US housing market faces major correction
The guest argued that the US housing market is poised for a 35% to 50% correction over the long term, driven by oversupply, rising delinquencies, and institutional selling.
The argument
She pointed to rising FHA delinquencies, the expiration of forbearance programs by fall, and year-over-year price declines in over 50% of surveyed cities during the spring selling season. Additionally, she argued that institutional investors are now net sellers of inventory rather than acting as a market backstop.
The thesis, stress-tested
✓ What validates it
- ✓Foreclosure sales rise significantly in late 2024
- ✓FHA delinquency rates continue to tick upward through the fall
- ✓Year-over-year price declines expand to a larger percentage of metropolitan areas
▸ Risks discussed
- ▸Government intervention or new forbearance programs could artificially delay foreclosures
- ▸Seasonal demand trends could temporarily stabilize prices
Hear it yourself
"But I think what you're starting to see is under, the surface, there's a lot more distress that's bubbling. And you can see it in mortgage delinquencies. New thirty day delinquencies I've seen in my client books, just, started rising. And this is very odd, Julia. This is the season when you don't see that because you're getting those tax refunds, you're getting those bonus payouts. And so in reality, this is when we should be seeing delinquency go down. And, you know, the spring selling season is the critical season. Oh, is that right? The only thing that matters. Yeah."
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