It won’t be too long before large numbers of Americans are once again…
by Michael Snyder of The Economic Collapse Blog
Our concerns about the housing market have been confirmed. This week, the corporate news is full of headlines about the new “housing recession” that has officially arrived, but this shouldn’t surprise any of us. We were warned over and over again that if the Federal Reserve aggressively hiked interest rates that it would absolutely crush the housing market. In so many ways, what we are currently witnessing seems so similar to 2008. After a period of very rapid growth, home prices all over the nation are starting to fall. Meanwhile, much higher mortgage rates are pushing millions of potential homebuyers out of the market and home builders are starting to panic. If nothing is done, it won’t be too long before large numbers of Americans are once again underwater on their mortgages and this crisis starts to reverberate on Wall Street.
On Monday, we received some news that was extremely troubling…
The National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, fell for the eighth consecutive month to 49, marking the worst stretch for the housing market since the 2008 financial crisis.
8 months in a row.
Needless to say, that is clearly a trend.
And if you want to thank someone for this, you can thank officials at the Federal Reserve, because they have pushed us into yet another “housing recession”…
“Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession,” NAHB chief economist Robert Dietz said.
The only way out of this mess is lower interest rates.
But Fed officials aren’t going to reduce rates.
Instead, they are going to keep hiking them, and that means much more doom and gloom for the housing market in the months ahead.
Looking more deeply at the numbers that were just released, I am particularly alarmed by what has happened to buyer traffic…
Of the index’s three components, current sales conditions dropped 7 points to 57, sales expectations in the next six months fell 2 points to 47 and buyer traffic fell 5 points to 32.
Despite higher costs for land, labor and materials, about 1 in 5 builders in August reported lowering prices in the past month in an effort to increase sales or limit cancellations. The average drop reported was 5%.
A very low level of buyer traffic indicates that sales will be depressingly low during the weeks and months to come.
So if you are trying to sell a house right now, that is really bad news.
And for homebuilders the outlook is downright apocalyptic.
Those that build homes have to make plans far in advance. If they guess right, they can be rewarded handsomely. But if they guess wrong, the pain can be immense.
Unfortunately, homebuilders are being hit by a double whammy right now. Input costs have been going higher and higher, and meanwhile home prices overall are about to steadily fall all over the nation thanks to much higher mortgage rates.
If you can believe it, 30 year rates have almost doubled over the past 12 months…
The average rate for a 30-year fixed rate mortgage climbed to 5.22% for the week ending Aug. 11, according to recent data from mortgage lender Freddie Mac. That is significantly higher than just one year ago when rates stood at 2.86%.
We really need mortgage rates to start coming back down.
But thanks to the Fed they are just going to keep going up.
Buying a home in the United States has never been more unaffordable than it is right now, and it is only going to get worse as we head toward 2023.
Many Americans that would like to buy a home are currently choosing to rent instead, but rent prices are also becoming less affordable.
As I discussed yesterday, the median monthly rent in the United States has now risen above $2,000 a month for the very first time.
I was stunned when I first read that.
I can still remember renting a nice apartment for $300 a month many years ago.
There is no way that rents should be as high as they are now.
The greed that we are seeing in the industry has gotten completely out of hand. According to one recent survey, almost 60 percent of all renters have had their rent payments increased over the past year…
If you are feeling the pinch of higher rents, you’re not alone.
Nearly 60% of renters saw a rent increase during the past year, while just 38% said they saw their income increase, according to a study from Freddie Mac. And renters were less likely than all employed respondents to have gotten a raise. As a result, nearly 1 in 5 who experienced a rent increase said they are now “extremely likely” to miss a payment.
This is going to end quite badly.
As the U.S. economy slows down, millions of people will ultimately lose their jobs.
And a lot of those people that are no longer working will eventually lose their homes.
Do you remember the tremendous suffering that we witnessed during 2008 and 2009? Well, as I have been persistently warning, we are going to see it happen again.
Whenever the housing market crashes, there are countless people that have their lives turned upside down as a result.
So much of the pain that is coming could have been avoided if our leaders had made much different decisions.
But that didn’t happen, and so now a “housing recession” is here.
And it isn’t going to be fun at all.
***It is finally here! Michael’s new book entitled “7 Year Apocalypse” is now available in paperback and for the Kindle on Amazon.***
About the Author: My name is Michael and my brand new book entitled “7 Year Apocalypse” is now available on Amazon.com. In addition to my new book I have written five other books that are available on Amazon.com including “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, “Get Prepared Now”, and “Living A Life That Really Matters”. (#CommissionsEarned) When you purchase any of these books you help to support the work that I am doing, and one way that you can really help is by sending digital copies as gifts through Amazon to family and friends. Time is short, and I need help getting these warnings into the hands of as many people as possible. I have published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help. These are such troubled times, and people need hope. John 3:16 tells us about the hope that God has given us through Jesus Christ: “For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.” If you have not already done so, I strongly urge you to ask Jesus to be your Lord and Savior today.