Op-Ed: Jerome Powell’s Hollow Commercial Property Market Assurances

By DESMOND LACHMAN In March 2008, then Federal Reserve Chairman Ben Bernanke assured us that the sub-prime loan and housing market problems were not of systemic concern to the financial sector. Yet, in September 2008 Lehman Brothers failed in large part because of its leveraged exposure to subprime and housing market lending. Lehman’s failure in turn triggered a U.S. and world financial crisis that resulted in the 2008-2009 Great Economic Recession. Fast forward to today. Last Sunday, Fed Chair Jerome Powell gave a television interview to 60 Minutes on the monetary policy challenges that lay ahead. In that interview, he went out of his way to provide assurances similar to those of Ben Bernanke in 2008 about the stability of…

Direction Of Commercial Real Estate Market Unclear, But There Is A Glimmer Of Hope

By ERIN FLYNN JAY and KIMBERLEY HAAS As business models continue to change in the post-Covid economy, some market experts are predicting a commercial real estate crash while others are saying there could be a revival in investment opportunities. Desmond Lachman, an American Enterprise Institute senior fellow, recently wrote that high vacancy rates have already caused commercial property prices to decline. At the same time, property owners need to roll over around $500 billion in maturing loans at higher interest rates. Lachman said this spells trouble for the banking sector in general and the regional banks in particular. He predicted commercial real estate troubles could lead to the failure of 385 regional banks. “With as much as 18% of their…

AEI Predicts Housing Market Will Continue to Struggle Through 2023

By Scott Kimbler Watch for housing sales in 2023 to follow the same pattern from a decade ago. That’s the prediction of Ed Pinto, Director of the American Enterprise Institute’s Housing Center, during a recent data review. He and Assistant Director Tobias Peter used information from the final months of 2022 and into the first quarter of 2023 to preview the remainder of 2023 and perhaps even into 2024, given current market trends. Pinto pointed out that Agency Purchase Volume for the final month of 2022 was down 45 percent from the same month in 2021 and 51 percent down from the same month in 2020. “Based on Optimal Blue date,” Pinto said. “We expect purchase volume in early 2023…

Bleak Outlook For Housing Prices Predicted For All Of 2023

By SCOTT KIMBLER The director of the AEI Housing Center at the American Enterprise Institute painted a bleak picture for the rest of this year and all of 2023 earlier this month during a presentation and forecasting of home prices in the United States. AEI Senior Fellow and Director of the AEI Housing Center Edward Pinto pointed to some major factors colliding at once that will be harming market prices, appreciation of owned homes, and the consumer ability to buy or upgrade a home at all. Those factors are inflation, which is at a 40-year-high, the Fed Fund rate continuously being raised to cool inflation, a housing shortage, and employment repercussions of the pandemic. First, the volume of homes being…

Home Prices Are Cooling Faster In The West

Home price appreciation is leveling out on a national level, but zooming in on price points and regions reveals a more complex picture, according to new data from the AEI Housing Center. The center looked at how home price appreciation is changing, first by price tier and then by specific metros and geography. While June home price appreciation dropped to nearly zero month-over-month nationally, the story is completely different when analyzing these two metrics. In the first, the Center divided home sales into four price tiers based on their access to leverage. Doing so revealed that appreciation is slowing across all tiers, especially when it comes to the highest level. High-price tier homes were the first to show a negative…

Morning Roundup (1/25/2022)– Emerging Markets, Mortgage Scheme Victims Can Apply For Compensation

Good Morning! Today is Tuesday, January 25. President Biden was caught cursing about a Fox News reporter on a hot mic. Stocks continued a selloff at the opening bell this morning as investors worry over Fed policies and global politics. The Supreme Court will hear cases challenging affirmative action, focused on Harvard and the University of North Carolina. In mortgage and housing news… The Mortgage Note Reports Victims of Mortgage Ponzi Scheme Can Seek Compensation: People who were victimized by what investigators have called the biggest Ponzi scheme in New Hampshire history can apply for compensation. Big Cities Making A Comeback: More expensive, populated housing markets appeared on the quarterly Wall Street Journal/Realtor.com® Emerging Housing Markets Index, which could signal…

Morning Roundup (11/15/2021)– Forbearances Drop Below 2%, Airbnb To Impact Market In 2022

Good Morning! Today is Monday, November 15. The Glasgow climate summit ended with an agreement by nearly 200 countries to cut their carbon emissions in half this decade. An appeals court barred President Biden’s vaccine mandate for large employers. A New York Times report revealed the US hid an airstrike that killed civilians in Syria. And in mortgage and housing news… Forbearances Drop Below 2%: Forbearance exits jumped week-over-week, with nearly 300,000 borrowers leaving their plans, Black Knight reported. Airbnb Will Majorly Impact 2022 Market: Analysts predict Airbnb will expand its inventory 25% in 2022, suggesting it will have a significant impact on the housing market next year. AEI Response: The AEI Housing Center published a response to FHFA’s proposed…