US housing market could be headed for ‘meltdown,’ economist warns

[Kamaji]

US housing market could be headed for ‘meltdown,’ economist warns

By Thomas Barrabi   
July 19, 2022

The US housing market could be on the verge of a “meltdown,” an economist warned following this week’s release of data showing a collapse in home builder confidence in July.

US home builder confidence plummeted 12 points to 55 in July, according to the latest data from the National Association of Home Builders/Wells Fargo Housing Market Index released Monday.

Sentiment has declined for seven straight months and is now at its lowest level since May 2020 — with more trouble potentially ahead for homeowners.

“Homebuilders have been in denial about the extent of the drop in demand, despite mortgage applications falling by more than a quarter over the first half of the year, with no end in sight to the decline,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Now, they are acknowledging reality.”

“Pretty soon, anyone who has bought a home in recent months will be sitting on a loss,” Shepherdson added.

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Source:  https://nypost.com/2022/07/19/us-housing-market-could-be-headed-for-meltdown-economist/

[catfish1957]

More than half of America has 75% of their net worth tied up in their homes.

This does not end well.

[Kamaji]

More than half of America has 75% of their net worth tied up in their homes.

This does not end well.

Certainly not for those who purchased recently or who are highly leveraged.

We'll probably go through another period of having thousands of zombie houses on the REO books again, and some lenders will collapse.

[catfish1957]

Certainly not for those who purchased recently or who are highly leveraged.

We'll probably go through another period of having thousands of zombie houses on the REO books again, and some lenders will collapse.

Actually, when you wipe this much capital off the books, the trickle down effect is going to be more far reaching impact than you think. Realize that what were (at least to these people) were sound investments suddenly go undewater in value.  Then watch the defaults, and the number of banks that are going to lose capital due to interest rate speads.......

Stars are aligning to make '08-'09 look like childs play.

[Kamaji]

Actually, when you wipe this much capital off the books, the trickle down effect is going to be more far reaching impact than you think. Realize that what were (at least to these people) were sound investments suddenly go undewater in value.  Then watch the defaults, and the number of banks that are going to lose capital due to interest rate speads.......

Stars are aligning to make '08-'09 look like childs play.

I agree that the aftermath will be worse than it was in 2008.  On the other hand, for those who have some resources available, it'll be a prime buying market again.

[Kamaji]

Meanwhile, there's this:


Here’s why Americans think now is the best time to buy a home

By Zachary Kussin
July 19, 2022

Despite the crush of inflation, rising mortgage rates to battle and the ongoing woes of rising rent, a new study shows that, hey, maybe there’s some reason for optimism?

Some six in 10 Americans, or 56%, believe that “right now” is the time to buy a house, according to the study, conducted by OnePoll on behalf of the fintech mortgage lender Lower. The survey compiled responses from 1,000 homeowners and 1,000 renters, finding that 55% of respondents claim ongoing record-high inflation has made them want to buy a home even more.

Specifically, 47% of that group said they aim to get one in the next year. The bulk of that individual sample, 74%, add that it would be their first time buying a house. Just 26% are existing homeowners who want to get something else.

Just more than half of the participants — 51% — said they see homeownership as an investment opportunity toward financial freedom, while 50% said they want to get their foot in the door of homeownership before appreciation rises more. Others with their eyes on their golden years — 42% to be exact — said they want to live comfortably in retirement. (Of the total pool, 41% admitted to feeling bored in their current residences, and 41% aim to get a home for their growing family.)

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Source:  https://nypost.com/2022/07/19/heres-why-americans-think-now-is-the-time-to-buy-a-home/

[catfish1957]

I agree that the aftermath will be worse than it was in 2008.  On the other hand, for those who have some resources available, it'll be a prime buying market again.

Being a landord is the biggest hassles for the return on earth.  I'll never do that again. Farmland, OTOH, is another matter.  I might increase postions there. The 3 we have pay off like slot machines.

Based on what I see as their value, they are yielding near 6%

[Kamaji]

Being a landord is the biggest hassles for the return on earth.  I'll never do that again. Farmland, OTOH, is another matter.  I might increase postions there. The 3 we have pay off like slot machines.

Landlording can be exceedingly difficult.

[catfish1957]

Landlording can be exceedingly difficult.

Straw that broke the camel's back?   About 15 years ago, we owned one home that a tenant went 9 months without paying rent.  Even going through all the proper legal challenges, it was obvious the laws and red tape favored treatment of renters.  I finally had to hire a property management oufit to extract their asses out.   I mean it boiled down to dumpsters and deputy sheriffs.

Never was able to recoup a penny.  No more of that for me.

[Kamaji]

Straw that broke the camel's back?   About 15 years ago, we owned one home that a tenant went 9 months without paying rent.  Even going through all the proper legal challenges, it was obvious the laws and red tape favored treatment of renters.  I finally had to hire a property management oufit to extract their asses out.   I mean it boiled down to dumpsters and deputy sheriffs.

Never was able to recoup a penny.  No more of that for me.

It can get much worse than that in NYC.  There, the landlord/tenant laws are decidedly pro-tenant, as are the courts, with the result that a tenant who knows how to game the system can stay rent-free for more than a year.  And evictions can only be done by the marshal; attempts at DIY evictions end up getting the landlord in really hot water.