A Housing Market Divided Cannot Stand
When Abraham spoke these immortal words, “a house divided cannot stand,” he wasn’t talking about the housing market. However, they seem to apply. At one point you had basically free money in which countless prospective homebuyers chomped at the bit to take advantage and bought homes, many of whom for the first time.
Fast forward to now, and my how times have changed in just a short window of time. As interest rates begin to tick back up, the wave of homebuyers that caused a surge in these assets’ prices has all but completely evaporated.
This has caused the housing boom to quickly turn into a housing bust, causing many experts to fear a housing market collapse that could easily drag out into 2023. This roller coaster ride has taken many real estate stocks with it, as well as the once gitty and optimistic buyers.
One of the stocks that have been taken for a ride, real estate mega-giant Redfin (RDFN), which has been one of those ringing the alarm bell ahead of what seems to be this pending collapse.
RDFN reported its third-quarter financial results on Wednesday afternoon, leaving some investors notably spooked over the state of housing going forward. The real estate brokerage laid out a rather grim timeline for the company, as well as the market overall.
RDFN, and firms like it, have fallen victim to this year’s mortgage rate rise. Not just the business, but their workers, as well. The firm has announced sweeping layoffs in the wake of this rise in rates.
What lies at the heart of this issue? Demand has fallen off a cliff as housing has overwhelmingly become unaffordable. Over the last two years, the average monthly payment for an American family buying a median-priced home increased by 71%.
If this doesn’t all give you a bearish tingle running up your spine you may want to check your pulse. I don’t think we are going to be faced with a real estate collapse comparable to that of 2008, however, what goes up… well, you know the rest.
As yet another market is walking a tightrope, I will pose the idea yet again. How can we put our cash to work in order to not catch this falling knife, but take advantage of it hitting the floor? Simple, we just need to turn to Magnifi.
After a little bit of digging, I was able to find several ways where, based on the circumstances of the present, we can short the housing market. I think it is important to note that this isn’t us banking on the housing market collapse, but instead being prudent investors, and making our money work a little harder. Rather than just sitting on the sidelines, earning no return at all, we can adapt to the environment we find ourselves in.
This is just the situation we find ourselves in, and why shouldn’t we make money from a situation that is completely outside our control? Times are tough and we have to do what we have to do to survive.
Like a house divided cannot stand, we need to do everything in our power to make sure our financial house can stand. For our sake and the sake of our financial future.
Today’s feature: Short Real Estate