Recession

Home builders have been very active during the past ten years.

 

While oil providers have OPEC, the housing supply does not have a similar cartel.

Therefore, most builders and many city councils became overly enthusiastic and overbuilt inventory.

As a result, the months of supply from new buildings is greater than 400% that of resale apartments!

 

As a result, builders are currently halting new projects and marketing their ongoing ones.

 

A housing-related recession will hit construction if builders commence widespread layoffs.

Additionally, a national headline recession may occur since a significant portion of all jobs are in the construction industry.

BUT as of now, we anticipate:

12% Increase in 2022

4.2% increase in 2023

 

4 factors that will keep property prices rising

 

Significantly insufficient supply

 

Supply is dropping

 

Because 90% of homeowners already have a mortgage, the supply from resales will continue to fall. Instead of selling, most people will choose to become landlords.

 

Strong unmet demand

 

Reluctant lending

 

There's no denying the evidence.

 

And…

 

However, there are some cities that are particularly vulnerable.

Up to 10% can be off in some cases. Then they'll get right back up again.

Very few will have a 20% decline (excluding seasonality).

Why? Inventories of homes in several cities are seriously swollen.

In the event of an accident...

 

Three federal interventions will cause the Fed to change course

• Cut or lower the rates used as a reference
• Revive RMBS QE
• Get back into mortgage forbearance

 

Saving home equity by settling debt is a win-win. And then housing prices will increase again.