30-year mortgage rates are near 8% with excellent credit. Interest rates have climbed for the past three months straight. The Fed is considering another interest rate increase for November and December, possibly pushing rates up to 8.5% or even 9%. The reasoning is that higher interest rates will "slow down inflation".
Home sales are at a 13-year low. Factor in the higher cost of insurance and the fact that property taxes are going up to unaffordable levels and the very high cost of labor and materials for home construction... and you have a real estate market that's going to crater.
I personally know several homeowners that had their homes listed for sale, but have removed them from the market in the past 2 months. They will wait and hold on to what they have for now. One real estate agent mentioned to a couple that they should keep their house off the market until at least middle of next year and then decide based on market conditions.
I'm suggesting that the U.S. economy is a three legged stool... and one of those legs is housing and private & commercial real estate. If it fails, the economy goes into a deep recession at best.
This is only the beginning. Remember that the baby boomer generation owns like ~75% of the housing market and that generation is starting to die off. Starting this year there will be 3-4 million boomer deaths per year and that is going to create constant downward pressure on the housing market for the next 20 years.
You are the only person I’ve seen mention this (other than me)
I think you are 100% right.
don’t forget, boomers wanting to cash out their chips for retirement as well.
And yes. Boomer parents with property portfolio, kids inherit, “I don’t need all 5 of these houses. Sell 2-3 and go on a holiday/buy a nice car/shopping spree/whatever”
Going to be interesting to see what happens on that front.
Also, interest rates don't matter much to boomers who are downsizing since they have often built up enough equity to pay cash for a smaller home. I live in a spot where in the first half of 2022 you could list at any stupid price and get an all-cash offer in 1 day. The majority of the homes were never viewed other than on the internet.