Read full text: https://rubino.substack.com/p/watch-the-housing-bust-play-out-in?publication_id=1166121&utm_campaign=email-post-title&r=y7h5a&utm_medium=email
Now For the Great Re-Pricing
To bring this kind of out-of-balance market into equilibrium, one of two things has to happen: Incomes have to rise dramatically, or prices have to fall by at least 20%. The first—higher incomes—is almost inconceivable given record levels of consumer debt and the approaching recession. The second is easier to envision and achieve: Sellers just have to start accepting what the market can offer.
Here’s how that played out in the Great Recession: The median home price fell by about 19%, with much steeper drops in the most overpriced markets.
With houses more overvalued relative to incomes than ever before, price declines at least as dramatic as last time around are possible. And sooner rather than later.