The median US home price to drop in 2023 - the first annual drop since 2012

 

Economic news—and market reactions to it—increasingly resemble a tennis game. Spectators follow the ball back and forth, thinking something will happen but usually it doesn’t.

Wishful thinking. 

Federal Reserve policy has been the bull’s best friend for 20 years now, and maybe 40 years if we count since Volcker and the Greenspan Put. It’s easy for people who made a lot of money in these conditions to convince themselves that higher rates and QT are aberrations that will surely end soon.

Thinking Powell will lose his nerve isn’t crazy. He’s done it before, 2018 most recently. So did Bernanke and Yellen. Markets came to expect monetary conditions would always favor Wall Street. 

The fact that it distorted markets and prices of assets, commodities, and almost everything, while simply crushing savers and retirees, was seemingly unimportant to Wall Street types. They liked what it did to their portfolios.

That being said, I don’t think Powell will “blink” again. If stopping inflation means starting a recession, he will choose recession. 

The median US home price to drop about 4% in 2023 - to $368,000. 

If it happens, that will be the first annual drop since 2012.

The median home price almost tripled in the last 22 years

John Mauldin 9 December 2022

https://www.mauldineconomics.com/frontlinethoughts/recession-scale