Veteran strategist Chris Vermeulen, from The Technical Traders, warns of troubling signs in America’s real estate market, pointing to persistently high mortgage rates.
He highlights a plateau in new home construction, single-family and multi-family, following a sharp decline last year, reminiscent of patterns seen before the 2008 housing crisis.
Despite recent stabilization fueled by increased investment, Vermeulen remains cautious, especially if mortgage rates remain elevated.
Vermeulen suggests that while a crash similar to 2008’s housing bust is unlikely for residential real estate, further market weakening could prompt investors to sell off properties in panic.
He also notes a significant rise in commercial real estate foreclosures, up 117% year-on-year in the first quarter, according to ATTOM data.
He believes that although a recent market pullback indicates a temporary respite, another significant downturn could be on the horizon.
Experts have warned about potential price corrections, particularly in the commercial sector, with office values already down 35% since the Covid-19 pandemic, and further declines expected due to remote work trends and higher refinancing costs.