Real Estate and Retailers are taking a hit
Hi HODLers and Real Estate investors,
We have been talking about recession for months now and everyone agrees (except people selling you these assets) that Real Estate is in for a wild ride!
As reported by the Wall Street Journal:
Property sales were $39.4 billion in April, which was down 16% compared with the same month a year ago, according to MSCI Real Asset
Number of property sales are decreasing
The first step in a Real Estate market decline is a drop in the number of sales. After some time, sellers realize that they will not manage to sell at the high price they listed and will start lowering their prices.
On the buyer's side, as there are less buyers with big budget due to rising interest rates, intelligent ones will not be in a rush and will wait and become more picky. Time is working for them as prices should at worst stabilize and probably go down even more once sellers realize even lowering prices do not bring tons of offers!
Real Estate goes down, so what?
Well, for most people around this earth, their house is their biggest asset! Therefore, if they feel they have lost money/value on their house, consumers tend to be more cautious on their other purchases.
They you get into the vicious cycle of a recession! Less spending, less profits for companies, less hiring (some layoffs), less people employed, less spending....
Retailers are already feeling the lower consumer confidence...
Just this morning we had an update from Target (US Retailer) saying:
Target said inventory rose 43% in the most recent quarter as demand for outdoor furniture, small appliances and some electronics declined faster than expected and supply-chain snarls delayed the arrival of many goods past the ideal selling window.
I would love to have @scaredycat's take on the topic and to know how he plans to handle this downturn.
Stay safe out there,
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I see the Aussies are also getting hit big time with their real estate market because of the slight interest rate increase
Indeed, it is across the bird and especially in Anglo-saxon countries as they tend to have more mortgages on floating rates.
The hike has been very violent though… from 2% to 4-5% is a 100/150% increase.
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