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Fewer Americans are purchasing homes and the ones who are buying are acquiring more affordable homes as consumers are greatly affected by the worsening inflation. Mortgage demand fell last week compared with the previous week, and the average loan size shrank as well.
According to the Mortgage Bankers Association’s (MBA) seasonally adjusted index, mortgage applications to buy a home went down four percent for the week and were 18 percent lower than the same week in 2021. The report also included an adjustment for the July Fourth holiday.
House hunters may have been hesitating to purchase due to higher mortgage rates. However, the report noted that the rates held steady last week.
The average contract interest rate for 30-year fixed mortgages with conforming loan balances ($647,200 or less) remained at 5.74 percent, with points decreasing to 0.59 from 0.65 (including the origination fee) for loans with a 20 percent down payment.
“Purchase applications for both conventional and government loans continue to be weaker due to the combination of much higher mortgage rates and the worsening economic outlook,” MBA economist Joel Kan said.
He added that after reaching a record $460,000 in March 2022, the average purchase loan size was $415,000 last week, pulled lower by the potential moderation of home-price growth and weaker purchase activity at the upper end of the market.
Due to higher interest rates, applications to refinance a home loan have been notably weaker. It raised two percent for the week but was 80 percent lower than the same week a year ago. At the same time last year, the average mortgage rate was 3.09 percent.
Realtor.com chief economist Danielle Hale said homebuyers shouldn’t expect mortgage rates to fall back to three percent any time soon.
“The Federal Reserve is trying to fend off inflation by raising interest rates and that move will keep mortgage rates high for the foreseeable future,” she said.
Consumers have faced a difficult market this year as home prices have been in the $500,000 range, mortgage rates are soaring and there has been stiff competition from high-income buyers. (Related: The Fed is destroying the home mortgage industry as rate hikes due to ‘Bidenflation’ lead to a 70 percent reduction in lending.)
Homeownership now a distant dream for most Americans
The ever-skyrocketing cost of house purchase has pushed middle-income Americans’ homeownership dream aside. Most of them stopped shopping and resorted to renting.
“The market is getting much more challenging for home shoppers – we’re seeing some of them just quit and put their plans on hold,” Hale said.
Aside from the skyrocketing mortgage price, another factor that may have contributed to this is the availability of houses for sale for middle-class citizens.
A recent analysis by the National Association of Realtors found that across America, about 250,000 houses are currently for sale that is considered affordable for households with between $75,000 and $100,000 in annual income. This is a marked decline from about 656,000 available homes before the Wuhan coronavirus (COVID-19) pandemic started.
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Also, it is no longer enough for a buyer to have a ready down payment and a pre-approved mortgage. Redfin, a reputable real estate firm, said about 30 percent of homes were bought with all-cash offers in 2021, up from about 25 percent in 2020. In cities such as West Palm Beach and Naples, more than 50 percent of purchases were all-cash deals.
Analysts also say that home ownership in the U.S “is a signifier of the upper class now.”
“Unfortunately, the middle-class dream of home ownership has been fading away,” said Redfin chief economist Daryl Fairweather.
Rubeela Farooqi, the chief economist at High-Frequency Economics, said in a report that the prices remain excessively high and are impacting affordability.
The significant impact of the pandemic has also reduced affordable housing options and the total supply of single-family homes. This means that renting is becoming a more favorable option for many people, National Rental Home Council said.
Watch the below video that talks about soaring mortgage rates that cut mortgage demand to less than half compared to last year.
This video is from the SecureLife channel on Brighteon.com.
More related stories:
- 30-year fixed mortgages surge above 6% for the first time since 2008 as market reacts to Fed rate hikes.
- Housing bubble about to burst? Mortgage applications crash to 22-year low as monthly payments skyrocket.
- Average monthly apartment rent surges to all-time high $2,000, real estate firm reveals.
- Average rent prices in the US surpass $2,000 amid inflation and rising mortgage interest rates.
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Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
