More importantly, home prices across the globe spiked during the Covid lockdowns; therefore, a correction has been in the making; however, according to Nick Gerli, the founder of Reventure Consulting and the owner of the number 1 YouTube channel on real estate investing, a big selloff is coming. Namely, Gerli pointed to the fact that the 6-month US Treasury yield is almost the same as buying and renting out a house in America (Cap Rate), translating into little to no incentive for investors to be in these markets.
Margin calls
Furthermore, Gerli claims that Wall Street real estate investing was not built to last, as investors are stopping purchases, banks will make margin calls to investors to sell their property and reduce assets on books. These margin calls will be based on the Floating Rate Credit Facilities the investors used, which get more expensive with increasing rates.
Breaking the markets hard
Meanwhile, Barry Sternlicht, billionaire and co-founder of Starwood Capital Group, joined CNBC’s Squawk Box to discuss the economy, where he touched on the real estate market’s troubles. He also added: It seems that Wall Street is looking for an exit from the real estate markets, which in turn will cause a market crash, and homeowners will be worse off along with potential home buyers. By the end of 2022, a clearer picture of the gravity of these warnings should emerge; for potential real estate investors, staying on the sidelines, for now, seems to be the most prudent thing to do. Buy stocks now with Interactive Brokers – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
