Profit grows on trimmed trees, freshly painted walls, and rehabbed bathrooms, and flipping volume soars, and nothing can go wrong. Then something goes wrong.
by Wolf Richter • • Comments Off on Here’s the Chart that Shows Why the Housing Market Is Sick
Homeownership hit the skids when homes became a highly leveraged asset class, flipped and laddered by speculators, rather than lived in by normal folks.
Home prices hit a slick $1,000,000, while soaring office rents blow up enterprises with real business models. It’s crazy. It’s powered by hot money from around the world. Then comes the moment when the hot money evaporates.
Buyers from China are the most prolific, spending 72% more than a year ago! On expensive homes. They benefit from the devaluation of the dollar – according to the NAR – and are desperate to get their money out of China.
FICO: “That doesn’t feel like a healthy, sustainable growth situation.” Lenders fret “about the risk in mortgages” as consumers return to “reckless borrowing.”
