Recession: Likely
Correction: Maybe
Crash: Unlikely


Housing Recession = Loss in Construction Jobs

In the last 10 years, home builders have been busy.

Housing starts (2010-21)

But, housing supply doesn’t have a cartel like oil suppliers have OPEC.

So, most builders & many city councils got overzealous & overbuilt inventory.

As a result, months of supply from new construction is >400% that of resale units!

Months of Supply: New vs. Existing Homes (2010-22)

So now, builders are stopping new projects while trying to sell off current projects.

Housing Market Index (2010-22)

Once builders start trimming jobs en masse, construction will see a housing-related recession.

And since construction jobs are a material part of overall jobs, we could a national headline recession as well.


Currently, we project:
12% Appreciation in 2022
4.2% Appreciation in 2023

Home Price Growth: 2022 & 2023 Forecast

4 reasons why home prices will keep growing

Home Prices: 1920-2022 & 2022-25 Forecast

1. Massive undersupply

Overall Inventory (1982-2022)

2. Decreasing supply

Inventory: New & Existing Homes (1982-2022)

Supply from resales will keep decreasing because 90% of mortgage holders have a <5% mortgage. Most will become a landlord instead of selling their home.

3. High residual demand

Homeownership Rate (1940-2022)

4. Conservative lending

Mortgage Credit Availability Index (2004-22)

The evidence is clear

Median Days on Market (2015-22)


Homes Sold (YTD 2008-22)

But, some cities are at a high risk

Some might correct by 5-10%. Then, they’ll quickly bounce back.

Almost none will crash by 20% (excluding seasonality).

Markets facing a possible 5% price correction by 2023

Why? Some cities have massively overbuilt housing inventory.

Permits Issued Per 1000 Units (2022)

You can read more here.

*IF* there’s a crash…

The Fed will reverse course

3 interventions from the federal government:

  1. Pare or reduce benchmark rates
  2. Resume QE of RMBS
  3. Resume mortgage forbearance

This will protect housing equity by sacrificing debt.

And, then, we’ll see another spike in home prices.

What do you think?

Our belief? Never bet against America.

Never Bet Against America

Note: All statements above are subject to revisions based on changing assumptions and market conditions. Figures could be rounded by +-10% for improving readability. We are neither a tax advisor nor a financial advisor and none of our statements should be interpreted as tax advice or financial advice.