A reckoning is coming for the housing sector, according to billionaire real estate investor Jeff Greene, who said the industry will soon "get whacked" as Americans' savings disappear with the higher cost of living.
Green said Wednesday on CNBC's Squawk Box that the trillions of dollars injected by the government into the U.S. economy during the COVID-19 pandemic are starting to run out—with consequence for the entire sector.
"What's that going to mean for demand for everything? Retail, office, apartments—every aspect of real estate is going to get whacked, and I think we're just in the first inning," Greene said.
"In the real world, for most of Americans, what's happening is the wages have gone up a lot, because we've had a booming economy," Greene said, mentioning how salaries grew during the pandemic. "But all of that happened because of the trillions and trillions of dollars that were going into the economy. If that goes away, you're gonna have unemployment, you're gonna have people making less money and pay higher rent."
While wages and salaries grew by 4.5 percent between December 2020 and the first quarter of 2022, the cost of living outpaced them. Adjusted to inflation, wages fell by 4.3 percent at an annual rate over the first quarter of 2022, according to the Peterson Institute for International Economics.
In June 2023, U.S. workers' real weekly earning grew year-on-year for the first time in 26 months, though it was a modest growth of 0.6 percent.
Mentioning Florida, whose housing market experienced a boost in demand during the pandemic, Greene said that demand was a direct consequence of the movement induced by the health emergency and it's now fizzling.
According to Greene, all the people in big cities across the countries like New York and Boston who were thinking of retiring to Florida in the following years—between 2022 and 2025—decided to move immediately because of the pandemic.
"We've borrowed a huge amount of demand from the future," said Greene, who has more than 80,500 residential properties between Los Angeles, New York, Florida, New England.
Prompted by CNBC journalist Robert Frank, Greene said that that kind of in-migration between the Northeast and Florida is completely over, as higher mortgage rates makes it harder for people to move.
Greene is known to have successfully navigated the housing bubble of 2008, during which he made profits of $800 million.
On Wednesday, he told CNBC that investors should now look out for commercial properties because there will be "some extraordinary opportunities to buy" in the next 12 to 24 months.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Giulia Carbonaro is a Newsweek Reporter based in London, U.K. Her focus is on U.S. and European politics, global affairs ... Read more
To read how Newsweek uses AI as a newsroom tool, Click here.
