For years now, we have been worrying about the potential for the housing market to get even worse, and each year, it has continued to degrade. From the “everyone gets a mortgage” programs that caused a massive housing bubble to the inflation-driven historic mortgage rates, there is a problem going on everywhere.
Now the American housing market is finding itself in risky and unusual territory.
The market for homebuyers applying for a mortgage has shrunk dramatically. People are unwilling to pay the extra points on a mortgage, as they dramatically increase the monthly payment. Add in the hyper-inflated prices that never left from COVID with a housing shortage, and we have a recipe for disaster. Especially as the supply still remains low.
According to a Mortgage Bankers Association (MBA) press release, the number of new mortgages filed in the week ending September 1st dropped 2.9% and are now at their lowest number since 1996. Going with it, they are seeing a drop in new construction and inventory homes to back below pre-pandemic levels.
Joel Griffith, a research fellow at the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation, spoke to the Daily Caller about the situation. “The decline in mortgage applications reflects the reality that the income for many families simply cannot shoulder the mortgage payments of a new home given the combined impact of sharply higher mortgage rates combined with the surge in home prices.”
Mohamed Aly El-Erian, an economist and chief economic advisor at Allianz, talked about the realities of this situation back in August with CNBC. “When you go from record low mortgage rates to levels that we haven’t seen for almost 20 years, you destroy both the demand and supply. And that’s the irony, that supply has come down and demand has come down as well. That is the way you destroy a housing market.”
Gotta love watching the left completely destroy a good thing and a straightforward market. He could have saved the American people, but as expected, he just sold us out. All so the investments he and his cronies have could go up .25%.
