Financial and housing market expert, Dave Burt, CEO of investment research company DeltaTerra Capital, is warning a housing crisis is coming.
Burt predicted the 2008 housing crisis and is warning that many are “underestimating the systemic risk” posed by a perfect storm of economic weakness, higher interest rates, an increased number of homes on the market and homes impacted by climate-change-related flooding.
Burt’s advice and warnings saved the New York-based Cornwall Capital organization he worked for millions during the 2008 housing crisis. Successfully navigating that crisis was later profiled in Michael Lewis’ bestselling book “The Big Short.”
Fifteen years later, Burt warns the mortgage market is overlooking how probable climate-change-related flooding will facilitate another housing crash.
DeltaTerra’s research suggests that 20% of U.S. homes have “meaningful exposure” to flooding, making the housing market value $200 billion less than its 2022 $45.3 trillion value.
Speaking to CNBC over the weekend, Burt said: “We think of this repricing issue as maybe a quarter of the size and magnitude of the [global financial crisis] in aggregate, but of course very, very damaging within those exposed communities.”
During his CNBC interview, Burt warned that a 2008-style price correction is overdue because many lenders have not recognized the potential fallout associated with flood risks.
“Ultimately, until people have good information about what these climate-related costs are going to look like,” Burt argued, “we’re creating new problems every day. I think that’s really the crux of the matter.”
Burt’s warnings about climate change and flooding are not new. In April, Burt shared his concerns with CNBC. “I’m always on the lookout for these big systemic issues, and there’s a few reasons for that,” he told the outlet.
“If something is mispriced, then as an investor, which has been my job for most of my career, your main opportunity to add value is to identify something that is either too cheap to purchase for your clients or something that it is too expensive to sell for your client,” he added.
Burt noted that flooding represents the most common natural disaster in America. As an example, Burt cited Hurricane Ian, which caused more than $100 billion in damage last September.
Burt told CNBC: “When you buy a home, one of the most important considerations is the cost of maintaining that home, and I think so many important decisions are made based on that.”
In contrast, last week, the National Association of Realtors reported housing price increases in roughly half of the country, and that many sellers are receiving multiple offers and many homes are selling above list price.
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