With housing becoming more unaffordable in certain areas, mortgage defaults will start to rise, but most of the real estate slowdown will happen in the commercial end, not for residential real estate, said Scott Rothbort, president of LakeView Asset Management.
“There will be a shakeout more on the commercial end than there is on the residential end,” Rothbort told David Lin, anchor for Kitco News.
Rothbort noted that some of the factors behind the real estate boom in the past decade are now deteriorating.
“There’s a few reasons why we’ve had a boom in real estate. One is low interest rates, the other is low input costs. The other is the great migration,” he said. “There was only a point in which people would continue to pay high income taxes and high real estate taxes in a lot of cities and states. Frankly, it gets to the point where it just doesn’t make sense to live in some of these states.”
For Rothbort’s investment recommendations, watch the video above.
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