Investors Flee the Housing Market in Troubling Sign for the Economy

Investors bought 30% fewer homes in the third quarter of 2022 compared to the same time period last year, as high borrowing costs pressured investors out of the housing market, according to real estate brokerage Redfin Tuesday.

Besides a brief plunge in the second quarter of 2020 in response to the beginning of the coronavirus pandemic, the decline was the steepest since 2008, and surpassed the 27.4% overall decline in home purchases nationwide, Redfin reported. The pandemic ultimately boosted demand for homes in suburban areas, sending investors on buying spree as they raised rents in those areas, in some cases by double digits, The Wall Street Journal reported Tuesday.

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Investors Show Concern over Defaulting Mortgages as Possible Recession Looms

Investors are reportedly concerned about mortgage defaults and are unloading Fannie Mae and Freddie Mac securities, amid record-high interest rates and a rapidly cooling housing market. 

Mortgage rates last week hit a two-decade high of 6.92%, a trend that has slowed the booming, often over-priced real estate market during the height of the pandemic.  

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Goldman Sachs Warns Investors High Rates Are Here to Stay

Even in the best case scenario where the Federal Reserve is able to combat inflation without causing a recession, it is unlikely to cut interest rates, Goldman Sachs analysts warned in a note, according to Business Insider.

The Federal Reserve has raised rates three times in the past four months, with Wednesday’s 0.75% increase bringing primary credit rates to 3.25%, one of the most aggressive increases since the 1980s. However, even in a so-called “soft landing” where a recession and layoffs are avoided, the Fed is unlikely to cut interest rates until “something goes wrong,” according to a Goldman Sachs note reported by Business Insider.

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Wall Street Is Freaking Out About One Major Recession Indicator

Wall Street investors and economists are sounding the alarm over a yield curve inversion, one of the most reliable indicators that a recession is coming, according to The New York Times.

The yield curve inversion, or when two-year bonds have a higher return than ten-year bonds, hit its largest spread yet on Wednesday, sending investors into a panic, according to the NYT. Economists and investors see this kind of inversion as a negative omen for the economy, and every recession in the U.S. in the last 50 years has been preceded by a yield curve inversion.

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Another Whistleblower Files SEC Complaint Alleging Facebook Didn’t Do Enough About ‘Hate Speech’, ‘Misinformation’

Person looking on Facebook with trending topics

Another former Facebook employee filed a whistleblower complaint Friday with the Securities and Exchange Commission alleging that the tech giant misled its investors by failing to combat the spread of hate and misinformation on its platform, The Washington Post reported.

The former employee, whose name is not yet public, alleged that Facebook executives chose not to pursue adequate content moderation policies related to hate speech and misinformation for the sake of maximizing profits. The complaint also alleges that Facebook did not do enough about alleged Russian misinformation on the platform for fear of upsetting former President Donald Trump.

In particular, the complaint alleges that Trump and his associates received preferential treatment, according to the Post.

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