Real estate analyst and blogger Mark Hanson says that home prices could drop 20 percent over the next year as investors start shying away from the market in the face of rising prices, interest rates and dropping margins on buy-to-rent investments.
The high percentage of all-cash deals over the last two years — more than 50 percent, according to some estimates — is the basis for Hanson’s take. Investors will leave for more profitable markets, Hanson thinks, and home prices will plummet, particularly in volatile areas like Florida, California and Nevada that have seen massive price increases from their housing-crash lows.
“There’s a strong distinction between a normal slowdown and the wheels coming off the housing recovery,” Zillow’s chief economist, Stan Humphries, told Bloomberg in reaction to Hanson’s take.
Hanson, who accurately predicted 2007’s housing crisis, has been wrong in recent years, Bloomberg pointed out.