Yahoo Finance Grant Cardone Blames Fed for Killing Dreams of First-Time Homeowners, Predicts More Renters in Next 2 Years Than ‘Last 50’
Grant Cardone, private equity fund manager, real estate investor, author of “The 10X Rule” and creator of the 10X Profit Planner, is blaming the Federal Reserve for “stopping the housing industry” and killing the dreams of first-time homeowners.
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“The Fed will make more renters in this country in the next two years than it has in the last 50 because mortgage applications are at all-time lows,” Cardone said on Fox News on Dec. 14.
“He [Fed Chairman Jerome Powell] has not controlled inflation. He has failed miserably. What he has actually done is created and, in the meantime, stopped the housing industry,” he added.
He further argued that one way to reboot the housing market would be for Powell to “step aside” and let the market correct itself.
A combination of high prices, low inventory partly due to homeowners who’d rather stay put due to the low mortgages they secured a few years ago, and exploding mortgage rates have left many homebuyers on the sidelines.
While mortgage rates have started to come down after hovering around 8%, they are still much higher than two or three years ago. As of Dec. 14, the average 30-year mortgage rate fell below 7%- the first time since August, according to Freddie Mac data.
Home prices were 3.9% higher in September compared with the same month a year earlier, up from a 2.5% change in the previous month, according to the S&P CoreLogic Case-Shiller Index. This is also 6.6% above its January level and a 6.1% year-to-date increase.
Cadone argued that Americans will be stuck with renting, although that market is also proving difficult.
For instance, Moody’s Analytics found that in the third quarter of 2023, the U.S. rent-to-income ratio (RTI) declined by 0.5%, ending at 30%, where it is still considered “rent burdened.”
Yet, there are glimpses of hope- a new Realtor.com report found that in November, rents have decreased for seven consecutive months of year-over-year rent decline, with prices down -0.6% for 0-2 bedroom properties across the top 50 U.S. metros.
“While the decline has not been sharp, rents are down just 3.3% from their 2022 peak, they are moving in a renter-friendly direction,” said Danielle Hale, Realtor.com chief economist.
The Realtor.com August Rental Trends Report already found that only three of the 50 largest metros had lower monthly costs for buying versus renting a starter home, she added.
“On average, renting was far more financially favorable from a monthly cost perspective,” she said, adding that falling rents are likely to tip the short-term rent versus buy tradeoff further in favor of renting, and with a near-record number of multi-family units under construction, rental supply is likely to increase, helping to keep rents from rising in the year ahead.
‘Realtor.com’s 2024 Housing Market Forecast anticipates that rents will be roughly steady in 2024 as supply barely outpaces demand, declining just 0.2%,” she added.
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