Tesla and Spacex CEO Elon Musk says commercial real estate is “melting down fast,” warning that home values will be next. Some experts disagree with Musk regarding the residential real estate market, including Shark Tank star Barbara Corcoran. However, she agrees that the commercial real estate market is “going to be a bit of a bloodbath before it gets better.”
Elon Musk’s Real Estate Market Warnings
Tesla and Spacex CEO Elon Musk warned about real estate markets in a tweet Monday. The billionaire cautioned that the commercial real estate market is “melting down fast,” predicting that home values will be next.
Musk’s tweet was in reply to venture capitalist David Sacks, founder and partner of Craft Ventures, who extensively discussed the challenges faced by the commercial real estate market through a series of tweets over the past few days.
Sacks highlighted the effects of the Federal Reserve raising interest rates from near 0% to about 5% in the past year, stating that they correspond to the “3 stages of the financial crisis we’re in.” Noting that the first stage is the banking crisis, the second is the commercial real estate crisis, and the third is the government debt crisis, the VC stressed:
We’re seeing the first stage play out now. The second and third stages are yet to come.
Multiple people have warned about the impending collapse of the commercial real estate market, including Shark Tank star Barbara Corcoran. The veteran real estate investor said Wednesday that the commercial market is “in trouble,” stating that “no one has the confidence to buy now” and “no one really believes it’s going to turn the corner.” She opined:
I don’t see that turning around. I think it’s going to be a bit of a bloodbath before it gets better.
Experts Disagree With Musk on Residential Real Estate Market
While Musk warned about a potential decline in home values, some people disagreed. Federal Reserve Governor Michelle Bowman stated on Wednesday that home prices have been “leveling out recently, which has implications for our fight to lower inflation.”
Corcoran similarly told Fox Business Wednesday that the residential real estate sector is beginning to rebound, emphasizing that Musk is wrong. “So you get a Mexican standoff going on, but things are changing,” the Shark Tank star detailed. “The people who are going out there and buying are finding they’re overbuilding. They’re having a hard time getting their hands on the house. And right now, what everybody’s afraid of is the high-interest rates. But the minute those interest rates come down, all hell is going to break loose and prices are going to go through the roof.”
Glenn Kelman, the CEO of residential real estate brokerage operator Redfin, also disagreed with Musk. Responding to the Tesla CEO’s tweet, he wrote:
The loss in demand for commercial real estate is what’s driving demand for residential real estate. People who work from home need more space at home. Sales volume is down because inventory is down. Today, home prices increased for a second straight month.
Do you agree with Elon Musk regarding commercial and residential real estate markets? Let us know in the comments section below.
