"US $41 Trillion Assets Face 35% Plunge"

The National Association of Realtors in the United States has released housing sales data for November, painting a very pessimistic outlook for the U.S. real estate market. Compared to October, sales volume plummeted by 7.7%, and in comparison with the same period last year, there was an even more significant drop of 35.4%.

The United States is currently implementing a monetary tightening policy, with the printing press that has been running non-stop now completely shut down. The elements that supported the rise in housing prices have also vanished. American investment banks predict that the situation will be even worse next year.

However, a significant number of Chinese buyers had already left the market in advance, timing their exit perfectly at the market peak.

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The market had already formed a pessimistic expectation for the upcoming sales figures, but the actual data released was even more pessimistic than anticipated. The sequential decline in November sales marks a continuous 10-month slide since February of this year.

Looking back at historical data, during the initial outbreak of the COVID-19 pandemic in May 2020, U.S. housing sales experienced an even greater decline. Excluding that particular data point, the current drop would be the largest decline record in nearly 100 years.

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Undoubtedly, there are two major risks for the U.S. real estate market at present: The first is the continuously increasing mortgage interest rates, which lead to growing repayment expenditures for homebuyers; The second is the ongoing monetary tightening policy in the United States, which no longer involves the over-issuance of currency, and consequently, there is no continuous influx of funds into the housing market.

Currently, there is a slight increase in the number of homes for sale in the United States, which is not a good sign.

Although the supply volume has not significantly increased, this also indicates a trend. As the future situation gradually worsens, there may be more and more sales. Homeowners choosing to put their houses on the market for sale will further suppress housing prices.Taking the next step, if the supply in the market increases and housing prices drop, leading to a continuous decline in sales volume, it is highly likely that houses will not be sold and will have to be auctioned off, then it's not far from a market crash.

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Previous data indicates that since the Federal Reserve raised interest rates in March, Chinese buyers have already started to sell the properties they purchased in the United States. By September of this year, the total value of the properties sold amounted to at least $13 billion.

Of course, it's not just Chinese buyers who are selling; other foreign buyers are also doing so.

Data from the United States shows that in the past year, the sales volume of foreign buyers purchasing existing homes in the U.S. has significantly decreased by more than 1/3 compared to the previous year.

The decline in sales volume has led to a stagnation in housing price growth.

In terms of housing prices and rent, the data shows that they are also continuously falling. The price of existing homes has been declining since the middle of this year, with a decline for five consecutive months on a month-over-month basis, and the growth in rent has been continuously sliding for ten months.

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Although the recent loan interest rates have slightly decreased, homebuyers are still hesitant to enter the market and maintain a wait-and-see attitude. This is because, although the interest rates have slightly decreased from their peak levels, they are still more than double the high levels of the past decade.

If, according to the Federal Reserve, even if the future will reduce the magnitude of interest rate hikes or even stop raising interest rates, but still maintain the interest rate level at a high level for a period of time, it also means that mortgage interest rates will not decrease rapidly.Drawing from the experience of the subprime mortgage crisis, the current mortgage interest rates are sufficient to cause a collapse-like decline in housing prices. At the same time, since past housing prices were mainly driven up by the continuous issuance of money by the United States, and now, with the tap turned off, it is difficult for the United States to have a large influx of funds into real estate.

Data from the Federal Reserve shows that by the end of the second quarter of this year, the total value of American households' real estate was $41.2 trillion. With the expected decline in future housing prices, this portion of assets will face the risk of a significant drop.