re: Wall Street: Housing market to see 2nd biggest home price decline since Great Depression

There ultimately has to be a correction. Even large investment funds are facing a significantly higher cost of capital which materially hurts returns on buying up these assets, and obviously traditional single-family buyers are seeing their buying power decrease significantly.

ETA: even a cursory glance of Zillow shows pretty broad price decreases (marginal at this point) vs original list price and houses staying on the market for a week or more, which was unheard of here 6 months ago.

Another indicator that things are dicey in the housing market is that local realtors are doing a bunch more interviews in the local business news talking about the strength of the market. They didn’t need to do that last year.

Where is Paul Allen?

He said prices were going to go up because of lack if supply

You can’t have rising interest rates and inflation and expect housing prices to keep rising when they are at all time highs.

It’s economics 101

Im sure when there was zero foreclosures they are up 30% now

If you are in default and have equity thats your fault if you dont want to find the solution


But this is a lot of fearmongering

I bought back in August 2020. Wasn’t the best financial decision at the time, but probably will pay off big long term if I can keep a steady job through this recession.

My home value is has gone up 75% since I built two years ago. If the market drops 25%-30% then so be it.

The WSJ should point out that the "reported foreclosure numbers" are actually highly inaccurate. The reason they are inaccurate is they are only counting Government owned RMBS not privately owned mortgages (i.e. Goldman Sachs, State of Louisiana Employees' Pension Fund, Wells Fargo, etc.). The numbers are mortgages that FHA, VA, USDA, Freddie/Fannie report that they are holding on to. The actual foreclosure numbers are typically double the reported numbers.

The bigger issue with the housing market is the non-bank lender & wholesale lender crash that is starting to take place. The Bond Markets have priced in interest rates dropping back down to the 4-5% range in 3-4 years. The average RMBS investor needs at least 7 years of servicing a loan to turn their first profit. If a consumer gets a new loan for a home today or refinances today at say 7% that means these private investors will take it in the short and curlies in 3-4 years so they are no longer buying.

This has caused the credit risk spreads to jump to such a level that the private sector are no longer purchasing loans right now. The non-bank lenders often sell their loans and if there are no buyers for their loans then they are forced to sit on those loans. They have no ancillary income to make up for loans to sit on their books which means their credit facilities will dry up and they will either be forced to sell at a firesale price or file for bankruptcy protection.

The same issue is going on with the wholesale lenders as the private money no longer wants to purchase any brokered loans which are now deemed to be even more risky. Almost everyone is exiting the wholesale market right now.

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Im sure when there was zero foreclosures they are up 30% now

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Yes the early months there were increases compaed to year over year but then the increases have continued for nearly a year now and are now increasing month over month. That's a trend no matter how you try to word it.

As I said, we are almost at 2019 levels despite tons of programs to help people avoid foreclosure and a super hot market.

A 30% inventory increase at the second largest default servicer in the USA in August is just the beginning according to people I know there. They are actually in panic mode internally because they are expecting a huge increase in 2023 and are not sure they can find enough subcontractors to handle the workload.

So are you predicting a housing meltdown like 08?

Cause nothing shows that to be happening

Not even close