Blog U.S. Housing: Potential Opportunity Amid Cautious Economic Outlook Even as the probability of a recession in the near-term remains low, we believe investors should look to sectors that are likely to be resilient in periods of higher volatility.
Even as the probability of a recession in the near-term remains low, we believe investors should look to sectors that are likely to be resilient in periods of higher volatility. One area in which we see a potential opportunity is U.S. housing, where fundamentals remain sound. Demand is outpacing supply, and it remains cheaper to buy a home than to rent one (see chart). Furthermore, while recession risks have risen, we don’t see the same kind of imbalances in the real economy that we have seen in previous recessions: There is no over-borrowing, overconsumption or over-investment. Also, while the pace of home price gains is slowing and the pace of housing-related activity is slowing, valuations in the U.S. housing market look reasonably attractive. As a result, we think this is a sector that will exhibit resiliency even if we were to get into a sustained period of weak economic growth or even a period of higher interest rates. What it means for investors With rising volatility and stretched valuations, we believe investors should emphasize flexibility and consider sectors like U.S. mortgages that have solid fundamentals and are less affected by swing factors like politics or trade. For more insights into the factors that inform our favorable view of the housing market, watch “Quick Takes: Will Rising Rates Hurt the Housing Market?” Watch Now
Blog Dollar Strength: Sum of All Fears The dollar is set to weaken as fears over last year’s shocks abate.
Blog European Outlook: Less Downside Now, But Caution Still Warranted Focusing on high quality and liquidity when taking risk in portfolios will be key in 2023, as pressure on monetary policy remains intense.
Blog Cyclical Outlook Key Takeaways: Strained Markets, Strong Bonds High quality fixed income investments can help center portfolios while offering attractive yield potential amid a likely recession in 2023.
Cyclical outlook Strained Markets, Strong Bonds Resilient assets with attractive yields can help portfolios stay centered in 2023, when we expect inflation to moderate, central bank policy to steady, and a recession to take hold.
Viewpoints Staying in Place – The Post‑Pandemic Housing Market We expect further weakening in U.S. home prices, although not a sharp decline, as higher mortgage rates pressure affordability and induce many homeowners not to move.
Viewpoints Commercial Real Estate: Finding Value in Distressed Assets Traditional channels of liquidity for commercial real estate have collapsed, providing attractive opportunities for distressed investors.
Blog ECB Hikes, and Indicates Higher Rates Coming The European Central Bank is likely to continue hiking rates next year, but the end point remains uncertain.
Viewpoints Staying in Place – The Post‑Pandemic Housing Market We expect further weakening in U.S. home prices, although not a sharp decline, as higher mortgage rates pressure affordability and induce many homeowners not to move.
Viewpoints U.S. Housing Outlook: No Bust After the Boom Home price fundamentals suggest appreciation will slow but remain resilient.
Blog U.S. Inflation Eased More Than Expected in November as Fed Eyes Pause in Rate‑Hike Cycle Next Year Falling prices for cars and holiday discounting contributed to softer U.S. inflation, creating more room for the Fed to potentially dial back its hawkish stance.