Residential real estate is already massively overinflated and showing signs of a correction. And with existing home sales dropping for the ninth straight month, that correction could come sooner rather than later.
Mortgage rates are also on the rise, nearing seven percent, as of this writing. All of this and more points to a "large-scale housing slowdown." (Related: The commercial real estate market started showing cracks at the start of the Wuhan coronavirus [Covid-19] scamdemic.)
"Home prices are mostly too high to appeal to buyers, who are facing skyrocketing mortgage rates," reported Axios. "But sellers are loathe to lower asking prices. Sales are cratering – some folks are just walking away from deals."
Kieran Clancy, a senior U.S. economist at Pantheon Macroeconomics put it simply when stating:
"In one line: Collapse in prices is coming."
Home prices reached a peak in June, averaging around $414,000. Since that time, prices have been steadily dropping – though some sellers are refusing to budge as the market adjusts.
Having seen big dollar signs over the past several years, sellers still expect to receive sky-high prices for their homes. Buyers, however, are seeking lower prices as mortgage rates continue to rise.
Goldman Sachs shifts home price forecast from flat to down
Earlier in the year, analysts at banking giant Goldman Sachs forecasted that going into 2023 home prices would remain flat. They have since changed their estimation to price decreases of around four percent.
The company further noted that it expects "unsustainable levels of housing affordability to continue weighing on housing demand."
Up until very recently, many analysts scoffed at the idea that the American housing market would do anything other than continue to go up. They pointed to "persistently low inventories of houses to buy" as putting "a floor under the market."
It turns out they were wrong. And according to Axios, analysts are finally "coming around" to the idea that a "correction" is soon to come – though they still do not admit that an "outright bust" could happen.
"Unemployment remains low," the outlet reported. "And most homeowners who bought in recent years have locked in rock-bottom rates, making their payments affordable."
"That means a surge in defaults – like the one that crashed the U.S. housing market in 2008 and 2009 – is unlikely, economists say."
In short, the newest admission from economists is that home prices will, in fact, decline at some point, contrary to what they were claiming earlier this year. They still insist "it won't be a disaster," though.
"And lower prices will be welcomed by frustrated, would-be buyers," they also say.
The progression of this ever-changing narrative is similar to the one surrounding the energy crisis, which was initially said to not be that big of a deal. Now, though, countries like Germany and France are gearing up to lose power and heat, and warning their people to prepare accordingly.
"This economic debacle is still getting started," is how one commenter on a story put it.
"I hope BlackRock lose their shirts," wrote another, BlackRock being a heavy speculative investor into real estate and one of the major driving factors behind home inflation.
Another wrote that the U.S. needs to immediately ban all foreign and corporate ownership of residential homes. This move alone would make housing prices fair and affordable for people as opposed to housing having become just another "stock" to be traded in these endless boom-and-bust cycles of greed and financial corruption.
"Supply and demand will stabilize and we'll see the true prices of residential property," this person added. "Homes shouldn't be subject to market speculation. This is an area where unchecked capitalism damages the American people."
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