cheap. Cheap enough to positive cashflow with a little bit down.