Housing: Here Comes the Crash

by Andrew Zatlin May 06, 2022 11:59 am ET

Stocks keep crashing — but the housing market keeps surging!

But now, after a great run, the housing boom could be coming to an end.

Today, I’ll explain what’s going on…

Then I’ll show you how you could profit from it.

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

Housing: Here Comes the Crash

What the heck is going on with the housing market?

I mean, stocks keep crashing. As of this morning, the Nasdaq was down almost 25% for the year.

Other markets are down even more. For example, parts of the crypto market like NFTs (NFTs are basically this generation’s Beanie Babies) are down 92%.

But not housing! So far, housing’s just gone up and up and up.

But now, after a great run, the housing boom could be coming to an end.

So today, I’ll explain why it’s coming under pressure…

And then I’ll show you how to get positioned to profit from it.

Propping up the Markets

The 2020 recession was unlike any other in history.

Because of the government stimulus packages, many peoples’ incomes went up. In fact, people had more disposable income than ever.

All this cash helped prop up the market, as people used their stimmy checks to trade stocks. In other words, all this liquidity in the markets created speculation.

The thing is, this speculation created a bubble. At its recent peak, the overall market as measured by the Dow was up about 80% from its 2020 low.

But with inflation raging, now the Fed’s been forced to pull out the rug from underneath us…

POP POP

Once the Fed started raising interest rates, bubbles started popping.

That’s why the stock market was down about 5% yesterday — POP.

And started the day today by dropping another 1% — POP POP.

But now I believe another market is in similar peril…

Housing Is Up 30%... But Now What?

To show you what I mean, check out this chart. It shows the median sale price of a U.S. home.

Housing has shot up 30% since the coronavirus! That’s a bubble.

But why is this such a problem?

Simple: because housing makes up about 30% of inflation!

So if the Fed really wants to tame inflation, it needs to get this situation under control.

Let’s look at the approach it’s taking…

Too Little, Too Late?

The Fed has no interest in popping the housing-market bubble.

Popping a bubble creates financial pain and makes the Fed look bad.

Instead, it’s trying to just cool down the market.

To cool down the market, it’s doing two things:

First, it’s raising interest rates. Higher rates mean mortgages are more expensive. That translates into lower demand for housing, and it cools down the market.
Secondly, it’s slowing its purchases of mortgage-backed securities (MBS). The Fed is the single largest buyer of MBS. With lower market demand for MBS, mortgage rates will rise. And again, this lowers demand for housing and cools the market.

The question is, will the Fed be successful in its efforts to avoid a bloodbath?

If you ask me, housing hasn’t gone through its fair share of pain yet.

To learn more about this — and to see how to play this combustible situation for profits — check out my Moneyball Pro recommendation below!

In the meantime, Zatlin out. Talk to you soon.