Excellent piece. Well researched. Easy to understand for the reader.
Q: as the most highly capitalized by value asset class in the US ( by a factor of xxx), a general slowdown would be welcome for the Fed & new buyers.
To what extent does a sticky > 4% through ‘23-24 along w/ an extended slowdown ( recession) play into homeowner psychology insofar as they are having difficulties today w/ lower real wage growth &, persistently high food, energy, oil prices?
Another way to ask is when it’s clear economy is landing hard &, the FED has failed in threading that needle, how much shit do you expect to hit the fan when property markets slows considerably (as stocks - that usually lead the way 1st- by then -year end ‘22 will have lost 30-40% from their Dec ‘21 highs) ?
From a consumer perspective, the refinancing boom is over and with it the ability to treat homes as ATM machines to withdraw equity. We also have a situation where mobility is likely to be reduced in the future even if home prices do not decline because people will not want to give up their low fixed rate mortgages. Of course, if home prices actually decline, people will start to have negative equity further decreasing mobility and potentially prompting foreclosures if there's a recession and unemployment goes up.
I'm not very good at predicting the macro environment and my attitude with respect to title insurers is that they are likely to get punished with bad housing headlines and perhaps they will be punished unfairly. I don't think that most people understand this industry and could assume exposure to risks don't exist. That can lead title insurers to sell under tangible book value and potentially provide opportunities for investors. That was the case in the aftermath of the housing bubble/financial crisis, as I'll discuss in the next article.
Thanks. Would be interesting.
Excellent piece. Well researched. Easy to understand for the reader.
Q: as the most highly capitalized by value asset class in the US ( by a factor of xxx), a general slowdown would be welcome for the Fed & new buyers.
To what extent does a sticky > 4% through ‘23-24 along w/ an extended slowdown ( recession) play into homeowner psychology insofar as they are having difficulties today w/ lower real wage growth &, persistently high food, energy, oil prices?
Another way to ask is when it’s clear economy is landing hard &, the FED has failed in threading that needle, how much shit do you expect to hit the fan when property markets slows considerably (as stocks - that usually lead the way 1st- by then -year end ‘22 will have lost 30-40% from their Dec ‘21 highs) ?
From a consumer perspective, the refinancing boom is over and with it the ability to treat homes as ATM machines to withdraw equity. We also have a situation where mobility is likely to be reduced in the future even if home prices do not decline because people will not want to give up their low fixed rate mortgages. Of course, if home prices actually decline, people will start to have negative equity further decreasing mobility and potentially prompting foreclosures if there's a recession and unemployment goes up.
I'm not very good at predicting the macro environment and my attitude with respect to title insurers is that they are likely to get punished with bad housing headlines and perhaps they will be punished unfairly. I don't think that most people understand this industry and could assume exposure to risks don't exist. That can lead title insurers to sell under tangible book value and potentially provide opportunities for investors. That was the case in the aftermath of the housing bubble/financial crisis, as I'll discuss in the next article.