US real estate Armagheddon starts: skyrocketing interests, collapsing sales, collapsing mortgages
Ultimately, the Fed's restrictive policies are causing the real estate Armageddon that many predicted.
This evolution is quite logical, considering the sharp fluctuation in interest rates on US mortgages, many of which are, among other things, variable. The current week has gone from a serious situation to a catastrophe, as 30-year mortgage rates have risen at the fastest pace ever recorded, exceeding 6 %, which is the levels last seen just before the outbreak of the real estate bubble.
This sent the cost of the mortgage payments skyrocketing,
Since the end of 2021 the cost of the installment has increased by as much as 750 Dollars a month, a value of 2500 USD that many families are starting to not be able to afford.
In fact, the installments are less and less convenient, less and less within the reach of consumers.
Costs are extremely high, not affordable, and so home sales start to drop, and we have a slump in new home sales, the number of which dropped at the 2020 Covid peak.
Except that in March 2020 there were lockdowns linked to the first wave of covid-19, the narrow one, which made it practically impossible to sell properties, also because those corrections, including telematic ones, had not been prepared, which allowed a very rapid resumption of negotiations.
Given that the crisis is already evident, according to Redfin , we have the highest percentage of sellers who lowered the list price during the four weeks ending 12 June,
If the prices are reduced it is because, obviously, the seller cannot be found.
Now what will happen is obvious:
a) the real estate market and construction will stop, with an evident economic slowdown;
b) the number of outstanding payments will be increased
So this crisis, for now only on paper, will become a real, real and total crisis, complete with a boom in defaults and jumping mortgage-backed securities. Let's go back to 2007 …
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The article The US real estate Armagheddon starts: skyrocketing interests, sales collapse, mortgage collapse comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/parte-larmagheddon-immobiliare-usa-interessi-alle-stelle-crollo-vendite-crollo-mutui/ on Sun, 19 Jun 2022 06:00:07 +0000.