What Will Crush Housing?

[View this email in your browser]( In any "cycle" there are themes that help the market to move in both directions. For example, the downside during 2008/2009 financial crisis largely came from leverage in the housing market. Without the excessive leverage in the housing market, 2008/2009 probably (only with the benefit of hindsight) would not have been as bad as it was. The upside during the bull market of 2009-2021 largely came from money printing. Without the excessive money printing in the financial sector, the 2009-2021 bull market (again, only with the benefit of hindsight) would not have been as good as it was. You get the idea. During the latest cycle, and especially the last two years, one of the drivers in housing, besides record low-interest rates and besides trillions of dollars in helicopter money, has been AirBnb. You buy a property, put it on AirBnb, and that property produces more cash via short-term renters than the typical 12-month renter. Here is the problem as I see it. 1) 50% of homes listed on AirBnb have been purchase in the last 2 years 2) Bookings on AirBnb are down over 40% year over year Yes, 30 year mortgage rates over 7% will slow down housing. Portfolio's being down 25% will slow down housing. Negative real wages every single month from January 2021 to present will slow down housing. There are normal ebbs and flows to all markets, but I am starting to get concerned that the nasty leg lower in housing may come from an under-the-radar source, namely AirBnb. Now, what I do not know is the type of debt these AirBnb owners have. If they have fixed debt that was locked in at low rates over the past two years, there is a good argument to be made that those owners should have an easier time. But if some AirBnb'ers bought a home within the last two years, which is now worth less than when they bought it, that also has a variable or floating loan, especially when bookings are down 40%, that could be a disaster for the residential housing market (commercial and multi-family would be impacted far less directly from AirBnb). More to come as I know more. Stay small and win more trades, Steven STONY BROOK SECURITIES LLC IS A PUBLISHER AND DOES NOT OFFER TRADING ADVICE OR RECOMMENDATIONS. ALL INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND NOT AN OFFER OR A RECOMMENDATION TO TRADE FUTURES CONTRACTS, STOCKS, OPTIONS OR FOREX. GOVERNMENT REGULATIONS REQUIRE DISCLOSURE OF THE FACT THAT WHILE THE TRADING IDEAS AND TRADING METHODS SHOWN ON THIS WEBSITE MAY HAVE WORKED IN THE PAST; BUT PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. WHILE THERE IS A POTENTIAL FOR PROFITS THERE IS ALSO A HUGE RISK OF LOSS. A LOSS INCURRED IN CONNECTION WITH TRADING FUTURES CONTRACTS, STOCKS, OPTIONS OR FOREX CAN BE SIGNIFICANT. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION SINCE ALL SPECULATIVE TRADING IS INHERENTLY RISKY AND SHOULD ONLY BE UNDERTAKEN BY INDIVIDUALS WITH ADEQUATE RISK CAPITAL. AN INVESTOR COULD POTENTIALLY LOSE ALL OR MORE THAN THE INITIAL INVESTMENT. [FULL INVESTMENT RISK DISCLOSURE]( Copyright © 2022 Stonybrooksecurities LLC, All rights reserved. Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](. Questions? Contact support@stonybrooksecurities.com