Billionaire Jeff Greene says this housing boom is also in a bubble

A real estate investor who made a fortune shorting subprime mortgages More than a decade ago, he told CNBC on Friday that he believed the current housing market was in a bubble.

“Absolutely. I think we’re in an omni-bubble. How long does that last? It depends. How long do you keep the tap running and that money flowing?” billionaire Jeff Green say it “Powerful lunch.”

“There’s so much money on corporate balance sheets…and on people’s balance sheets and their bank accounts that it’s driving up the prices of everything, but at some point that has to stop,” Greene said.

The housing market has been one of the strongest sectors of the U.S. economy over the coronavirus pandemic, which has also put millions of people out of work and triggered a recession.

Mortgage rates have historically lowand the rise of remote working has gave the Americans greater flexibility in where they live. House prices soared when strong demand was met with weak supply.

Greene is not the first person to suggest the market is overheating, although his previous bet against the housing market in the mid-2000s made his comments notable on Friday. Recently, Google searched “When will the housing market collapse?” have risen dramatically.

“When you see prices rise the way they have, you have to ask yourself: why did this happen?” Greene said, saying the strong monetary and fiscal policy response to the pandemic played a key role.

“I think it happened 80% because of the extraordinary amount of liquidity in the economy, 20% because of the fundamentals,” he said. The investor also pointed out rising wood pricessuggesting that significant inflation will play out in various sectors of the economy as it recovers from the crisis.

“I think we’re going to have inflation that no one…is predicting, and that’s going to have to lead to much higher interest rates and that’s going to slow down all of these markets,” Greene said.

Jeff Green

Cameron Costa | CNBC

Not everyone shares Greene’s view that the housing market is in a bubble, even if they believe real estate values may undergo a brief correction. A crucial reason for some people this boom is different is because mortgage underwriting standards have improved due to the previous crash.

Others have a different view than Greene on the causes of the surge in demand. “I know there’s a lot of concern about potential speculation, but that’s really not what’s happening in the market today,” said the CEO of Coldwell Banker Real Estate. Ryan Gorman told CNBC on Tuesday.

Gorman’s company, which is owned by realology – recently conducted an investigation focused on why people are considering selling a home.

“About 40% are moving, the most classic reason people are looking to move. About 30% see an increase in the value of their home, so they’re thinking, ‘Maybe I want to monetize this. value. Maybe moving forward with my retirement plans,” Gorman explained on “Powerful lunch.”

“You still have about 30% saying, ‘If I can work remotely at least some of the time, maybe all the time, then maybe I want to live somewhere other than where I live now, maybe -even somewhere a bit more affordable,” Gorman said. “So as house prices go up, affordability is a relative term and we’re seeing some people take advantage of that.”

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