2016 Harvard article about housing cycle is quite accurate

https://extension.harvard.edu/blog/how-to-use-real-estate-trends-to-predict-the-next-housing-bubble/

“The increases in prices throughout the broader economy that accompanied the expansion and hyper-supply phase will, sooner or later, force the Federal Reserve to fight inflation by increasing interest rates.”

The builders are always late and this time is no different. The new 1.5 million home starts in 2021 means completions in 2022, so there will be a lot more supply going into 2022 including foreclosures which were previously suspended. Paired with much higher interest rates, the pool of buyers could shrink dramatically relative to supply if rates were to continue surging over 5 or 6 percent by the end of 2022. The surge of buyers in 2020-2021 that were able to buy due to historically low interest rates are currently very levered up (especially investors) and any slight dip in real estate prices would put a lot of them underwater. The effect and magnitude of these events on real estate prices will never be accurately forecasted consistently but the market conditions have changed quickly and the risks of downside is real and higher than average for the next few years.

submitted by /u/tylor262
[link] [comments]

https://extension.harvard.edu/blog/how-to-use-real-estate-trends-to-predict-the-next-housing-bubble/ “The increases in prices throughout the broader economy that accompanied the expansion and hyper-supply phase will, sooner or later, force the Federal Reserve to fight inflation by increasing interest rates.” The builders are always late and this time is no different. The new 1.5 million home starts in 2021 means completions in 2022, so there will be a lot more supply going into 2022 including foreclosures which were previously suspended. Paired with much higher interest rates, the pool of buyers could shrink dramatically relative to supply if rates were to continue surging over 5 or 6 percent by the end of 2022. The surge of buyers in 2020-2021 that were able to buy due to historically low interest rates are currently very levered up (especially investors) and any slight dip in real estate prices would put a lot of them underwater. The effect and magnitude of these events on real estate prices will never be accurately forecasted consistently but the market conditions have changed quickly and the risks of downside is real and higher than average for the next few years. submitted by /u/tylor262 [link] [comments]

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