Why 'the next big shoe to drop' in the U.S. economy could hit by July

[marmar]

(MarketWatch) The last time a housing bubble popped in the United States, it took four years to play out. But things are moving fast during this pandemic — just look at the record-breaking action in the stock market — and if Wolf Richter has it right, pent-up supply could soon ravage home prices.

He used this chart to show how the typically red-hot Bay Area housing market, including Marin, Sonoma, Napa and Solano counties, has been grinding to a halt.



“This is supposed to be the spring selling season, and new listings are supposed to surge,” Richter explained in a post. “But sellers aren’t interested in having potentially infected people traipsing through their home; and they know that buyers are woefully absent, and it doesn’t make that much sense to list the home because previously listed homes are still languishing on the market.”

Here’s a chart of what the trend typically looks like vs. the current reality:



According to Thomas Stone, a Sonoma Country realtor quoted on the Wolf Street blog, there’s a very rough road ahead in the housing sector due to falling appraisals, a trickier loan market and a glut of vacation rentals that owners need to shed.

“The next big shoe to drop will be when appraisers call a declining market, probably in August but perhaps as early as July,” he said. “And this bleeds into the difficulties of getting a mortgage.” ..........(more)

https://www.marketwatch.com/story/why-the-next-big-shoe-to-drop-in-the-us-economy-could-hit-by-july-2020-05-13?mod=home-page

[Warpy]

1. Big Dummy's money printing press

will lead to runaway inflation, also, so fewer people are going to be able to save for a down payment. Lucky ones will inherit it late in life, but the rest will be on that "creative mortgage" treadmill of paying for 5 years until balloon payments kick in, then putting up more earnest money so they can renegotiate and pay for another five years and so on--just the way it was before the FHA.