The housing market is rolling over – and it will get worse as mortgage rates and house price inflation continue to rise.
Of course, you're not seeing or hearing about this out in the media... yet. That's because, initially, these events will make little difference to the now-booming U.S. economy. Housing stopped being a major economic driver after the last bubble collapsed.
But make no mistake: It will matter, big time.
I've got some charts that will show you what it's going to look like this time, why it's happening, and, most importantly, how you can make some money (think John Paulson or Michael Burry of The Big Short fame) when the brewing crisis explodes...
The Impact of This Crash Will Be Tragically Familiar
Millions of mortgages will be under water – again. Homeowners will walk away or be foreclosed – again. Losses will ripple through the financial system and the markets – again.
And with the financial system in crisis once more, taxpayers – you and me – will be forced, again, to pay for the bailouts of Fannie Mae and Freddie Mac because this time, we own 'em.
Urgent: This catastrophe could bring the U.S. economy to its knees – and make the Great Recession seem like a day at the beach. Read more…
Another housing collapse would induce the Fed to reverse its current tightening policy, but that's still months away. They'll continue to turn the screws until well after this new crisis becomes apparent.
You can take that to the bank: Jerome Powell affirmed as much at his press conference when he said the Fed wouldn't lower interest rates until there's a sustained financial decline.
Besides, we should all remember, and remember well, just how long it took Ben Bernanke to even acknowledge there was a problem.
By now, you're thinking, "So, how long do we have?!"
That's hard to say for certain. I think maybe a year or so at the outside. But we do have an important clue:
Transaction volume seizes up prior to price decline.
The rollover in sales volume is just starting. In the last crash, sales plunged for a year before prices broke down. Sellers may respond more quickly this time, the market having been through this in all-too-recent memory.
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Here's what we know now...
The National Association of Realtors' Data Holds Clues...
About the Author
Financial Analyst, 50-year charting expert, finance + real estate pro, and market analyst; published and edited the Wall Street Examiner since 2000.
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