As the Federal Reserve continues its hawkish market reset – which has contributed to a rise in interest and mortgage rates – real estate experts are sounding the alarm that "big trouble" lies ahead for the U.S. market.
"When you have a rise and increase in interest rates like we've had, that is a big problem for housing. Interest rates are like the mother's milk of housing," Pulte Capital CEO Bill Pulte told FOX Business’ Maria Bartiromo Thursday. "And if you cut it off, you're in big trouble. And when you've had these massive increases in interest rates, it just puts a lot of things to a stop."
"It's a tale of two cities. I hate to relate it to politics, but the more red states, places like Florida, Texas, the office buildings are pretty busy. Business is booming. There's more demand and supply," Thor Equities CEO Joe Sitt said later on "Varney & Co." "It's more, I hate to say it, markets like ours here in New York, Chicago, San Francisco is a ghost town. San Francisco's been destroyed."
One of the nation’s largest homebuilders, KB Home, released its Q4 report Wednesday which indicated more signs of housing weakness. According to the report, KB Home saw a 68% cancelation rate on new construction projects.
U.S. REAL ESTATE HAS ‘MONUMENTAL OPPORTUNITY’ TO SOLVE HOUSING CRISIS IN 2023: EXPERT
Mortgage rates also increased last week, with the 30-year rate rising to 6.48% and the 15-year mortgage coming in at 5.73%, up from 5.68% the week prior. Higher mortgage rates continue to test homebuyer affordability, according to the Mortgage Bankers Association (MBA).
READ ON THE FOX BUSINESS APP
Fed Chair Jerome Powell warned on Tuesday that raising interest rates to slow the economy "are not popular" in the short term, and could even create political opposition.
"Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time," Powell said Tuesday in remarks prepared for delivery at a conference held by Sweden's central bank. "But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy."
"It’s going to be tough," Pulte spoke of the real estate market. "The [KB Home] cancelation rate… was through the roof, something like 68%, which is just enormous. Usually, that number is around 10, at most 20%. So I think we've got a tough road ahead this year, and I think you'll start to see that in earnings toward the back half of this year and frankly, into next year. I think the earnings are going to continue to deteriorate."
Property investor Sitt claimed it’s "going to take some time" for metropolitan areas to see a rebound in their commercial and personal housing markets.
"I think the cities are going to wake up and try to react," Sitt said. "I would say San Francisco rents are probably down somewhere in the neighborhood of about 35%. No exaggeration. It's dramatic what's going on in that marketplace."
Real estate investments are going where the money "feels comfortable," according to Sitt, who predicted that Sunbelt states might experience less volatility this year due to a manufacturing job boom.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
"I hate, again, relating to politics, but from a global place, the autocratic countries are doing the best. Singapore, Dubai, Monaco. Some people joke Florida and Texas is part of that," the Thor Equities CEO said. "The world order is changing, particularly because of some of the conflict with China. So you've got this tremendous onshoring wave, and so all of the Southeast now is going to get their next economic benefit. I call it the battery belt, that battery belt market of all those jobs that are going to create for manufacturing, is going to have ripple effects there."
Pulte contested that his firm has yet to find promising opportunities in the real estate sector so far this year under rising rate pressure.
"Not yet. It's going to be pretty interesting," Pulte said. "The M&A [mergers and acquisitions] environment in housing and building products is something to keep an eye on over the next six, 12, 18 months. It's not time yet."
READ MORE FROM FOX BUSINESS
FOX Business’ Megan Henney and Nora Colomer contributed to this report.
Related Quotes
(Bloomberg) — Nassim Nicholas Taleb has a message for investors. Prepare for a painful return to reality.Most Read from BloombergSony Slashes PlayStation VR2 Headset Output After Pre-Orders DisappointBrexit Is Costing the UK £100 Billion a Year in Lost OutputPutin’s War in Ukraine Pushes Ex-Soviet States Toward New AlliesTrump Sues Journalist Bob Woodward for Releasing Interview RecordingsMicrosoft Studio Behind Halo Faces a Reboot on Years of Turmoil“Disneyland is over, the children go back to
Traders have placed a near definite chance for the Federal Reserve to slow down its pace of interest rate hikes once again on Wednesday, when it finishes its February meeting, and then perhaps a cut later this year. Investors are right to be on a slower pace of rate increases. After raising rates aggressively seven times last year, the Fed in its latest summary of economic projections said median interest rates will go as high as 5.1% in 2023.
Yahoo Finance markets reporter Ines Ferre examines AMD's latest earnings report.
Inflation made the headlines through most of last year, for all the worst reasons: it ran far too high, peaked above 9% in June, and the inflationary pressures pushed down hard on stock markets. The Fed jacked interest rates up their highest level in over a decade, risking recession to fight the rise in prices. Today, inflation is still in the headlines, although the tone has shifted. The annualized rate is trending downward; the December number came in at 6.5% year-over-year. While this is good
Amazon.com Inc. is expected to reveal its first unprofitable year since 2014 this week — and expectations for the year aren't headed in a positive direction.
Shares of hydrogen fuel cell star Plug Power (NASDAQ: PLUG) jumped 4.7% through 11:45 a.m. ET Tuesday morning after the company secured a long-term supply agreement with British hydrogen technologies company Johnson Matthey (LSE: JMAT). Under the terms of the agreement, Johnson Matthey will supply Plug with components for membrane electrode assemblies and specifically with "catalysts, membranes, and catalyst coated membranes (CCM)" — essential parts for building fuel cells. Plug says that partnering with Johnson Matthey will "strengthen its supply chain and help meet the growing demand for fuel cells and electrolyzers."
Question: Eight years ago I hired a financial advisor because the rounds of layoffs at work were coming more regularly, and I wanted to know if my savings were enough for me to retire. The financial advisor began managing some of my accounts for me for a fee of 1%.
While stocks have rallied this past January, giving a good start to 2023, there’s no doubt that last year was decidedly bearish. A receding tide pulls back all boats, and that complicates the art of successful stock picking. The key to winning in a complicated environment like this is to find stocks that may be down – but are poised for a comeback. With this in mind, we've used the TipRank database to pinpoint two stocks that the analysts believe, in their words, are 'oversold' and are primed fo
Is Mr. Wonderful bailing on crypto? Not quite.
(Bloomberg) — At least two of India’s biggest business families participated in Adani Enterprises Ltd.’s $2.5 billion share sale, according to people familiar with the matter, in a sign of solidarity with Gautam Adani as the tycoon fights short seller allegations that sent the value of his empire plummeting.Most Read from Bloomberg8,000 Layoffs Don’t Exactly Scream Family ValuesPutin’s War in Ukraine Pushes Ex-Soviet States Toward New AlliesSony Slashes PlayStation VR2 Headset Output After Pre-
In this article, we will take a look at the 10 most undervalued tech stocks to buy according to hedge funds. To see more such companies, go directly to 5 Most Undervalued Tech Stocks to Buy According to Hedge Funds. Tech stocks took a beating last year as investors fled growth stocks amid rising inflation […]
Thank you, and welcome to AMD's fourth quarter and fiscal year-end 2022 financial results conference call. Participants in today's conference call are Dr. Lisa Su, our chair and chief executive officer; Jean Hu, our executive vice president, chief financial officer and treasurer; and Devinder Kumar, our executive vice president.
Most readers would already be aware that MaxLinear's (NASDAQ:MXL) stock increased significantly by 31% over the past…
Intel CEO Pat Gelsinger and other managers are taking pay cuts, days after the company’s quarterly earnings disappointed Wall Street.
Stocks moving in after hours: Snap, AMD, Match Group, Electronic Arts
(Bloomberg) — Shares of Pfizer Inc. suffered their biggest monthly decline since June 2020 as investors anticipated a troubled path ahead for the drugmaker’s Covid products.Most Read from Bloomberg8,000 Layoffs Don’t Exactly Scream Family ValuesPutin’s War in Ukraine Pushes Ex-Soviet States Toward New AlliesSony Slashes PlayStation VR2 Headset Output After Pre-Orders DisappointMicrosoft Studio Behind Halo Faces a Reboot on Years of TurmoilNational Archives Releases Records Tied to Trump Classif
The Federal Reserve is expected to slow its pace of interest rate increases for the second-straight meeting on Wednesday, raising its benchmark interest rate another 0.25%.
A number of media companies filed to get the court to release the names of the people who co-signed Bankman-Fried’s $250 million bail bond.
Costco has a tremendously loyal customer base with an over 90% membership renewal rate worldwide and an even higher rate in the United States (92.5%) in its most recent quarter. Currently, Costco charges $60 for a Gold Star membership and $120 for an Executive membership. Executive members have been rising in importance for the company.
Joe Natiello is facing what you might call a "nice problem to have." Almost 20 years ago, the 64-year-old Westfield, New Jersey, resident took out a term life insurance policy, to help cover his family in case the worst happened. Next year, though, that policy is elapsing, and at his age, Natiello's insurance premiums would spike if he decided to extend coverage.
