Experts Say That Home Prices In The US Are In A Huge Bubble And That People Should Get Ready For A Hard Free Fall

Alarm bells are already sounding for American homeowners as rising mortgage rates frighten away potential purchasers. According to experts, the housing market recession in the US will only get worse. The effects of stress are now obvious. According to recent data, existing house sales decreased 24% in September, marking the longest reduction since 2007. This loss has now occurred for eight consecutive months.

Starts for new homes dropped, and there were a 22% decrease in new house listings. The Federal Reserve, which is rapidly hiking interest rates to combat 40-year high inflation, is to blame for the failing housing market. Mortgage rates have now reached 20-year highs as a result of this.

Because of this, purchasing a home has become more expensive, which has caused purchasers to pull back — mortgage applications are at their lowest level since 1997. Demand has decreased in the meanwhile due to mounting worries about an impending recession.

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Here’s What 7 Top Experts Are Warning About What Happens Next.

Jeremy Siegel, Wharton Professor Of Finance

In a recent interview with CNBC, Siegel stated, “I predict house prices to fall 10% to 15%, and the housing prices are accelerating on the negative.” Siegel noted that housing prices are declining according to all available data. He stated in a different interview with CNBC: “Over the next 12 months, I believe we will experience the second-largest decrease in property prices since the post-World War II era. That has a huge impact on equity in the property market as well as wealth.”

Mark Zandi, Chief Economist At Moody’s Analytics

“Strap in. National housing values will decline by approximately 10% from peak to trough if rates stay close to their current 6.5% level and the economy avoids recession “In a recent tweet, he added. “The majority of those decreases will occur sooner as opposed to later. Additionally, a typical recession will result in a 20% drop in housing prices.”

He stated in a current housing report: “The area of the economy most affected by interest rates is the housing market. It is directly affected by the effects of the Fed’s efforts to reduce inflation.” “The housing market will experience a nationwide decline. It’s going to hurt like hell. The market as a whole is not immune.”

David Rosenberg, Veteran Economist And Rosenberg Research chief

“Right now, there is a significant housing bubble. The majority of the household balance sheet is made up of residential real estate and stocks “In a RealVision interview that was published this week, Rosenberg remarked.

The analyst cited the Fed’s efforts to tighten monetary policy in order to reduce inflation from its current rates of 8–9% to its aim of 2%. “They desire a decline in the stock market. They want the cost of homes to decrease. Why? Because without a current phase of asset deflation, they have no chance in hell of reaching their 2% holy grail consumer inflation. It is absolutely required.”

Paul Krugman, Nobel Prize-Winning Economist

The seasoned economist predicts a catastrophic decline, but he believes it will take some time for rising interest rates to have a significant impact on property prices and demand. “The Fed’s rate increases have in fact caused a significant decrease in building permit requests.

However, the employment in the building industry hasn’t even started to decrease, perhaps because many workers are still occupied finishing homes began when interest rates were lower “In a recent comment article, he noted. Furthermore, he added, “the broader economic implications of the impending housing recession are still many months away.”

Ian Shepherdson, Chief Economist At Pantheon Macroeconomics

Shepherdson thinks that even buyers who lower their goals to less expensive homes will still have to make larger mortgage payments because the precipitous decline in home sales hasn’t yet reached its bottom.

To get back to the pre-COVID price-to-income ratio, the strategist predicted a decline of 15 to 20 percent over the coming year. “In other words, the housing market is in freefall. Sales volumes have taken the brunt of the damage so far, but prices are also decreasing now, and they still have a long way to go.”

Don Peebles, Real Estate Developer, And Peebles Corp. CEO

“I believe that a home market recession is imminent. Price reductions are coming; in fact, they have already started “Last week, Peebles spoke to Fox News. “I see it as though a freight train is going out of control because to low interest rates, and no one is looking to start slowing it down or applying the brakes. And now it’s going to suddenly crash into the station “said he.

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Chen Zhao, economics Research Lead At Real Estate Brokerage Redfin

Along with a survey that revealed a record 22% of properties for sale experienced a price reduction in September, Chao remarked last week that “the housing market is going to become worse before it gets better.” “The Federal Reserve will likely continue raising interest rates as long as inflation is still out of control. This suggests that the key inhibitor of house demand, high mortgage rates, may not start to drop until early to mid-2023.”

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