Real Estate Investor Predicts “Greatest” Correction in Industry
By Alicia Warren, Daniella Genovese, and Eric Revell, Fox Business
Published Dec. 16, 2023
Updated Dec. 16, 2023, 4:08 p.m. ET
One real estate investor is bearing witness to the start of the industry’s “greatest” correction he’s ever seen. Grant Cardone, a private equity fund manager, made the bold claim during an interview on “FOX & Friends,” where he discussed the state of the real estate industry.
“It’s [real estate correction] going to be a great opportunity for individuals, regular, everyday people to actually grab trophy real estate from institutions. This has never happened in the country,” Cardone said, expressing his belief that the correction will be at epic levels.
Despite Cardone’s claim that the industry is entering new territory, the current housing market presents significant issues for both buyers and sellers. With sellers staying out of the market, low inventory exacerbates the problem, resulting in rising home prices. Cardone attributes the unaffordability of owning a home to the Federal Reserve, blaming them for “single-handedly” killing the housing market with interest rate hikes and failing to control inflation.
To jump-start the housing industry, Cardone is urging Federal Reserve Chair Jerome Powell to “step aside” and let the market correct itself. He believes that interest rates will have to come down in order for pricing to come down and for mortgage applications to increase, which would encourage people to start selling their homes.
The impact of these market conditions extends beyond potential buyers, as renters are also feeling the strain. A study by Moody’s Analytics found that the U.S. rent-to-income ratio (RTI) declined slightly in Q3, ending at 30% – a level considered the threshold for being rent-burdened.
Cardone predicts that the Fed’s actions will result in more renters in the country in the next two years than there have been in the last 50 years. With mortgage applications at all-time lows, the real estate investor believes that the housing market is in need of a drastic correction.
As the real estate market continues to experience challenges and uncertainty, it remains to be seen whether Cardone’s prediction of the “greatest” correction will come to fruition.