House Prices To Fall 30% - John Rubino's Substack

 The following chart explains today’s “frozen” housing market.

It also guarantees that at least one of three things will happen to restore balance in the sector.

• Mortgage interest rates fall to 3%

• Household incomes rise by 40%

• Home prices fall by 30%

Let’s consider each scenario:....

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30% Lower Home Prices

Now for a feasible number. A 30% drop would bring home prices more or less into line with the incomes required to buy them.

And there’s historical precedent for this kind of decline: During the previous decade’s housing bust, the Case-Shiller home price index fell by 27%.

But as with everything else in this inflationary decade, home prices are now at levels that make a 30% cut hard to imagine. On a $500,000 house (typical in today’s middle-class neighborhoods), 30% equals $150,000 off the asking price, something for which today’s sellers are not prepared.

Getting from here to there will feel like a crisis. But it might happen surprisingly fast. Consider Bitcoin this year and NVIDIA this month:....