Thread by @Tryng2lookahead

Important for industry experts to provide housing forecasts to the decimal for current year. However, I think these forecasts will be more helpful for individuals making housing decisions:
1) Selection & prices will be better over the next 2 yrs than it is now. Better to wait.

2) It will be cheaper to rent than own for most markets for the next 5-10 yrs.
3) It's not too late to sell & capture equity before it's lost.
4) Hottest pandemic markets likely to see home prices drop 40+% from peak, most others 10%-20%.
5) No boom following this bust.

6) Home prices will still be lower in 5 years, than they are today & there's a meaningful risk that they'll be below their peaks 10 years from now.

Basis of forecast: Housing demand was turbocharged by 2.5% rates, massive fiscal stimulus, surge in household formation & explosion of newby real estate investors; which led to #FOMO driven bidding wars, pulling forward several yrs. of demand. Reversal of these popped the bubble.

Size/extent of bubble (least affordable in history) mean correction won't be mild. Fed being wrong on inflation led them to hike too long. It's already too late for any pause to save housing. Powell determined to kill inflation, so rate cuts will be reluctant and late.

Leading indicators signal recession this yr. Given the reversal in liquidity & rates means it's likely to be severe. Peak asset prices set with 0% rates & too many businesses need free money to survive. Even successful companies over hired. This was an everything bubble.

Massive stimulus & 13 yrs of free money mean inertia and lagging impact continue to prop up activity. Many still buying homes because they're frustrated that they missed bubbly profits & are anxious to buy the first dip. They missed their chance, and are missing the big picture.

Divided congress means there is a near zero chance any bailout or stimulus will be passed, as in recent recessions. Fed tightening well past peak growth & inflation, just like 1981. This will be first recession w/both of those conditions in place since severe '81-'82 recession.

Working age population growth terrible going forward, so large sales from disappointed newby landlords, 2nd homeowners and boomers will not find buyers. Add risk of massive job loss from AI, and U.S. could have a lost decade or more.

We sold our home April-22 & plan to rent until after market turns. I don't claim to have a crystal ball, but the risk/reward is clearly negative. My judgement is that it's better to miss first yr. of uptrend if I'm wrong, than suffer large losses over next 10 yrs. if I'm right.

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