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SVTPerformance's Chain of Restaurants
Road Side Pub
Real-Estate Bubble Popping?
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<blockquote data-quote="Klaus" data-source="post: 16797800" data-attributes="member: 190070"><p><img src="https://pbs.twimg.com/media/FYB-RytUIAADPs_?format=png&name=small" alt="" class="fr-fic fr-dii fr-draggable " style="" /></p><p></p><p>* Single-family housing as an asset class has strongly outperformed equity, credit, and fixed income indices the past two years, with home prices gaining 40%. More recently, the steep rise in mortgage rates has significantly challenged affordability, and there are early signs that excess demand is cooling.</p><p></p><p></p><p></p><p>* While the recent outperformance of housing equity is highly likely to subside as HPA slows, outstanding mortgage debt remains attractive. Credit assets should perform even if home prices pull back.</p><p></p><p></p><p></p><p>* Most homeowners are locked into fixed-rate mortgages well below the prevailing rate, and would face higher, variable shelter costs by purchasing a new home or renting. Homeowners also have significant embedded equity and wealth in their homes, as borrowers have largely refinanced to lock in lower rates rather than tap equity. This is the opposite backdrop to 2008’s strategic defaults and, from a credit perspective, should encourage and allow borrowers to remain current and stay in their homes.</p><p></p><p></p><p></p><p>* The “rate lock-in” effect should also help constrain existing supply, which already stands at record lows. More structurally, builders’ reluctance to significantly invest in new construction following the 2008 housing market collapse has created an undersupply of single-family homes estimated in the millions.</p></blockquote><p></p>
[QUOTE="Klaus, post: 16797800, member: 190070"] [IMG]https://pbs.twimg.com/media/FYB-RytUIAADPs_?format=png&name=small[/IMG] * Single-family housing as an asset class has strongly outperformed equity, credit, and fixed income indices the past two years, with home prices gaining 40%. More recently, the steep rise in mortgage rates has significantly challenged affordability, and there are early signs that excess demand is cooling. * While the recent outperformance of housing equity is highly likely to subside as HPA slows, outstanding mortgage debt remains attractive. Credit assets should perform even if home prices pull back. * Most homeowners are locked into fixed-rate mortgages well below the prevailing rate, and would face higher, variable shelter costs by purchasing a new home or renting. Homeowners also have significant embedded equity and wealth in their homes, as borrowers have largely refinanced to lock in lower rates rather than tap equity. This is the opposite backdrop to 2008’s strategic defaults and, from a credit perspective, should encourage and allow borrowers to remain current and stay in their homes. * The “rate lock-in” effect should also help constrain existing supply, which already stands at record lows. More structurally, builders’ reluctance to significantly invest in new construction following the 2008 housing market collapse has created an undersupply of single-family homes estimated in the millions. [/QUOTE]
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SVTPerformance's Chain of Restaurants
Road Side Pub
Real-Estate Bubble Popping?
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