The Incredible Shrinking Home Market

What a difference a year makes. “The math for buying a home no longer works,” you say? A “pipedream” for first time buyers? Well, wha’dya expect after FED mortgage rates ballooned under Joe’s watch while prices soared & supply tanked?

The WSJ story was blunt in concluding “many people are just giving up.” No, this ain’t your grandpa’s Oldsmobile, er, typical hangover from Old Uncle Sam’s overspending on the pandemic & his meandering attempts to tame a historical inflationary typhoon that resulted largely from it. As the story goes, “Typically, high mortgage rates slow down home sales & home prices should soften as a result. Not this time. Home sales are certainly falling, but prices are still rising – there just aren’t enough homes to go around.” Unfortunately, “higher rates add up fast … an increase of just a few percentage points can mean hundreds of thousands more in interest over the life of a standard 30-yr loan.”

In short, before the FED when on its “corrective” interest rate hikes a $2,000 housing budget could have gotten you a $400,000 home. Nice. But, today “that same buyer would need to find a home valued at $295,000 or less.” Game the system by taking out an “adjustable rate mortgage” that offers a bit lower rate for the first few year? But even that old trick ain’t working as ARMs have also risen sharply this year … and God help the buyers who can’t dump their ARM or digs & get socked with even higher mortgages should rates keep climbing.

Davd Soul