Posted on 09/15/2022 10:18:27 AM PDT by millenial4freedom
Billionaire real estate investor Barry Sternlicht said he believes the economy is "braking hard" and that the continuation of rate hikes is likely to cause a "major crash" in housing. “The economy is braking hard,” the chairman and CEO of Starwood Capital Group said on CNBC earlier on Thursday. “If the Fed keeps this up they are going to have a serious recession and people will lose their jobs." "You are going to have a major crash in the housing market and housing prices are going down," Sternlicht said. "You are seeing housing prices correct."
(Excerpt) Read more at seekingalpha.com ...
“You are going to have a major crash in the housing market and housing prices are going down,”
This has been an inevitability for well over a decade now. The real thing that has changed is that the current economic pressures make it untenable for banks and the federal government to continue to artificially prop up real estate prices. So we will have the overdue crash, and then then market may return to being ruled by normal market forces, until the fed and banks are able to start interfering again.
Seems a lot of people want to move here (Juno Beach/Jupiter/Tequesta) for one reason or another. While I can see real estate prices dropping in the near future, not here. Bad thing is appraisals are catching up and taxes are rising.
“Of course housing will crash.”
As it should. Normal economies do not have constantly soaring housing prices while wages remain stagnant for four decades.
In some markets it will drop 25% over the next 18 months...assuming the Fed does the right thing.
Mortgage rates are more influenced by 10 year bonds than the short term rates, which are impacted by the FFR. I don’t think its likely mortgage rates go up much further unless people begin to think the Fed needs to take rates up 6-7% for several years. Keep an eye on the 10 year US Treasury rate, which is what the mortgage rates typically are indexed to
Probably also worth noting the current rates for mortgages already reflect the market expectation of a 4% FFR - which you can already see in the 1 year US treasury yield of 3.99% right now. For rates to go higher, the next 2 increases won’t cause it - they’ll have to believe the Fed will go even higher and for longer.
I just put one of mine up two weeks ago and went under contract immediately. 50% of homes still are in fact.
Only the stupid are buying now.
Smart people are holding cash and laying low.
2) Wages in real terms were stagnant for a long time, but not in nominal terms. Real estate has basically kept up with inflation despite larger homes and nicer homes than 40 years ago.
Housing only crashes when you have a ton of foreclosures. That is extremely unlikely to happen this time.
“1) Housing didn’t soar for 40 years. It kept up with nominal inflation. “
Inflation which has been in a constant upward long term trend for that time as well... so yes, housing has soared, compared to wages.
“2) Wages in real terms were stagnant for a long time, but not in nominal terms.”
If wages cannot purchase more than they purchased 40 years ago, then they are stagnant. There’s no way to rhetorically dance your way around that.
“Housing only crashes when you have a ton of foreclosures. That is extremely unlikely to happen this time.”
We shall see, but if they do not, then we’ll just be continuing on the same foolish path that any economy with undue government interference does.
Oh the humanity!
Most of it loads in shanghai. We usually are bringing in a few pallets worth of material. From China we ship to San Fran. Most of our headaches are on the US side.
There are issues with delayed vessels etc but we are getting our material in.
Not if they’er wealthy.
“Now I can be house poor and cash poor too!!!!
Equity and diversity.
good. i’ll wait to buy then.
It’s ugly out there and going to get much uglier.
Read later.
Here in So. California, I expect we will see many foreclosures on the cracker boxes that sold for double and triple value. If people lose teir income, they won’t be able to make that $4K to $5K payment…and if that doesn’t do them in, the property taxes will.
“Smart people are holding cash”
Well they aren’t that smart. Cash is losing value every day.
We have 7 million more jobs available than on the market. We’d need a severe recession just to bring the job market into equilibrium. Meanwhile, the buyers the last 2.5 years have had the biggest downpayments as a % of purchase price and highest credit scores in history and homeowners have record equity as a % of value today. There is no big foreclosure wave coming in any normal recession or even severe recession scenario - it would need to be like depression level event, in which case housing will still hold up better than nearly every other investment.
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