The usual real estate market forecasters have been saying for at least a year now that the U.S. real estate market is due for a major correction. Their position seems to largely be based on the “fundamental” fact that average income is not keeping pace with the extremely fast-growing and high-flying prices of homes. In focusing on these “basics” these forecasters ignore all the big words and complicated theories that tell most economists that the real estate market is strong.
But it seems like things are starting to break up, after many months of warning the forecasters clearly are seeing something going wrong in the high end real estate market. The big players are still trying to play it cool, for example the Fiscal Times reports that the luxury real estate market is “cooling off.”
Coast to coast though, we seem to have a problem. For example, we see “Billionaires Row” in New York, New York, headed for its first foreclosure. We also see what the Wall Street Journal calls a “fraying” of the luxury housing market in Greenwich, Connecticut.
Meanwhile, on the West Coast, some are saying that San Francisco’s high-end real estate market has finally “peaked” after years of growth that is divorced from all economic realities…which created a market where a small “starter home” goes for $730,000.
Folks on the lower end who do not live in the red-hot markets (SF, LA, Portland, Seattle, NY, etc.) never really saw much of a recovery after the 2007 crash. Thus, if we see another real estate “correction” it stands to reason that people in fly-over Trump country will be hardest hit when their homes suffer another blow after never fully recovering from the last one. A double whammy, ten years in the making. Why should you care about the high-end luxury United States real estate market? How would a crash in New York impact me in Omaha? It’s simple: shit flows down hill.