24K99 News Laurent Maurel, a precious metals investment researcher at Recherche Bay, stated that the willingness of real estate investors in the USA has dropped to a historic low, with the sluggish real estate market and stock market cooling consumers, prompting them to prioritize savings over consumption. He anticipates that as investors gradually withdraw from real estate, the price of gold, calculated in dollars and euros, will hit new highs every week.

He explained that the US monetary system allows for the free creation of new legal tender through the crediting creation process, while the real estate market relies on one of the key drivers of this credit creation: mortgage loans.

"In the past 50 years, most developed economies have followed the same pattern, with interest rates steadily declining, and public and private debt continuously increasing, allowing the economy and asset markets to remain vibrant even as the population ages. Low interest rates encourage people to apply for larger mortgage loans, thereby driving up real estate prices. Providing more credit at lower rates will push prices up. However, this expansion of credit also leads to a substantial increase in the amount of currency in circulation."

"Therefore, when comparing real estate prices with competition money like gold, which has limited supply, the prices remain stable. An adequately flexible reits system, if properly utilized, can be very beneficial because it allows decision-makers to support the economy in times of crisis. However, mismanagement may lead to a surge in asset prices and inflationary pressure."

Maurel emphasized that this is exactly what is happening in the American real estate market.

According to Reventure's analysis based on 134 years of data, real estate prices adjusted for inflation are currently almost 100% higher than the average level of the past 130 years. The current prices even exceed those during the 2006 real estate bubble period.

The ratio of median US house prices to median household income has reached a record 7.2 times, surpassing the 7.1 times in 2022 and the 6.8 times during the 2008 real estate bubble. Before the 2020 pandemic, this ratio was 5.5 times. In just 5 years, house prices have risen by 50%, while household income has only increased by 17%. As a result, the housing supply continues to deteriorate.

(Source: GoldBroker)

In the USA, the number of full-time real estate agents and brokers will decrease to 0.44 million in 2023, the lowest level since 2014. This figure decreased by 0.072 million within a year, a 14% decrease, the largest decline since 2008.

(Source: GoldBroker)

Since 2022, the membership of the National Association of Realtors has decreased by 0.1 million, dropping to approximately 1.5 million. In July, the number of homes for sale hit a historical low, even lower than during the 2020 pandemic. At the same time, mortgage demand is at its lowest level in 30 years.

The homeowner leverage ratio (the percentage of household mortgage debt to property value) is currently at its lowest level since the fourth quarter of 1958, at about 27.3%. After peaking before the 2008 global financial crisis and steadily declining with falling interest rates.

(Source: GoldBroker)

As long-term interest rates rise, lending capabilities may deteriorate again. Contrary to everyone's expectations, the Fed's rate cuts in recent weeks have not had the anticipated effect, and long-term interest rates have actually increased significantly.

Real estate interest rates are quickly rebounding, much to everyone's surprise.

(Source: GoldBroker)

Morrill emphasizes: "No one is willing to sell their homes because no one is willing to give up mortgages with 3% or lower interest rates. Many homeowners are unwilling to sell their homes because of these interest rate levels. Unless you have enough cash to buy, switching from a 3-4% mortgage rate to a 6.5% rate makes no sense unless you're moving to a cheaper area. And no one is willing to buy! Now that rates have risen, who wants to pay more than 35% of the principal?"

"The market has come to a standstill," he added.

"Further rate cuts strengthen this expectation. If rates continue to fall, what's the point of buying today? Due to the current situation, real estate agents are leaving the industry as they struggle to obtain new listings. Low property supply in the market is causing hesitation for new agents and their buyers, as multiple people are bidding on the same property. Real estate has become a challenging industry with no income in the long term."

However, the current standoff is unprecedented in the past 50 years, with the market completely frozen. Even worse, this impasse is fundamentally altering market sentiment: the willingness to buy real estate in the United States has never been as low.

(Source: Bravos Research)

He mentioned: "Today in the USA, buying a house or apartment is considered a ridiculous idea, never in history has there been such negative sentiment towards the real estate industry. The extreme scenario is characterized by a lack of buyers, sellers, and liquidity, yet prices have reached historic highs, with no one interested in buying properties, an unprecedented situation in American real estate history."

In France, the willingness to buy property may also be affected, partly due to rising interest rates and also due to market conditions. The government plans to strengthen the taxation of non-professional furnished rentals (LMNP-Non-Professional Furnished Rental) in the 2025 fiscal bill.

Currently, property owners can benefit from depreciation allowances, but depreciation is not considered when calculating capital gains upon sale. The reform proposes to reorganize this depreciation, thereby increasing taxable capital gains. If the property is sold after depreciation, the taxable capital gains will be much higher.

In other words, when reselling property, owners' rental income will be heavily taxed. Professionals are concerned that this may affect the rental market and worry that the attractiveness of furniture-equipped real estate investments will decrease.

But most importantly, real estate investment sentiment may be affected. In France, just like in the USA, the desire to buy real estate may further weaken.

Moriel finally stated: "Will there also be a frenzy for physical gold in the USA? Will those avoiding real estate turn to physical gold to protect their savings? Western attitudes towards gold are beginning to change. As investors gradually withdraw from real estate, gold prices calculated in dollars and euros are setting new highs every week."