Reaction & Commentary
Bottom just yet things are getting so scary that even Federal Reserve officials are warning about a double-digit drop in home prices and saying that bubble theorists have been right all along home sales of falling precipitously mortgage applications just hit a low last seen in 1995 and several other indicators are signaling that more
Turmoilers ahead according to an expert that is accurately predicted previous downturns many properties will halve in value by the end of 2023 and a wave of foreclosures is now emerging on the horizon we have a lot to cover today but before moving on WE kindly ask you to
Support our work with a thumbs up and don’t forget to subscribe to our channel so you don’t miss our upcoming videos since the summer of 2022 the housing market has been weakening every month with the home prices in some bubbly markets falling over 21 since June which
Has been the case in San Francisco California Boise Idaho and Austin Texas according to the s p k Shiller index of prices in 20 major Metro areas experts say that conditions have deteriorated so quickly that right now this isn’t a seller nor a buyer’s market at the
Moment I would say the U.S housing market is going through a period of tug of war a conflict between buyers and sellers in terms of trying to figure out where the bottom is and in terms of sales prices and even construction activity explains Chris to write us the deputy chief Economist at Moody’s
Analytics prices have calmed down everywhere but the process hasn’t been linear he added they came down fairly aggressively during summer and now most recently we saw another decline in January and February so that to me suggests that there is this tug of war between the buyers and the sellers as
They deal with the higher interest rate environment to write as argues that this struggle between sellers and buyers is to be expected during a housing market downturn the expert also noted that more immediate sharp declines tend to occur in moments when unemployment rates start going up which is the case right now all
This means that both home buyers and sellers have been pulling out of the market as mortgages become more and more expensive the high mortgage rate led to a situation where sellers have no incentive to move or to sell their homes they have been locked in a very low
Interest rate and if it’s fixed for the life of their mortgage then their payments will never rise unless they sell said to write us and if they sell then they have to buy another home or rent and at that point they would face much higher costs so from that
Standpoint I see the market as freezing out he continued the buyers are receding because they can’t afford the monthly payments and then the sellers are also receding because they have no incentive to sell at this point and as a result sales have gone to a very low level to
Write us outlines last month mortgage applications fell to 1995 levels according to Fannie Mae data compiled by seeking Alpha’s author and entrepreneur Logan Kane applications for mortgages are typically a useful leading economic indicator because they tell us how sales are going to be in the months ahead and what applications for mortgages are
Telling us is that not many people want to buy homes at today’s prices Kane stresses and why would you if prices are up 45 since pre-pandemic and mortgage rates have gone from 3.5 percent to seven percent if it costs you two thousand one hundred dollars per month
To buy a six hundred thousand dollar home with a five hundred thousand dollar mortgage before now that house is about eight hundred and fifty thousand dollars if you make the same down payment you’d need to pay about five thousand dollars per month on a 750 000 mortgage now on
The exact same house as three years ago it’s not worth it the emphasizes the truth is that despite recent price declines the housing market remains significantly overvalued all across America and property values have a lot more room to fall in a scenario where unemployment levels rise by five percent severe economic shocks weren’t
Repercussing the market at that point you would see a number of borrowers unable to make their mortgage payments adds to write us noting that a wave of foreclosures is already forming and it is those foreclosures that typically lead to that very sudden decline in prices he says no wonder why now even
Federal Reserve officials are alerting about a double-digit drop in prices on top of the declines we have already witnessed so far in a research report where police last week Dallas Federal Reserve Economist warned that the U.S housing market would face a worrying price correction this year and more rate
Hikes from the Central Bank could make a crash even worse the housing market has become frothy since 2020 as a result of the pandemic boom wrote authors Lauren black and Enrique Martinique Garcia and there’s still a risk of a deep housing slide despite signs of easing home price growth
The economists showed in the report that we’re still in a major housing bubble and the reflection of the current affordability crisis can be seen in house price to rent ratios which measure the profitability of housing as an investment opportunity if the observed price-to-rent ratio grows at an explosive rate relative to its
Fundamental base ratio estimated with long-term interest rate and rent gross data bubble theorists Merit attention they said for the housing market to return to its fundamentals they estimated that a 20 correction would still be necessary that decline would add to the eight percent Nationwide drop in home prices that
Already occurred last year meaning that we are set to see property values falling even more sharply than they did during the 2008 housing crash when U.S homes lost a quarter of their value and that’s the modest Baseline scenario they said more hawkish monetary policy could trigger a much steeper correction
The risk of a more severe price correction cannot be ignored the researchers alerted last week the average 30-year mortgage rate hit 6.5 percent up from 3.89 percent during the same week one year earlier the possibility of a domino effect where investors pull out of housing seeking safety and liquidity elsewhere also
Raises concerns of spillovers to the US economy black and Martin akarthia wrote in February the median price of a U.S home was lower than it was in February 2022 ending more than a decade of year over year increases the longest on record according to a National Association of realness report
The median existing home price went down by two percent in February this marks the first monthly year-over-year price decline since February 2012. the association noted in some markets the reduction was much more accentuated for instance in New York and Los Angeles median existing home prices have fallen 10 it’s even worse in San
Francisco where they collapsed by 13 over that same span but Lawrence Young Chief Economist for Nar argues that this is not the bottom for prices he said in a recent interview we expect a continuing price correction for the rest of 2023 goldsmo estimates suggest that from March through May home prices will
Fall 6.1 percent as rates take higher the bank estimated that some cities in other overheated markets such as Seattle Boise and Austin Texas would experience larger double-digit declines meanwhile Pantheon macroeconomics has projected a home price plunge of up to 31 during the current downturn their forecast seems more realistic considering how much
Homes have gone up in price since the pandemic with a reversal underway existing home sales fell for their 13th consecutive month dropping 36.9 percent from one year ago Nar reported the decline was Nationwide but most pronounced in the west where sales were down 42.4 percent year on year the
Median price in the west was still the most expensive in the country at 525 200 down 4.6 percent from January levels now many folks think we’re rushing toward another 2008 style housing crash a recent survey by cinch Home Services found that 53 of prospective home buyers believe the real estate market will
Crash this year and we can all understand where their fear is coming from even though such month-over-month losses may not sound that scary we have to remember that in America houses aren’t just houses the average American has over 70 percent of their net worth in their house for a middle-class family
Their house is their NASDAQ when its value starts depreciating it means that a comfortable retirement is slipping away and over the past eight months the housing market suffered the biggest drop in value since 2008. real estate brokerage firm Redfin released data that shows that the value of U.S homes
Tumbled from 47.7 trillion dollars in June 2022 to 45.3 trillion dollars this month that’s a decline of 2.3 trillion dollars or 4.9 percent that represents the biggest drop in percentage terms since the 2008 financial crisis when home values plunged by 5.1 percent from June to March at the same time Daval
Joshi from BCA research points out that home building activity has dropped by 20 in the past year the speed of decline puts it up there with five other big U.S housing downturns 1990 1980 1973 1965 1951. that is an important indicator because housing downturns precede downturns for the whole U.S economy this
Is logical house building is highly interest rate sensitive and so it Keels over before the rest of the economy does if the perfect post 1970 track record continues the current U.S housing crisis is the canary in the coal mine for an economic meltdown in 2023 he explains similarly macro Guru Henrik zaberg just
Issued a dire warning to the public saying that a type of Market meltdown not witnessed in nearly a century is around the corner zaberg shared with his a hundred and two thousand one hundred Twitter followers a chart that shows how the National Association of home builders housing market index and the
U.S unemployment rate tend to move in tandem with each other the index looks at the health of the housing market by raping the relative level of current and future single-family home sales zaberg highlights that the index and the current unemployment rate are behaving eerily similar to the way they did
During the 2008 housing market meltdown that triggered the great financial crisis and no one other than the legendary investor and GMO co-founder Jeremy Grantham agrees with saberg’s View during a recent Rosenberg research webcast with Economist David Rosenberg grant them alerted about the implosion often everything bubble that could halve
The value of U.S homes and plunged the U.S economy into a much more painful recession the price of real estate and other Investments have ballooned to unsustainable highs during the pandemic Grantham said the current bubble is pretty damn big compared to previous ones and dwarves 2008 in scope the
Market historian observed if the U.S gets lucky the housing market might slump by around 29 percent but if events pan out poorly a 50 crash is not unlikely the bubble expert predicted a severe economic crisis is inevitable when this Super Bubble pops Grantham said and the ensuing downturn will be
Far worse because the speculative frenzy has affected multiple asset classes he also nodded to the current banking crisis outlining that U.S credit markets might come under pressure from high levels of debt and Rising interest rates that could worsen The Fallout from the acid bubble bursting he said it’s not on
Unsurprising that the biggest housing bubble in history ends in the biggest housing crash in history but at a time when the stock market is screwed the bond market is disintegrating and the banking system is falling apart it’s almost a certainty that we’ll see another catastrophic financial crisis unfolding sooner than we think investors
Are panicking policy makers are desperate but still most people remain unaware of the risks that lie ahead as Grantham emphasizes this is gonna be the implusion of a Super Bubble and we should all expect the consequences of it to be extremely destructive we hope you found this informative
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