"How do you make housing affordable? If you have to raise interest rates, the prices have to come down. So something will crack," Terry said on the podcast, Newsweek reported. "I think we're going to have a Black Swan event going to come here probably in the next six to eight months. Some sort of Black Swan something."
To say the Federal Reserve wants a "crash" isn't entirely accurate, however. The Fed has been trying to balance its rate hikes while steering the U.S. economy toward a "soft landing" — in other words, curb inflation without causing a deep recession. Last year, Fed Chairman Jerome Powell also said the U.S. housing market would likely need to go through a "difficult correction" before achieving "better balance" in prices and affordability.
There could be more pain coming. After the Fed took a pause from its streak of rate increases in June, it announced in July a 0.25% hike to its benchmark lending rate from 5.24% to 5.5%, the highest it has been since 2001. Last month, Powell signaled the Fed may not be done raising its rate with wide swaths of the economy still running too hot.
and First Republic. When sizing up those banks' total assets, adjusted for inflation, they were larger than the 25 that failed in 2008, the New York Times reported.However, housing experts have consistently been saying a 2008-like crash is not imminent — that a nationwide housing shortage is what has kept home prices high, despite elevated interest rates.
"That came about due to population and job growth that outpaced new-home construction," Yun told Newsweek. "Then, the shortage worsened during the first year of the COVID-19 real estate boom as many desired to take advantage of the historically low interest rates. The shortage intensified when mortgage rates shot up due to homeowners who have been unwilling to list and give away their locked-in low rates.
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Source: Newsweek - 🏆 468. / 52 Read more »