Financial Analyst James Stack Predicts Real Estate Market Collapse in 2008

Financial analyst James Stack predicted a collapse in the real estate market in 2008, and last year he warned of a slowdown in the real estate market. "Trading in real estate may come to its worst period since the last decline. We can expect the trend of a decline in real estate sales to continue over the next 12 months and beyond. If a recession comes, there is a significant risk to real estate prices," said Stack in a phone interview with Bloomberg. In January last year Stack warned that rising interest rates on mortgages would make buying a home more difficult, and homes less affordable. Shares of builders last year recorded a decline in value of over a third. Stack today, a year later, warns of new trouble in the real estate market, but also in the wider economy. Home sales in the US fell by 7.7 percent in November, and consumer confidence fell in December. The indicator of American production has fallen the most since 2008, just a day after Apple reduced its forecast of sales results.

Economic stability is encouraging

Stack explained that it is still too early to say whether the forecast is actually about a new great fall in the real estate market, as it will depend on what happens with the economy globally. His previous year's warning was announced after he noticed that the index of the value of shares of builders and mortgage institutions increased by 80 percent in a year. According to his opinion, this is a sign that investors have played too much. He believes that economic stability may still be encouraging for the real estate market. Interest rates for 30-year mortgages have risen since the beginning of 2018. The peak was reached in November at 4.94 percent, and then fell to 4.51 percent. The unemployment rate in the US is the lowest in five decades, and the most employed in 10 months was in December. Stack claims that the damage has already been done. "Even if interest rates remain at the same level or slightly decrease in 2019, it is unlikely that there will be a psychological turnaround. People have woken up and realized that the affordability of homes is a big problem. Can they afford a home at all?" concluded James Stack.

If changes come to America, they will affect Croatia as well

If the predictions of financial analyst James Stack are confirmed, the change in the real estate market will be felt in Croatia as well, believes Boro Vujović from the Association of Real Estate Business at the Croatian Chamber of Commerce. "If something big happens globally, we will feel it very soon in our market. The world is a global village today," said Vujović for Dnevnik.hr and added that we even felt the last crisis in America: "For a few months, it was so strong that we didn't know what was happening." The question is whether something big will happen and how it will happen. Currently, the situation on our real estate market is good. "Now something interesting has happened. Some investors have lowered prices from 2800 to 2400 euros per square meter in Zagreb, which has not happened in the past two years. This is very indicative as it is clear that sales are not going as they should," explains Boro Vujović, who also owns an agency for real estate sales. He says he does not expect a rise or a fall in prices, but rather a stabilization of prices at current levels until September when the subsidies for apartments will be in effect. "Then there might be some changes in prices," he added. The time of subsidies, by the way, is the time when a lot more real estate is sold. "We sold 15 apartments in the first five days when subsidies were in effect until October 4 or 5, and then we sold another 10 apartments by the end of the month. This clearly shows what subsidies mean for the market and what the demand and offer are," explains Vujović and adds: "You already have buyers who will wait for the ninth month and then buy an apartment with a subsidy." In the time of subsidies, with increased demand, there is also a possibility of a smaller correction of prices due to the unchanged offer. But there are buyers now as well. "Demand is already higher than supply. The market is good and stable on its own. There are sales and there are buyers," said Vujović and reminded that, if there are significant changes in the American real estate market, they will be felt in the Croatian real estate market as well. I am only translating the provided text and do not have the original Croatian content or any additional information to verify the provided translations.

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