Real estate expert predicts huge changes in the housing market: ‘Things are really breaking down’

The US real estate market could be headed for a significant correction.

An experienced strategist, Chris Vermeulen of The technical tradersbelieves he is witnessing worrying signals in the market, noting that financing costs are expected to remain high for an extended period.

Vermeulen notes that construction numbers for single- and multi-family homes have remained at a plateau after a sharp decline last year, mirroring patterns last seen before the devastating housing crisis of 2008.

Despite a recent stabilization in construction activity, driven by increased investment, Vermeulen believes the real estate market is still at risk, especially if mortgage rates remain high.

Although the majority of single-family homes in the U.S. are financed with 30-year mortgages, higher interest rates can pose challenges when it comes to refinancing, especially for commercial real estate owners who face $900 billion in maturing debt this year. get to make.

“To me this is a sign that things are really starting to crumble, and this is just a revival,” Vermeulen told Business insider.

‘It is currently the last place where you can make a little profit from these buildings. Material and labor costs are rising and then we see the financial sector and real estate prices really falling apart.’

This pressure could lead to an increase in the number of commercial real estate foreclosures, which jumped 117 percent in the first quarter compared to a year earlier, according to ATTOM data, a leading provider of nationwide real estate information.

Vermeulen argues that a 2008-style housing market crash is unlikely for residential real estate, but that further market weakness could trigger a panic sell-off among investors.

Seasoned strategist Chris Vermeulen believes there are worrying signals in the market and notes that financing costs are expected to remain high for an extended period

He warned that the current pullback could be misleading as he expects another significant drop.

“People don’t realize that the real estate sector is poised for another major downturn,” Vermeulen said.

“They’re buying now because there’s a pullback, but the reality is I think we’re going to see this collapse.”

Real estate experts have been warning for a year about a correction in real estate prices, especially in the commercial sector.

Office values ​​have fallen 35 percent since the Covid-19 pandemic, and credit rating agency Fitch Ratings expects further declines as many offices remain vacant given the large number of remote workers and higher refinancing costs.