Here's what 7 top experts are warning about!IMO consumer discretionary spending will see a substantial reduction for up to 18 months, resulting in higher unemployment, higher loan service cost and default, and weaker commodity prices. USD will remain strong, making U.S, products more expensive and less competitive in global market, but will reduce basic materials cost for manufacturers.
Bottom line: The next 12-18months will have both winners and losers.
Predict highly indebted company earnings will suffer from debt serving cost
b. Here's what 7 top experts are warning about what happens next.
Jeremy Siegel, Wharton professor of finance
"I expect housing prices fall 10% to 15%, and the housing prices are accelerating on the downside," Siegel told CNBC in a recent interview, noting that housing prices by any indicator are going down.
In a separate interview with CNBC, he said: "I think we're gonna have the second-biggest housing price decline since post WWII period over the next 12 months. That's a very, very significant factor for wealth [and] for equity in the housing market."
Mark Zandi, chief economist at Moody's Analytics
"Buckle in. Assuming rates remain near their current 6.5% and the economy skirts recession, then national house prices will fall almost 10% peak-to-trough," he said in a recent tweet. "Most of those declines will happen sooner rather than later. And house prices will fall 20% if there is a typical recession."
In a recent housing report, he said: "The housing market is the most interest-rate-sensitive sector of the economy. It's on the front lines of the fallout from the Fed's efforts to bring down inflation."
"There's going to be a coast-to-coast downturn in the housing market. It's going to be brutal. No part of the market is immune."
David Rosenberg, veteran economist and Rosenberg Research chief
"We have a massive housing bubble right now. Most of the household balance sheet is residential real estate, and it is equities," Rosenberg said in a RealVision interview released this week.
The economist pointed to the Fed's tightening efforts to bring inflation down from recent rates of 8-9% to its 2% target.
"They want the stock market to go down. They want home prices to go down. Why? Because there's not a snowball's chance in hell they're going to get to their 2% holy grail consumer inflation, without there being a period now of asset deflation. It is 100% necessary."
Paul Krugman, Nobel Prize-winning economist
The veteran economist agrees there's a severe downturn coming — but he expects it will be a while before higher rates really hit home prices and demand.
"The Fed's rate hikes have indeed led to a sharp fall in applications for building permits. However, construction employment hasn't yet even begun to decline, presumably because many workers are still busy finishing houses started when rates were lower," he said in a recent comment piece.
"And the wider economic effects of the coming housing slump are still many months away," he said.
Ian Shepherdson, chief economist at Pantheon Macroeconomics
Shepherdson believes the steep drop in home sales hasn't hit bottom yet, and even buyers who set their sights lower to cheaper houses will still face bigger mortgage payments.
"We expect a drop of 15-to-20% over the next year, in order to restore the pre-COVID price-to-income ratio," the strategist said in a note last week.
"In short, housing is in free-fall. So far, most of the hit is in sales volumes, but prices are now falling too, and they have a long way to go."
Don Peebles, real estate developer and Peebles Corp. CEO
"I think the housing market is on its way into a recession. We're going to see price declines — price declines have already begun to take place," Peebles told Fox News last week.
"I look at this as though we have this freight train out of control, speeding up, speeding up with low interest rates, and no one looked to start slowing it down or stepping on the brakes. Now all of a sudden its going to come crashing into the station," he said.
Chen Zhao, economics research lead at real estate brokerage Redfin
"The housing market is going to get worse before it gets better," Chao said last week, alongside a report that found a record 22% of homes for sale had a price drop in September.
"With inflation still rampant, the Federal Reserve will likely continue hiking interest rates. That means we may not see high mortgage rates — the primary killer of housing demand — decline until early to mid-2023."
Buckle in for a brutal free-fall in home prices and US housing is in a massive bubble, experts say. Here's how bad Jeremy Siegel, Paul Krugman and 5 others think it could get. (yahoo.com)