Episode summary
The housing market is 'really stuck in the mud', says OnePoint's Peter Boockvar
CNBC Fast Money
· · 6 min · Guests: Peter Boockvar
Summary
Peter Boockvar argued that the housing market is still deeply impaired by high mortgage rates, elevated prices, and low turnover. He said housing-related activity accounts for roughly 15% to 18% of U.S. GDP and that existing home sales remain far below what a much larger U.S. population would suggest, leaving the market “stuck in the mud” and “frozen.” He said the fix will take time: more supply, slower home-price gains, and a period in which incomes grow faster than home values so buyers can “grow into the affordability.”
He also linked housing to broader market and economic conditions. Boockvar said a stock-market pullback could cool bidding wars and lower prices, while a weaker wealth effect would make homeowners less inclined to remodel or spend on their homes. That, in turn, would weigh on Home Depot and Lowe’s activity because transaction-driven spending is more cyclical than repair-and-remodel demand.
On rates, Boockvar said a decline in markets could pull long rates lower in the near term, but he still sees a rising-rate environment over time. He expects the 10-year Treasury could ultimately revisit 5.5% to 6%, though it may first move down toward 4.75% if growth concerns intensify. He also said he is increasingly worried about the AI trade if expected capital spending does not get fully approved.
Key takeaways
- Boockvar says housing remains “stuck in the mud” because high mortgage rates and still-high home prices are suppressing transactions.
- He estimates housing-related activity is about 15% to 18% of U.S. GDP, making the sector too large to ignore in the macro outlook.
- Boockvar thinks a stock-market decline could reduce the wealth effect, weaken home spending, and help push home prices lower.
- He expects the 10-year Treasury could eventually reach 5.5% to 6%, even if growth fears first pull yields down toward 4.75%.
- Boockvar said the AI trade is vulnerable if projected capex does not get greenlit, even though spending is still expected to rise next year.
Notable quotes
“THE IMPORTANCE OF HOUSING, JUST TO QUANTIFY IT, ACCORDING TO THE NIH, BE BETWEEN, WELL, EVERYTHING RELATED TO HOUSING”
“A DECLINE IN THE STOCK MARKET COULD BE THAT ON THE HIGHER END”
“I AM GETTING WORRIED ABOUT THIS AI TECH TRADE. NOT IN TERMS OF THE THE ABSOLUTE LEVEL OF SPEND”
How the episode opens
Everybody. And if you look at other parts of I would just say more of the plain vanilla semiconductors. This pullback to me is still an opportunity. I'm not running from that trade. — All right. Meantime homebuilder sentiment falling to more than 14 year lows in october as mortgage rates remain persistently high. For more on what's next for the housing market, we're joined on set here by cnbc contributor Peter Boockvar. He's chief investment officer at one point, bfg wealth partners. Peter, great to see you in person. So in terms of what's next for the housing market, it doesn't sound like anything good in your view, at least not immediately.
So the couple of things, the importance of housing, just to quantify it, according to the nih, be between, well, everything related to housing, whether it's the builder, whether it's the contractor, whether it's the real estate broker, whether it's the title company, we're talking about 15 to 18% of u.s. Gdp that is essentially still contracting 40, 30 years ago, mid 90s, we had existing home sales at about 4 million annualized. Here we are 80 million people bigger as a population, we're doing 4 million.
Then, of course, you throw in a 50% increase in home prices over the past six years and now mortgage rates. So it's really stuck in the mud. It's frozen.
You still have a lot of people, obviously, with low cost mortgages, even though that number is shrinking. So you're actually getting closer to in convincing someone to actually move and not stay because of a mortgage. But it's still a troubled area and only time is going to cure this.
Yes, we need more supply, but that's going to take time. And we need a period of time where income growth is much faster than the appreciation in the value of homes.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- housing market
- mortgage rates
- home prices
- real estate demand
- economic outlook
Companies and tickers mentioned
- OnePoint BFG Wealth Partners
Watch the episode
Watch “The housing market is 'really stuck in the mud', says OnePoint's Peter Boockvar” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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