ST. LOUIS ― Recent movements in several housing indicators, including mortgage rates, existing home sales, real house prices and the momentum of residential investment, could suggest another housing downturn may be on the horizon. William Emmons, assistant vice president, and chief economist of the St. Louis Fed's Center for Household Financial Stability looks into the possibility that current housing market signals may mean a broader economic downturn in 2019 or 2020.
The Fed wants a slow housing adjustment, as slow as the bubble developed in the past few years. Unfortunately, the fed has little choice, rates will likely rise above 3% and the housing market will crash.
But it does not single a major recession, it signals a small dip. We are having a debt recession, too much of it drives up rates, and the Fed will be part of a sharp contraction if history is any guide. Here is California it is a big deal, housing collapses. Home sales are the exit strategy for many of the boomers, and they are getting trapped as home sales keep falling YoY.
Cun California go bust without taking down the whole economy? No, California is just too big. It is Gavin, not Trump who delivers the recession, and he is well on his way to doing so.
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