What are your predictions for the housing bubble in 2024? Six months ago, "1) Global residential real estate (RRE): It’s a big fat ugly bubble.
2) U.S. RRE: It’s also a big fat ugly bubble; a microcosm of the global one. The U.S. central bank, the Fed, is doing stealth QE already. There are many components of liquidity and stimulus: RRP, BTFP, TGA, Fed acct. losses, GSEs, etc. In a normal world, asset bubbles always burst. The Fed is trying to prevent the collapse of “The Everything Bubble” that they purposefully inflated. If it bursts, then we have some amount of deflation and falling prices. Deflation is kryponite to the Fed. They want to steal your $ via inflation. We’ll see what wins out here. In any case, the outcome won’t be nice. U.S. commercial real estate (CRE), is currently a smoldering dumpster fire that everyone is ignoring. This should turn out OK. /s
3) Central banks are out of control and are, along with complicit governments, the direct cause of asset bubbles via easy (fiat) money.
4) Governments are swinging left and embracing Socialism and the globalist agenda.
5) The Great Reset involves continued wealth transfer from everyone else to the elite class. The end game here is CBDCs. Think 666 and you won’t be far wrong. The collapse of “The Everything Bubble,” ushers in the New World Order.
7) Of course I could be wrong (hope so). Have a nice day ?"

One year ago, "With inflation well above the Fed’s target level of 2%, it will continue raising interest rates into 2023 and beyond, while ignoring the crescendo swell of wailing and gnashing of teeth by Wall Street’s risk asset HODLers."

The Arizona Republic. "Higher mortgage rates put the brakes on metro Phoenix’s frenzied housing market in mid-2022, but rates started dipping in December. Last month’s sales pace was the third lowest for a November during the past two decades. There were only fewer home sales during the month in the housing crash years of 2007 and 2008. Market watchers think if 30-year mortgage rates drop between 6.5% and 6% that could be the sweet spot for homebuyers. 'The housing market will start back up in January,' said Tina Tamboer, senior housing analyst with The Cromford Report about metro Phoenix. 'Not only are buyers on the fence, but so are sellers who have low mortgage rates.'"

The San Gabriel Valley Tribune. "Let me make one prediction about California's housing market in 2024. The number of purchases will increase. Could sales go any lower after crashing into history's basement this year? The 259,100 pace of existing single-family home sales in 2023 broke the previous bottom of 290,500 in 2007 as that bubble burst into the Great Recession. Consider that 2023's homebuying crash was the result of a 42%, two-year drop in sales. The main culprit was the Federal Reserve, which rapidly boosted mortgage rates from historic lows to battle pesky inflation. And dare I mention that amid the homebuying's steep descent of 2005-07, California prices also rose 5%? That bubble-bursting era's price implosion of 50% came in 2008-09."

Hoodline in California. "The volatile housing market in the Bay Area continues to stir debate among experts, with Zillow projecting a steep decline in home values for San Jose over the next year, while local real estate agents maintain bullish expectations. The San Francisco Chronicle reports that Zillow sees the average home value in the San Jose metro area, which includes locales such as Palo Alto and San Benito County, to tumble from $1.46 million in November 2023 to $1.37 million by November 2024, predicting the most significant drop across the country's major metros at 6.1%."

"Meanwhile, San Francisco's real estate landscape doesn't look much rosier according to Zillow data, with average home values there falling 6.4% to $1,234,246 over the past year and houses going to pending in about 23 days, as shown by a Zillow listing."

The Dallas Morning News in Texas. "2023 was the worst year for the commercial property industry since the Great Recession, with debt costs doubling and lenders slamming the window on loans for many purchases and new construction. 'The tone in July was pretty optimistic,' said Andrew Alperstein, a real estate partner with PwC. 'By the time we got to September it had turned pretty pessimistic. I think it’s going to be an interesting early 2024.' The biggest price declines so far have been for D-FW office buildings. 'We expect asset prices to continue to slide into 2024 due to repricing due to the fastest rate hike in 40 years,' said Bill Kitchens, director of market analytics at CoStar Group. 'Office assets will lead price declines in Dallas-Fort Worth. We expect pricing to be down 13% from today to the end of 2024,' he said. 'From peak pricing in 2022 to the expected trough, we expect pricing to be down 24%.'"

From Fortune. "Sooner or later, commercial real estate’s day of reckoning had to come. Following an era of 'cheap money' that stretched all the way back to the 2008 housing crash and Great Financial Crisis, fueling an 'everything bubble' that coincided with an age of 'superstar cities' and their mega-valuable office buildings, the higher interest rates of 2023 were a shock. Research firm Capital Economics estimates a $590 billion loss in commercial real estate property values this year. But just how bad will things get in the new year? Capital Economics, for its part, predicts another $480 billion wipeout in commercial real estate values next year, and another $120 billion loss in 2025, for a 24% peak-to-trough value decline."

"'A lot of what’s going to drive next year is just continued maturities,' or debt coming due at a time when refinancing isn’t so cheap, said Kevin Fagan, head of commercial real estate analysis at Moody’s Analytics. 'It’s going to be a rough year for office next year…the maturities that are coming through, we’re seeing about 75% of them are going to be in trouble,' Fagan said. He said they will likely have low revenue (in the form of rents) relative to their loan amount, among other factors that lenders find undesirable, and will be hard to refinance for borrowers without putting a lot more equity in. 'It’s going to be a pretty bloody headline year,' Fagan said."

Yale Insights. "'We’ve had a change, perhaps a permanent change, in the usage of space,' said Yale SOM’s Andrew Metrick. Swipe card data show about half as many people coming into offices as pre-pandemic. 'There ain’t no way we’re going to keep the same amount of commercial real estate if that stays steady,' he explained, adding that estimates have office building valuations down about 30%. With the failures of Signature Bank and First Republic Bank following Silicon Valley Bank’s collapse, according to all the technical definitions, we had a banking crisis in 2023. It wasn’t terrible as crises go, but 'it happened outside of a recession, which is really, really rare,' Metrick said. The driver wasn’t banks’ credit losses, but the runup in interest rates as the Federal Reserve tried to end inflation. 'In the United States, we’ve never had interest rates go from zero to 5%,' he added. 'We’ve had larger increases in interest rates, but they were starting with a higher base.'"

"'Historically, for every one percentage point increase in the policy rate from the Fed, banks take 1% hits to their capital over the next eight quarters,' Metrick said. That’s a tradeoff policy makers are willing to make to cool the economy, but 'if banks lose 5% of their capital, there are going to be a lot of banks in trouble,' he warned. Awareness of the past pattern has banks nervous. As a result, they will be cautious lending to the owners of commercial real estate while interest rates stay high and, Metrick explained, 'we have this structural adjustment that we pretty much know is coming.'"

The Toronto Sun in Canada. "How many of us are counting down the days until we can turn a new page and leave 2023 in the past? This year has been a rollercoaster – and not the fun kind. But as the year winds down it feels like there may be some cautious optimism out there, particularly in the real estate market, an arena still recovering from the bends of the high highs and low lows served up though the pandemic to today.Already we have narratives being spun that we are about to witness the market ignite once again. The central assumption seeming to be that while these elevated rates have been horrendous for affordability, the real problem has been consumer confidence in a falling market."

"Even if one could comfortably swing the payment on a prospective property, the idea that they could be catching a falling knife with a market in free fall doesn’t do much to motivate a buyer. Instead, the boosters insist, the bottom is in – smart to get out there before competition returns and prices shoot up again. I don’t like making predictions, particularly in a format that may well exist on the interwebs in perpetuity. Too much is at play. And these past 18-months have shown us exactly what the stakes are. 2024 be kind."

Business Insider. "China's economy has yet to fully bounce back from its stringent lockdowns of the pandemic. And according to the Conference Board's China Center for Economics and Business, the growth struggle will continue into 2024. What looked like a demand-fueled rebound in the first quarter of 2023 later fizzled as indebted real estate giants like Evergrande and Country Garden flailed, aging demographics and soaring youth unemployment weakened the labor market, and the country tipped into deflation."

"'The downturn is structural, and likely to be permanent,' the Conference Board said. 'Chinese households have lost confidence in property as a channel for wealth accumulation. It is hard to predict when the sector will stabilize; but, when it does, it won't go back to being such a key growth driver as in previous decades.'"