A blazing hot Boston condo for sale market appears to be cooling off with sellers slashing prices and sparking signs of uncertainty about the future of the nations housing market. NBC’s Emilie Ikeda reports for TODAY on what’s behind the drop in prices.
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Well, yeah, if you consider a 50% decline to be “moderate”!!!
The Wall Street Journal recently interviewed Kenneth Heebner, who since 1994 has managed the $1.2 billion CGM Realty Fund (apparently, a very successful mutual fund).
What does he think about real estate and housing prices?
WSJ: How is the housing market?
Mr. Heebner: A significant decline in prices is coming. A huge buildup of inventories is taking place, and then we’re going to see a major [retrenchment] in hot markets in California, Arizona, Florida and up the East Coast. These markets could fall 50% from their peaks.
WSJ: What has you so concerned?
Mr. Heebner: I’m worried that more people will default on their mortgages. Risky mortgages such as interest-only and pay-option adjustable-rate mortgages require no principal amortization and in some cases payment of only a fraction of the interest due, have been widely used in the last two years. Some people got 100% financing for their homes …
… As housing prices fall more people will be under water, and these people are just going to walk away from their homes. They are going to say, ‘I’m outta here.’ You’re going to see increasing foreclosures over the next several years …
This guy has a lot of opinions, some pretty cracked, so measure his words cautiously.
“The economy only turns down when the Federal Reserve takes aggressive action to cause a downturn.”
Hmm. Well, yeah, that’s probably true, if you discount periods of war, famine, pestilence, or high gas prices, for that matter.
Those cause downturns, too.
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Updated: January 2018