This is a very bad time for those that work in the real estate industry. Thanks to the Federal Reserve, mortgage rates are much higher than they were a couple of years ago, and this has deeply frozen America’s housing market. Millions upon millions of U.S. homeowners are currently paying off fixed rate mortgages that were financed when mortgage rates were at historic lows. If you are one of those homeowners, selling your current home and buying another home that will come with a mortgage at a much higher rate would be very painful financially. So vast numbers of current homeowners feel “locked in” to their current homes. At this point, the number of Americans that are selling homes has fallen to a depressingly low level, and the number of Americans that are buying homes has fallen to a depressingly low level. This isn’t going to change until interest rates go down significantly, but the Federal Reserve is very hesitant to reduce interest rates because of the nightmarish cost of living crisis that we are facing. So our housing market will probably continue to be in a deep freeze for the foreseeable future.
On Wednesday, we learned that sales of existing homes fell once again during the month of April…
Sales of previously owned homes fell by 1.9% to an annual rate of 4.14 million in April, the National Association of Realtors said Wednesday.
That’s the number of homes that would be sold over an entire year if sales took place at the same rate every month as in April. The numbers are seasonally adjusted.
The pace of sales fell short of expectations on Wall Street, which was forecasting a 4.21 million pace for April.
As Zero Hedge has pointed out, sales of existing homes have almost plunged to levels that we last witnessed during the Great Recession of 2008 and 2009.
Normally, when home sales are going down home prices are heading in the same direction, but during the month of April the median price of an existing home actually jumped substantially…
The median price for an existing home in April rose 5.7% to $407,600, as compared with the year before. That’s the highest price recorded for the month of April.
The jump in home prices was the biggest since October 2022.
The reason why this is happening is because it simply does not make financial sense for the vast majority of homeowners to sell their homes right now.
If you got a mortgage when rates were low, that is something that you do not want to give up easily.
According to Zillow, as a result of higher rates the average mortgage payment in the U.S. has almost doubled since January 2020…
A monthly mortgage payment on a typical U.S. home has nearly doubled since January 2020, up 96.4% to $2,188 (assuming a 10% down payment).
I feel so bad for young couples that are looking to buy their very first home in this environment.
My advice would be to keep renting for now and pray that mortgage rates will go down eventually.
Until rates go down, it just doesn’t make sense to buy or sell.
As Lawrence Yun has noted, we are in “new territory as to how the lock-in effect will restrain home sales”…
“When we see these mortgage rates, which is a 300 basis point increase from pre-Covid pace, we are in a new territory as to how the lock-in effect will restrain home sales,” said Lawrence Yun, chief economist for the Realtors.
If the Federal Reserve wants to unfreeze the housing market, the solution is easy.
Slashing interest rates would force mortgage rates down and the housing market would heat up again…
Economists do not expect a significant decline in mortgage rates until the Federal Reserve starts cutting interest rates. The U.S. central bank has raised its benchmark overnight interest rate by 525 basis points since March 2022 to dampen demand in the economy and control inflation.
But the Federal Reserve is not eager to do that, because lower interest rates would just add more fuel to the inflationary pressures that are driving up prices throughout the economy.
So for now, many Americans will just do whatever they have to do to survive in this very harsh environment.
Recently, one 34-year-old woman was discovered living inside a rooftop grocery store sign in Michigan…
Police bodycam footage has been released showing the moment a homeless woman was found squatting inside a Michigan rooftop grocery store sign.
The 34 year old, whose identity remains anonymous, had been living behind the triangle-shaped sign – approximately 5ft wide and 8ft high that has a door accessible from the roof – of the Family Fare supermarket, located in Midland, a city approximately 130 miles north of Detroit.
The woman had turned the crawl space into an apartment, which included flooring the woman had laid down, bedding, a houseplant, clothing, a Keuring coffee maker, a desk, a printer, and a computer. She was resourceful, utilizing a power cord plugged into an outlet on the roof to use the grocery store’s electricity.
I applaud her ingenuity.
And from now on, whenever I see a rooftop store sign I will wonder if someone is living inside.
In the days ahead, all of us are going to have to make the most out of whatever circumstances we find ourselves in.
For the moment, conditions are still at least somewhat relatively stable, but we are rapidly moving into a time of unprecedented global chaos.
In the short-term, I fully expect economic conditions to quickly deteriorate during the second half of this year, and it appears that the American people as a whole are also becoming more pessimistic about our economic future.
This month, consumer confidence is substantially lower than it was last month…
The latest reading of the University of Michigan’s survey showed sentiment plunged to a six-month low of 67.4 in May from a final reading of 77.2 in April as Americans cited stubbornly high inflation and interest rates, as well as fears that unemployment could rise.
The cost of living just continues to soar, businesses are failing all over the country, and more layoff announcements come pouring in with each passing day.
Despite everything that our leaders have done to prop up the economy, we have now reached a breaking point.
So I would very much encourage you to brace yourself for hard times, because economic conditions are going to become very painful during the months ahead.
Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
About the Author: Michael Snyder’s extremely controversial new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com. He has also written seven other books that are available on Amazon.com including “End Times”, “7 Year Apocalypse”, “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, and “Living A Life That Really Matters”. When you purchase any of Michael’s books you help to support the work that he is doing. You can also get his articles by email as soon as he publishes them by subscribing to his Substack newsletter. Michael has published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and he always freely and happily allows others to republish those articles on their own websites. 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, we strongly urge you to invite Jesus Christ to be your Lord and Savior today.
This article was originally published on The Economic Collapse Blog . The views expressed in this news alert by the author may not directly represent that of The Official Street Preachers or its editors.
