Over the period following the 2022–2023 spike in mortgage rates, reduced housing mobility in the United States (caused by homeowners being locked into low-rate mortgages and unable or unwilling to move) will lead to a measurable rise in resident discontent in their current states or cities, compared with prior years when interstate mobility was higher.
“So as a result of that, I think discontent is going to rise, because I think one of the ways that you create a pressure valve is when people are unhappy in a state, they just move somewhere else. Well, now they're not able to do that”
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Explanation
The mortgage 'lock-in effect' from homeowners holding low pre-2022 rates has been widely documented as suppressing housing mobility and contributing to homeowner and buyer discontent in the years since.
In the near term (within roughly the next 1–2 years from May 2023), there will be significant financial distress in U.S. real estate markets, particularly commercial real estate, evidenced by increasing loan defaults, fire‑sale transactions, or major write‑downs.
“There's gonna be a lot of distress in the market soon. I'm predicting a lot of distress”
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Explanation
Commercial real estate distress, including rising defaults and major write-downs concentrated in office properties, materialized clearly within the 1-2 year window following this May 2023 prediction.
In the coming years following May 2023, many highly vacant office towers in San Francisco and similar major U.S. cities will end up owned by banks through foreclosure or similar processes, those banks will be forced to liquidate a large portion of these properties at substantial losses, and the associated commercial real estate loans will incur significant write‑offs, creating a notable problem for the banking sector.
“All these office towers are eventually going to be owned by the banks, which are going to have to liquidate them. And then we're going to find out that these loans that they made are going to have to be written off, because the collateral that they thought was blue chip that was backing up those loans is not so blue chip anymore. So I think we've got not just a huge commercial real estate problem, but it's going to be a big banking problem”
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Explanation
Numerous office towers in San Francisco and other major U.S. cities were foreclosed on or sold at steep discounts by lenders in the years following this prediction, with banks absorbing significant losses on the associated commercial real estate loans.