Total housing inventory in 2007 peaked at over 4 million homes for sale.
Today, we’re down to about 1.5 million homes. We are also down year over year!
Big deal…right? Yes! Very big deal!
The 2007 peak was a full year before the 2008 housing meltdown.
In addition, the population of the U.S. was 40 million less (302 million vs. 342 million today).
My point?
Housing crashes are preceded by massive inventory spikes (see 2007), and we are not only not even close – we are actually trending down a bit.
Logan Mohtashami illuminated this today with this tweet. He also shared the chart below.
This info and chart are excellent ammunition to share with potential buyers concerned about the nonsense the crash bros are posting nonstop.
What Event Will Bring Rates Way Down?
Everyone hoping for lower rates is focused on the Fed (which can do little), the war in Iran, and inflation.
And fortunately, inflation is cooperating to some extent, as rates fell today in response to a cooler-than-expected wholesale inflation (PPI) report.
Renowned analyst David Rosenberg even went so far as to post this tweet, pointing out that annualized core inflation is now well below 2% and more than 1% lower than it was last year.
He further told “inflation-phobes” that they need to change their tune… This is very good news, as the bond market fears inflation more than anything else.
But – the process will be slow and choppy (rates will bounce up and down).
The war in Iran is the other big factor. When it ends, oil prices will likely plummet, and rates will follow.
BUT – I listened to Jim Rickards explain on Julia La Roche’s podcast today that the war is unlikely to end soon.
The reason? Iran needs to do very little to keep the Strait of Hormuz effectively shut down (“just blow up a ship every few days”), and the IRGC can endure enormous levels of pain without care for the greater population (he used the Iran/Iraq war as an example).
So what event will bring rates down? A good old-fashioned bubble pop! (Fostering a “flight to safety” into bonds, bringing rates way down.)
Analyst Ed Dowd boosted a video by Jay Martin that explains why it is so likely. Martin’s point: Housing didn’t break in 2008, it broke in 2006 when prices peaked.
We’re seeing the same thing with AI. The acceleration can’t continue. Dowd adds that the bubble is exacerbated by leverage (borrowing). Echoes of the housing crisis…
Here is Dowd’s tweet, boosting Martin’s video.
Trump likely understands and will do whatever he can to prop the markets through the midterms (see the Capital Gain Tax Cut proposal).
