🌍 Conforming-loan expansion inflates home equity into a HELOC-fuelled bust

“if you all of a sudden, you know, push up the upper bound on what a conforming mortgage is to a million dollars, that effectively means, and it's roughly about 20 percent, that effectively means that you're moving people's net worth up by about four or five percent. ... they spend it or they invest it, or they, you know, it could be a real disaster scenario in five or six years. By the way, no, no, this is more like 1929 kind of thing.”

“I don't think we have like an issue in real estate, to be completely honest with you. ... I think that we may have a looming credit crisis.”

“In the 2008 financial crisis, the median home price to median income in the United States was 5x. Today, it's 7x. ... So people today own homes that are significantly more expensive relative to their income and earnings than was the case during the financial crisis that caused the massive housing bubble.”

“People can't afford the same mortgage they did before because rates are going up very fast. So, you know, sellers are going to have to drop prices.”

“real estate is a very unique category because you have I buyers taking stuff off the market. You have regulation not letting people build more. So I would be very reticent to extrapolate what's happening in real estate.”

“most Americans have most of their net worth tied up in real estate. And if we see a 30% correction in real estate, it could be a real problem, particularly with rising interest rates, inability to refinance.”

“People feel poorer than they were before, and this could get worse, like you're saying, Jason, with their nest egg in their homes getting hit. I agree, that's the next shoe to drop, just like the commercial real estate is the next shoe to drop. But I think the really big question over the next six months is what sort of job losses do we see?”

“We're down 6%, almost 7% year over year and 3.5% month over month, but we're holding up historically.”

“It feels like things are turning over in real estate. We talked about that last week. The number of homes being listed is skyrocketing. The number of mortgages being originated is plummeting while the rate goes up. So we're going to see mortgage rates probably go six, seven percent towards the end of the year.”

“But when you look at it historically, you know, even at 6% or even if it goes to 7% for mortgages, it's a lot less than we, our parents experienced and we experienced for the first half of our adult lives. So I think it's surmountable.”

“We have told every American that they should put all of their net worth and more into their house. And as a result, we've had to continue to drive up the price of housing in the US., drive up, create a housing bubble by pouring a ton of capital in to keep that asset safe and protected because it is where most Americans have put their nest egg.”