Big Problems Ahead for Real Estate Investors!
That was the title of this tweet from Nick Gerli, a real estate guru on YouTube.
He said: “The 6-month US Treasury now yields…the same as Buying & Renting Out a House in America…Translation: Big Real Estate Investor selloff coming. Especially among Wall Street owners.”
And, in response to that I say… “Please God, bring the selloff soon!” 😊
Mortgage Rate Lockdowns
I would love to see investors dump their homes for several reasons: (1) they have been snapping up far too much inventory and pushing up prices for far too long; (2) their focus is largely on entry-level housing, hurting first-time buyers and those who can least afford higher prices the most; and (3) we still have inventory shortages in most markets – largely because of “MORTGAGE RATE LOCKDOWNS.”
Mortgage Rate Lockdowns are discussed at length in this short HousingWire podcast, where the guest explains what they are – the reluctance of sellers to list their homes because they do not want to give up their incredibly low interest rates.
This reluctance was spurred of course by the fastest increase in mortgage rates in history – of approximately 3% in less than a year.
The podcast guest believes that listings are down as much as 20% in some areas because of “mortgage rate lockdowns.”
He further states that the inventory buildups we are seeing in places like Phoenix and Boise are actually returning us to a “healthy” or more normal market (and not anything close to what we saw after 2008).
Waiting for the Market to Come Back…
Further exacerbating the inventory issue is the number of sellers who are waiting for the market to return to its feeding frenzy days of 2021 – which, as most professionals know, were an anomaly (meaning they will likely never return).
So, this is one more reason I would love to see investors sell off their real estate holdings.
There are several lessons here. 1. Things that seem like doom and gloom scenarios can often be blessings; 2. Things are never as bad as the blogosphere and the clickbaiters on social media might try to make us believe; and 3. There are so many contradictory opinions among the expert class (recession? No recession? Inventory out of control? Inventory shortages? Housing crash? Housing holding strong?) that it is clear still that nobody really has a clue what will happen in today’s unprecedented times.
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