A Dark Storm Is Gathering Over The Housing Market

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A Dark Storm Is Gathering Over The Housing Market Submitted by QTR's Fringe FinanceI’ve been warning about the continued risks surrounding AI steadily since August, and I continue…

I’ve been warning about the continued risks surrounding AI steadily since August, and I continue to believe we’re going to see more bad news from the sector that has driven the bull market of the last few years.

I also think more bad news is coming for Nvidia and I’ve also warned about crypto, and the shaky price action we saw this weekend reinforces my view that more volatility and downside could be ahead.

I know, it’s a downer for a Sunday morning. And spoiler alert: today’s column isn’t going to be bright and cheery, either. Hey…if I have to suffer on Sundays as an Eagles fan this year, I’m insisting you must suffer, too.

But in all seriousness, today I’m going to focus on a concern I’ve had dating back for the last year or so in an area that isn’t talked about much, but where a deluge of newly released data is giving cause for some nascent concern: housing.

Financial stress doesn’t necessarily remain confined to one asset class. It’s the reason I’ve been barking about commercial real estate, subprime auto paper, regional banks, equities, crypto and bonds for the last year. Today I’m going to bark about housing.

Weakness in speculative investments can coincide with a broader pullback in risk-taking, tighter credit conditions, and more cautious consumer behavior. That doesn’t mean declining crypto prices automatically translate into falling home prices, but it’s worth considering how financial pressure moves through household balance sheets, particularly when housing affordability is already stretched.

There’s a general sequence that often develops when people need cash. They typically begin with their most liquid assets…first stocks, crypto, and other investments that can be sold quickly. Cashing out CDs, savings accounts and the likes.

As financial pressure builds, some households increasingly rely on credit cards, followed by unsecured personal loans when additional borrowing is available.

Housing often comes way later in that process.

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