What Could Possibly Go Wrong? Real Estate It's all about leverage.
When unleveraged investments fall, the people holding them lose some of their wealth. Relatively well-off people who hold investment assets are now relatively less well-off.
When leveraged investments fall, companies and their lenders can go bust. The need to pay off the debt can prompt fire sales elsewhere.
Bloomberg’s index of US office property real estate investment trusts, or REITs, is slightly lower now than it was 20 years ago, and almost back to the lows it hit during the worst of the pandemic in 2020 Chart
Typical 30-year mortgage rates are now a whisker below 6%, and approaching the pre-crisis high of 2006: chart
This is uncomfortably reminiscent of the conditions that triggered the global financial crisis.
if there is one further pocket of speculation in the world that could cause damage when it bursts, it’s British housing, particularly in London.
John Authers Bloomberg 21 juni 2022
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