Very Bad News for the US Real Estate Market

The US real estate market has some dark days ahead, due to growing inflation and Joe Biden’s inability to get it under control.

The time for selling your house or apartment or buying a new piece of property is gone, now that inflation has blown up the market.

Mortgage rates have now gone up past 5% and are set to make inflation even worse and drag down the real estate market from its boom.

Getting Specific

Specifically, take a look at the top choice of new home buyers: the 30-year mortgage operating at a set rate.

It’s now above 5%, which is the highest it’s been in a decade; the Federal Reserve’s attempts to get inflation under control aren’t showing any results.

The hope is that cranking up the interest rate will bring down the runaway inflationary spiral and get employment back on track. The Fed also hopes that fewer people will buy and sell homes with rates higher.

This is considered a plus, since housing availability is currently fairly low.

If buyers get scared away by higher rates, it can supposedly keep prices down. This is bad news for those selling a home or property.

It’s really not a big shock that the Fed’s signals have caused mortgage rates to go up. If anything, rates could easily be even higher.

There’s no doubt that the issue of inflation is even worse than what we’re being told by our mainstream media.Ā Recent statistics show fixed rate 30-year mortgages getting up to 6% in some cases.

The Outlook is Not Good

We could easily be looking at rates over 7% before this year is over.

In 2021, we saw rates averaging 3%; so thinking of how high it is getting now is genuinely alarming. To go up over 100% in a year in terms of 30-year fixed rates is astronomical.

Up until now, the Federal Reserve and various administrations in DC have done what they can to keep printing money and keep rates low so people keep buying homes.

Previously, overdoing this led to the 2008 financial recession and subprime mortgage crisis.

Too much so-called quantitative easing led to a crash, and now the Fed wants to pursue the opposite direction. The inflation from their past policies combined with an incompetent president has led to a perfect storm; now, they want to tighten the belt.

This has some positives, for sure, but it’s also going to pop the bubble in the opposite direction, leading to a lot of lost growth in the real estate market.

Time To Pop the Bubble

Cheap money always has a price, and now we’re starting to see it.

The big government and big spending policies of the left that took over our government in past decades are coming home to roost. The next housing bubble is about to burst.