- The U.S. housing market is collapsing as the Fed’s rapid rate hikes make mortgage costs skyrocket.
- Home sales have been declining for eight months, and prices are falling. But economists say worse is coming.
- Jeremy Siegel, Paul Krugman, and five other top experts describe how painful things can get.
Alarm bells have already been sounded for U.S. homeowners as soaring mortgage rates scare homebuyers and the downturn in the U.S. housing market is only getting worse.
The signs of stress have become blatant.Recent data indicates that second-hand home sales in September 24% reduction — It is the eighth straight month of decline and the longest decline since 2007. start to get depressedand the number of New home listings decreased by 22%.
Behind the deteriorating housing market is the Federal Reserve, which is aggressively raising interest rates to combat 40 years of high inflation.sent Mortgage rates hit 20-year highs.
Here are the top 7 experts warning about what happens next.
Wharton University Professor Jeremy Siegel
“We expect home prices to fall 10% to 15%, and the price decline is accelerating,” Siegel told CNBC. recent interviewnote that house prices by all indicators are falling.
and Another interview with CNBC,He said. [and] For housing market stocks. “
Moody’s Analytics Chief Economist Mark Zandy said:
“Buckle in. Assuming interest rates stay near their current 6.5% and the economy avoids a recession, home prices across the country will fall almost 10% from peak to trough,” he said. said in a recent tweet“Most of these declines will happen sooner or later. If we had a typical recession, house prices would drop by 20%.”
of recent housing reporthe said: “The housing market is the most rate-sensitive sector in the economy. It is at the forefront of the impact from the Fed’s efforts to bring down inflation.”
“The housing market is going to slump from coast to coast. It’s going to be brutal. No part of the market will be spared.”
David Rosenberg, Veteran Economist, Chief of Rosenberg Research
“We have a massive housing bubble right now. Most of the household balance sheet is residential real estate, which is equities.” In an interview with RealVision, Rosenberg said: Released this week.
Economists pointed to the Fed’s tightening efforts to bring inflation down to its 2% target from the recent 8-9%.
“They want the stock market to go down. They want the house prices to go down. We are about to reach inflation.We need asset deflation, 100%.”
Nobel Prize-winning economist Paul Krugman
Veteran economists agree a deep recession is coming, but expect it will be some time before higher interest rates really have an impact on house prices and demand.
“The Federal Reserve rate hike has led to a significant drop in building permit applications. But construction employment has not yet started to decline. “Because we are busy finishing the finished housing,” he said. I said in a recent comment.
“And the broader economic impact of the upcoming housing recession is still months away,” he said.
Ian Shepherdson, Chief Economist, Pantheon Macroeconomics
Shepardson believes the sharp decline in home sales hasn’t bottomed out yet.
The strategist said, “We expect a 15-20% decline next year to restore the pre-COVID price-to-income ratio.” I said in my note last week.
“In short, housing is plummeting. So far, most of the hit has been in sales volumes, but prices are also down and there’s a long way to go.”
Don Peebles, Real Estate Developer, Peebles Corp. CEO
“I think the housing market is headed for recession. told Fox News last week.
“I’m looking at this as if this freight train is spinning out of control. It’s speeding up and speeding up with low interest rates. No one is going to slow it down or hit the brakes.” I didn’t do it. Now all of a sudden it will come. It crashed into the station.”
Chen Zhao, Head of Economic Research at Real Estate Broker Redfin
‘The housing market will get worse before it gets better,’ said Chao Last week, along with the report, I said We found that 22% of homes for sale had a price drop in September.
“With inflation still rampant, the Federal Reserve is likely to continue to raise rates, which means high mortgage rates, the main killer of housing demand, are unlikely to fall through early to mid-2023. maybe not.”