@bravosresearch: WARNING: Housing defaults have...

WARNING: Housing defaults have skyrocketed

This is unlike anything we’ve seen in a decade

A thread 🧵

2/ The Fed had been on an unprecedented hiking cycle

Taking rates from near 0% to 5.5% in just 1.5 years

Ensuring tight monetary policy in the process

3/ High rates have negatively impacted the housing market

Given the high rate sensitivity of the sector

4/ During the recent hiking cycle, 30-year mortgage rates broke out a key downtrend line

It rose from 2.65% to a high of around 8%

And is still around 7%

5/ Elevated rates made the housing market very unaffordable

Homebuyer affordability fell to the lowest levels in 35 years

And still remains at very low levels

6/ Mortgage demand also plummeted

As high borrowing costs caused demand destruction

7/ Rising unaffordability + high inflation put pressure on consumers

Who have started defaulting rapidly

Delinquency rate for multifamily housing has hit levels unseen in a decade

8/ Even now, people don’t feel like buying homes

Buying conditions have collapsed, reaching levels only seen 2 times since 1960:

- 1974
- 1981

9/ Until rates become cheaper again or consumers' financial conditions improve, housing pressure is likely to remain

At Bravos Research, we’re staying patient

We want to see real bottoming signals before we add trades in the Real Estate sector

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12/ Thanks for reading!

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