US Housing Market is already showing cracks
Hi HODLers,
As expected, the rate hikes by the FED has already had a tremendous impact on worldwide housing market.
Investors are watching closely the US Housing Market as it has been so strong for the past 15 years.
I want to be clear, there is a very low chance of anything like the 2008 Housing Krach but this will still impact the economy / debt burden and the inflation in the US.
Average 30Y fixed Mortgage Rate
The monthly mortgage for an average US Home has increased by $300 per month! Making it unafordable for most US citizens.
Why am I talking about it? Well, because this is a direct impact of the FED policy. As long as they do not see inflation go down to 2-3%, they will keep this policy and the housing market will weaken.
These hikes also impacted risk-on assets such as stocks and cryptocurrencies. I am looking at this closely as I expect FED to pause their hikes when a recession might be in sight due to these economic shocks.
That is when I would like to deploy all of my capital.
Stay safe out there and... Be PATIENT!
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I wouldn’t say the risk is that low you’re basing the assumption that the housing market is set by US citizens when it’s more driven by large entities that do short term borrowing to acquire houses
They take short term debt to accwuire family housing and pocket the yeild from the rent for their LPs
As interest rates rise it makes the rental yeild less attractive due to all the operational costs
So these companies liquidate the homes to lower risk exposure pushing more supply onto the market
Also managing these position abs unrolling from them especially for illiquid assets at high volume isn’t easy in a higher interest rate environment
While unlikely the risk in this market is shooting up alarmingly
The housing market was bound to show cracks when it started pricing out some of the potential buyers. After all, prices have gone up and these people don't think they can afford them anymore. As that happens, there will just be less demand and the cracks will show.
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Tell me, are there any options for a non-US citizen to squeeze into one of these cracks?)
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You will own nothing and be happy about that. Well, they have to accomplish that somehow.
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