The biggest interest rate shock in several decades ought to challenge the Real Estate outlook. Since housing famously is the business cycle, what is the 2023 outlook for US housing?
Fascinating analysis. From a u S standpoint, there are so many relatively unique cross currents I think your logical conclusion has less heft than it would in the past. Why? A couple of things. One would be a Neil Howe type demographic view. Baby boom generation increasing in retirement or “empty nest “ status has very different reaction to this than before due to Covid and quite importantly collapse quality of life in quite a few urban centers. A significant majority of people who would previously have moved “in to the city” simply would not do that any longer. Too many urban cores have lost dining and entertainment vitality and shopping vitality as they just are unsafe with no prospect of improving. Chicago, Minneapolis, Baltimore and on and on. Thus quite a bit of suburban supply in mature cities just doesn’t come on the market. Higher end condos suffer price pressure due to lack of demand but of course if “nothing trades”….do we really see these declines? Those who willingly move in to cities are young and at lower price points as often unmarried or very early in career. As they get a little older and in to family formation, desperately poor public schools make that urban living less affordable as the only potion, private education, is incredibly expensive. All of these things and more are nuanced which makes me believe that outright general residential real estate conditions are nearly impossible to generalize. We will all learn together in 2023.
Lastly, do not lose sight of likelihood of U S government to intervene and preclude the type of wide spread foreclosure situation you innumerate. No guarantees but seems like the way the political wind blows in U S.
Interesting points but looking at the US housing market on a relative basis isn’t it one of the stronger markets? Isn’t there a case to be made that other economies will crack first and harder - e.g Canada and Europe - which drive a central bank pivot before the US market reaches any distressed state?
Regional of course and areas like Florida have different drivers like retirees. That said the market was over-heated and is adjusting rapidly starting approx. three months ago IMO.
I am left thinking dynamic (i.e. computerd driven and made) pricing is responsible for much of the recent price booming and the reality of supply and demand doesn’t matter. Most people do not understand this stuff and do as told/have to to achieve their aims. They do not agree finance thinking about the possibility of delinquency.
Fascinating analysis. From a u S standpoint, there are so many relatively unique cross currents I think your logical conclusion has less heft than it would in the past. Why? A couple of things. One would be a Neil Howe type demographic view. Baby boom generation increasing in retirement or “empty nest “ status has very different reaction to this than before due to Covid and quite importantly collapse quality of life in quite a few urban centers. A significant majority of people who would previously have moved “in to the city” simply would not do that any longer. Too many urban cores have lost dining and entertainment vitality and shopping vitality as they just are unsafe with no prospect of improving. Chicago, Minneapolis, Baltimore and on and on. Thus quite a bit of suburban supply in mature cities just doesn’t come on the market. Higher end condos suffer price pressure due to lack of demand but of course if “nothing trades”….do we really see these declines? Those who willingly move in to cities are young and at lower price points as often unmarried or very early in career. As they get a little older and in to family formation, desperately poor public schools make that urban living less affordable as the only potion, private education, is incredibly expensive. All of these things and more are nuanced which makes me believe that outright general residential real estate conditions are nearly impossible to generalize. We will all learn together in 2023.
Lastly, do not lose sight of likelihood of U S government to intervene and preclude the type of wide spread foreclosure situation you innumerate. No guarantees but seems like the way the political wind blows in U S.
Interesting points but looking at the US housing market on a relative basis isn’t it one of the stronger markets? Isn’t there a case to be made that other economies will crack first and harder - e.g Canada and Europe - which drive a central bank pivot before the US market reaches any distressed state?
Very well said.
Regional of course and areas like Florida have different drivers like retirees. That said the market was over-heated and is adjusting rapidly starting approx. three months ago IMO.
Good morning Andreas
I am left thinking dynamic (i.e. computerd driven and made) pricing is responsible for much of the recent price booming and the reality of supply and demand doesn’t matter. Most people do not understand this stuff and do as told/have to to achieve their aims. They do not agree finance thinking about the possibility of delinquency.
Kind regards
Michael