Housing market correction is structurally necessary
The guest argued that a 10% to 20% correction in home prices is required to restore affordability, despite political desires to keep prices inflated.
The argument
The guest noted that national home price growth has flatlined and homebuilders are already dropping prices and subsidizing mortgages to move inventory. He argues that politicians cannot control the long end of the yield curve to prevent this normalization.
The thesis, stress-tested
✓ What validates it
- ✓National home price indices showing consecutive monthly declines
- ✓An increase in existing home inventory and longer days-on-market metrics
▸ Risks discussed
- ▸Severe supply shortages in blue states could keep local prices artificially elevated
- ▸Aggressive mortgage rate subsidies by builders could delay price discovery
Hear it yourself
"You know, ultimately, we need to get home prices to come down 10 to 20% and that will fix affordability. You can drop interest rates, but, again, I don't think the Fed or Fannie Mae and Freddie Mac really can control the long end of the yield curve."
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