House price bubble will wipe out assets, warns Peter Bokvar

House price bubble will wipe out assets, warns Peter Bokvar

Investor Peter Bookover is sounding the alarm on the housing price bubble triggered by the Federal Reserve’s COVID pandemic policies.

He warned that first-time home buyers are the most likely to experience dramatic losses.

“I feel bad for the people who have bought homes in the past year because they are the ones who have paid the very high prices,” Blakely Advisory Group chief investment officer told Trading Nation on Thursday. from CNBC.

This excludes those who deposited 5% in an environment of historically low mortgage rates. If house prices correct by 10%, Bookwar sees a world of pain.

“Their equity is practically wiped out”

“Their equity is practically wiped out,” he said. “People who have owned for a while, who have built up equity, will be pretty much untouched.”

His warning comes as Fed policymakers virtually gather for the annual Jackson Hole symposium.

Bookover, an inflation tracker in the mid-2020s, criticized the Fed’s policies during the pandemic. While maintaining unprecedented quantitative easing measures thanks to the economic recovery, he noted that the central bank has increased the demand for housing, which is an overwhelming supply. The result is soaring prices.

“The problem is, this created such a demand that the supply could not keep up, whether it was the builders not getting materials or labor or not getting enough lots. CNBC contributor Bokvar said. .

Given that housing is the most interest rate sensitive part of the US economy, Bookwar fears the repercussions could be far-reaching.

“It’s very damaging to the buyer – especially the first-time buyer who wants to own a home that now pays the price and rents back,” Bookover said. “But rental prices are also increasing dramatically. “

They suggest that there is evidence that air is coming out of the bubble.

“People are now seeing a shock in house prices and they are holding back,” Boucher said. “Buyers call time out. They say “I can’t afford it” or “I want to wait until house prices go down. “

Wall Street could gain clarity in the housing market next week with pending sales of existing homes, the FHFA home price index and S&P CoreLogic Case-Shiller results. He expects the data, which will reflect trends from this summer, to strengthen.

“We’re always going to see these double-digit house price increases,” Bokvar said. “There is always a shortage of stocks. “

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