Part 3/6:
The conversation delves into the factors contributing to this crisis, including the influx of investor activity in the residential real estate market and the reluctance of existing homeowners to sell due to the inability to transfer their low-interest mortgages. Crisafulli suggests that a significant external event, such as a spike in unemployment, would be necessary to increase housing supply and alleviate the affordability crunch.
The Evolving Dynamics of the Banking System
The discussion also explores the challenges facing the banking sector, particularly the unrealized losses on bank balance sheets due to rising interest rates. Crisafulli highlights the precarious situation of regional banks, which hold a significant portion of commercial real estate debt and are burdened by these unrealized losses.
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