Housing Predictions: Guesses and the Data

The two financial stocks Karen Firestone favors coming out of earnings

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by Calculated Risk on 11/18/2021 12:08:00 PM

Today, in the Real Estate Newsletter: Housing Predictions: Guesses and the Data

Excerpt:

Currently my view is house prices seem too high, but lending has been reasonably solid, and there are some fundamental reasons for the high house prices (See: The Housing Conundrum)

If inventory stays low, then house prices will continue to rise fairly quickly (although it appears house price growth is slowing). Double digit house price increases aren’t sustainable, so the question I’m asking now is: What will cause inventories to increase?

I’m considering three possibilities: 1) mortgage rates rise fairly quickly, slowing demand, 2) economic problems in China spillover into the US, and 3) unregulated areas of finance cause economic problems.
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This is something I mentioned on my blog in 2013:

Each new generation of Wall Street wizards figures out a new way to turn lead into gold, and to become wealthy while damaging the financial system. Some of these wizards are probably perfecting their financial alchemy right now.

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The most likely cause of higher home inventories will be higher mortgage rates, but unregulated areas of finance are always a concern and something I’ll be watching.

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