Last week, Elon Musk was in the news again—this time for a housing prognostication that immediately prompted sharp counters from industry experts. Twitter’s new owner tweeted that he expected the hard times currently being experienced in the commercial real estate sector would be followed by the same result in the residential sector. If his crystal ball is clearer than it was when he paid twice its true value for Twitter, Houston real estate could get the fallout along with the rest of the industry.
Musk reasoned that banks now face mounting risks due to commercial real estate’s failure to repopulate office buildings following the pandemic—and that risk-averse bankers might raise mortgage rates to homebuyer-repelling levels. Certainly, that’s possible. On the other hand, there is late evidence that, per MSN.com, “homebuyers are again resorting to bidding wars to get what they want.” When current homeowners opt to preserve their low locked-in rates by withholding their properties from the market, the resulting low inventories ensure that price levels remain more tenaciously lofty than Musk-like pessimists had previously forecast.
Locally, the Houston real estate market did not seem to be rocked by the billionaire’s supposition—perhaps because of the quick rebuke it drew from Selma Hepp, the chief economist at CoreLogic. That firm employs more than 5,000 employees as the leading property data gatherer for the U.S., offering data-based advice to clients like Freddie Mac. In response to Musk’s tweet, she pointed out that the statistical evidence opposes his conclusion. “We are not seeing signs of a potential crash at all. If anything,” she told businessinsider.com in a piece headlined Elon Musk is Wrong, “…home prices are growing again and at a much faster pace” than expected.
That data did seem to disprove what the SpaceX CEO and Tesla architect had advocated. The S&P CoreLogic Case-Schiller US National Home Price Index showed a median price gain of 1.3% in March—an acceleration over the .3% gain of a month earlier. American home prices also showed an annualized increase. Businessinsider further pointed out that San Francisco, which had suffered double-digit price drops toward the end of 2022, now posted the nation’s strongest monthly price gains.
Nobody (engineering geniuses included) can see into the future, besides which—since Musk’s corporate securities compete with real estate investments for backers—the self-interest element might introduce an extra helping of skepticism.
Not subject to skepticism, I hope, is the value I can bring to the marketing of your next Houston real estate initiative. Please call Rinnovare Realty, LLC at (832) 445-4957 or visit us at www.rinnovarerealty.com.