Wednesday, June 22, 2022

America Faces a Housing Bust - WSJ

America’s housing market still had a lot going for it at the start of this year. It wasn’t enough to surmount a doubling in mortgage rates in combination with persistently high prices.

The National Association of Realtors’ measure of home affordability, based on mortgage rates, home prices and household income, showed that as of April existing homes were at their least affordable level since July 2007. They are even less affordable now. On Tuesday, the NAR said the median price on an existing home rose to $407,600 in May from $395,500 in April, while Freddie Mac reported last week that the average rate on a 30-year fixed mortgage was 5.78%, up from 5.23% a week earlier and from an April average of 4.98%.


I'm not so sure. It might be the dollar will get stronger, not weaker, as it's the cleanest dirty shirt in the fiat laundry. This is the "dollar milkshake" theory. (Mixed metaphors are standard in finance.) On this theory, money will be pouring into US assets as fiat weakens all over the globe. Real estate is a physical asset. Just ask Bill Gates. Mortgage rates are going up, but so far, so are at least high end houses, which means nearly everything in California. So I'm betting there will be no crash like in 2008. This also means I don't have to get up and clean up my current house, sell it and move into a smaller rental so I can bank the appreciation. So it's a win-win. Just watch YouTube and you too can be an expert on this stuff.

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