“A US housing crisis is coming,” says Danielle DiMartino Booth on Bloomberg. The American mortgage market was at the centre of the 2007 financial crisis, but house prices are now up by 117% from their pre-crisis peak. This time the problem is not “rampant speculation or subprime mortgage fraud”.
Instead a wave of forced sellers could crash prices once social-distancing restrictions are lifted. Heavy losses in the stockmarket could precipitate a “silver tsunami” as older homeowners are forced to downsize early. Yet surging unemployment means there will be few buyers to meet the supply surge.
Massive state intervention should provide a backstop to the residential mortgage market, says The Economist. The Federal Reserve will buy unlimited amounts of mortgage-backed securities. Yet the same cannot be said of commercial property, where leveraged real-estate investment trusts (Reits) cannot afford for rent payments to dry up. “Commercial real estate and social distancing don’t mix,” says Stephen Wilmot in The Wall Street Journal. Reits have taken a beating on both sides of the Atlantic, even though their balance sheets are in better shape than in 2008. While retail space is the obvious casualty of social distancing, a deep recession will also be grim for office and warehouse landlords. “For all its reassuring familiarity,” property is “a surprisingly risky business.”
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Barclays warns of significant rise in social media investment scamsInvestment scam victims are losing an average £14k, with 61% of those falling for one over social media. Here's how to spot one and keep your money safe
-
Over a thousand savings accounts now offer inflation-busting rates – how long will they stick around?The rate of UK inflation slowed again in March, boosting the opportunity for savers to earn real returns on cash in the bank. But you will need to act fast to secure the best deals.
-
Halifax: House price slump continues as prices slide for the sixth consecutive monthUK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
-
Where to find the best returns from student accommodationStudent accommodation can be a lucrative investment if you know where to look.
-
Revealed: the cheapest cities to own a home in BritainNew research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
-
Buy-to-let returns fall 59% amid higher mortgage ratesBuy-to-let returns are slumping as the cost of borrowing spirals.
-
North outperforming the South for property investorsThe property market in the North of England is outperforming the South for both capital appreciation and rental yields.
-
UK house prices: half of sellers cut asking prices to secure a saleProperty price reductions have reached their highest level in at least nine years.
-
Halifax: House prices fall for the fourth month in a rowHigher interest rates have wiped nearly £1,000 off the average UK house price between June and July.
