A real estate investor who made a fortune Short sale of subprime mortgages More than a decade ago, CNBC said Friday it believed the current real estate market was in a bubble.
“There’s just so much money on corporate balance sheets … and on people’s balance sheets and in their bank accounts that it only increases the price of everything higher, but at some point it has to stop,” Greene said.
Have mortgage interest was historically lowand the rise of remote working has given the greater flexibility of Americans in where they live. Home prices have skyrocketed when strong demand collided with low supply.
Greene isn’t the first person to claim the market has overheated, although his previous bet against the mid-2000s real estate market makes his comments on Friday noteworthy. Recently, Google did a search for “When will the real estate market collapse?” have shifted dramatically.
“When you see prices go up as they go up, you have to ask yourself: why did this happen?” Greene said the robust monetary and fiscal response to the pandemic played a key role.
“I think 80% of this was because of the extraordinary liquidity in the economy and 20% because of fundamentals,” he said. The investor also pointed out rising costs for sawn timberThis suggests that as it recovers from the crisis, significant inflation is emerging in different parts of the economy.
“I think we’re going to have inflation that nobody … is predicting, and it’s going to have to lead to much higher interest rates, and that’s going to slow down all of these markets,” Greene said.
Cameron Costa | CNBC
Not everyone shares Greene’s view that the real estate market is in a bubble, even if they believe in real estate values can undergo a brief correction. A big reason some people say This boom is different This is because mortgage underwriting standards have improved due to the previous crash.
Others see it differently than Greene, which is what is causing the surge in demand. “I know there is great concern about the possibility of speculation, but that is exactly what is not happening in the market today,” said the CEO of Coldwell Banker Real Estate Ryan Gorman said CNBC on Tuesday.
“About 40% is upsizing, the most classic reason people want to move. About 30% see an increase in the value of their home, so they say, ‘Maybe I want to monetize that value. Maybe move forward with my retirement savings,'” Gorman said “Power Lunch.”
“You still have about 30% who say, ‘If I can work remotely, at least part of the time, maybe all the time, then maybe I want to live somewhere different from now, maybe somewhere a little cheaper,” said Gorman. “As home prices rise, affordability is a relative term and we are seeing some people benefit from it.”