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.
The problem is that the Fed is now backed into a corner.
If they cut rates, we risk $300 loaves of bread by the end of the week and the dollar dies.
Or they can keep raising rates to prevent hyperinflation while the BRICS nations steadily destroy the dollar.
Yeah, the fuse is lit from both ends. It's gonna go bang and frankly needs to as painful as I think it will be.
I would agree. It would certainly make everyone feel like they were "pushed to the brink" as Q alluded to.
But from a selfish perspective, I've worked very hard for a long time to build up my retirement and my money. Scary to think that could all disappear.