New Year 2023 Real Estate Warning

Nothing Looks Good for the U.S. Market

We are now in the 10th to 11th full month of declines in the U.S. R.E. Market. From housing starts, to mortgage loan applications…all the way to reductions in unit sales. If you have been following the news at all, much of this problem has been initiated and perpetuated by the Federal Reserve’s constant rate hikes. Up until now, we have only seen approximately a 20% drop in home prices compared to about March of last year, but I predict this will get much worse. New home — existing home sales and interest rates are intricately entwined together. When there is a problem with one (e.g., high mortgage rates), the other follows suit. The higher the rates go, the more it cuts off the flow of applications to purchase or sell homes. Eventually, and with the Fed Chairman’s recent comments to continue his nonsense, the R.E. Market is going to fail. It will just plain collapse, very similar to what happened in 2008–09. Jerome Powell is concerned with slowing inflation and economic growth, but cares little about the folks in Real Estate that must suffer in the process. In my humble opinion, he is both right and wrong at the same time.

You see, the president you elected has determined that a Monetarist theory of fixing the broken economy…coupled with a Keynesian approach is what is needed to stop inflation. There are other ways of…