- Watch The JD Rucker Show every day to be truly informed.
You may not want to buy a house right now. What goes up must eventually come down, and we have just entered the “down” side of that equation. Over the past two years, home prices in the United States have gone up nearly 40 percent. Now mortgage rates are rising at a pace that is truly frightening, and they are likely to go even higher in the months ahead as the Federal Reserve continues to fight a relentless war against inflation. Needless to say, higher mortgage rates mean higher potential mortgage payments for prospective home buyers, and so millions of Americans are being priced out of the marketplace right now. The only thing that is going to bring those buyers back into the marketplace is for home prices to go down, and that is already starting to happen in some areas of the nation.
We were already in a historic housing bubble heading into 2020, and over the past two years we have witnessed another housing bubble develop on top of the previous housing bubble.
Overall, home prices in the U.S. rose 37 percent between March 2020 and March 2022.
That is insane.
Of course our incomes have not been going up as fast as home prices have. In fact, it is being reported that “home prices have gone up four times faster than incomes” over the past year…
Economists at the Federal Reserve Bank of Dallas put the real estate industry on edge this spring after they published a paper titled Real-Time Market Monitoring Finds Signs of Brewing U.S. Housing Bubble. Why the renewed concern? Over the past year alone, home prices have gone up four times faster than incomes. Simple economic theory, which dictates that neither home prices nor incomes can outgrow the other for very long, tells us that isn’t sustainable.
There is no way that this could continue for long, and we have reached a point where home prices in the United States are “overvalued” by almost 25 percent…
The analysis conducted by Moody’s Analytics aimed to find out whether economic fundamentals, including local income levels, could support local home prices. On a national level, Moody’s Analytics finds U.S. home prices are “overvalued” by 24.7%. In other words, U.S. home prices are 24.7% higher than they would historically trade at given current income levels.
Does this mean that home prices will come down by 25 percent?
Well, it all depends on what the Federal Reserve chooses to do.
If the Fed decides to stop raising interest rates by the end of this year, the damage could potentially be minimized.
But if the Fed continues to raise interest rates throughout 2023, we are likely to see carnage that is unlike anything we have ever seen before.
Personally, I have been stunned by how rapidly mortgage rates have risen. According to Peter Schiff, the last time that average 30 year mortgage rates crossed the 6 percent threshold was just before the last housing crash…
Average 30-year mortgage rates have pushed to nearly 6.4%. The last time we saw mortgage rates over 6% was right before the housing crash of 2008. Until mid-April, mortgage rates were in the 4% to 5% range. Just one month ago, rates were 5.49%.
Lower-income homebuyers have already been priced out of the market by spiking mortgage rates. The houses that are selling tend to be in higher price ranges.
Officials at the Federal Reserve can see what is happening, but they consider taming inflation to be a much higher priority right now.
So the housing bubble will inevitably continue to implode, and the numbers for the industry will just get even uglier. Here is more from Peter Schiff…
Air is hissing out of the housing bubble faster and faster every week.
Pending sales plunged in June and the inventory of homes on the market jumped as mortgage rates continue to rapidly rise.
Pending home sales plunged by 16% year-over-year in June. This follows on the heels of a 12% drop in May and a 9% dip in April. June marked the 10th straight month of year-on-year declines in pending sales.
Some of the hottest markets in the country have started to cool off really fast.
For example, just look at what is happening in California…
The pace of California home sales plunged 21% in June from a year earlier as soaring mortgage rates took a bite out of buyer interest, the state Realtors group reported Monday.
And what we are witnessing in Boise is really alarming.
Boise was once one of the hottest markets in the entire nation, but now sales are dropping faster than Joe Biden’s approval rating…
Before governors relaxed stay-at-home orders two years ago, white-collar professionals were already fleeing their exorbitantly priced apartments in cities like San Francisco and Seattle. The biggest beneficiary of that WFH homebuying wave was undoubtedly Boise—where home prices skyrocketed 53%. You could even call it the poster child of the pandemic housing boom.
But that Boise honeymoon is over. While spiking mortgage rates have pushed the overall U.S. housing market into a slowdown, it has delivered a particularly hard blow to the Boise housing market. That has seen both Boise home sales plummet—down 28% on a year-over-year basis—and inventory levels surge—up 161% this year. It’s also chipping away at home values. According to Zillow, the median Boise home sales price fell 3.5% in June.
This downturn is going to have enormous implications for home builders as well.
Sales are falling, and a key measure of home builder confidence just declined for the seventh month in a row…
The National Association of Home Builders/Wells Fargo Housing Market Index, which measures the pulse of the single-family housing market, fell for the seventh consecutive month to 55, the lowest level since May 2020. It is the second-biggest, one-month decline in the survey’s 37-year history.
The only time that the index has fallen more in a single month was during the very early stages of the COVID pandemic.
National Association of Home Builders CEO Jerry Howard fears that things will continue to get worse in the months ahead, and he is warning that “we’re going to go into a recession” unless something dramatic happens…
“For the last seven straight months it has been going down and this is a huge drop – and I think all it says is, ‘Somebody do something or we’re going to go into a recession,’” Howard said.
I am sorry to tell you this Jerry, but we are already in a recession right now, and it is going to get really bad.
Our leaders have been making decisions that have been mind-numbingly bad for a long time, and now we are all going to suffer the consequences.
If you are searching for an easy way out of this mess, you can stop looking, because there isn’t one.
What we are heading for is going to make 2008 and 2009 look like a Sunday picnic, and it will shake our nation to the core.
***It is finally here! Michael’s new book entitled “7 Year Apocalypse” is now available in paperback and for the Kindle on Amazon.***
About the Author: My name is Michael and my brand new book entitled “7 Year Apocalypse” is now available on Amazon.com. In addition to my new book I have written five other books that are available on Amazon.com including “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, “Get Prepared Now”, and “Living A Life That Really Matters”. (#CommissionsEarned) When you purchase any of these books you help to support the work that I am doing, and one way that you can really help is by sending digital copies as gifts through Amazon to family and friends. Time is short, and I need help getting these warnings into the hands of as many people as possible.
I have published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.
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Article cross-posted from The Economic Collapse Blog.
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.
Those who ignore history are doomed to repeat it. At least we don’t have “no doc” loans being put into AAA secured instruments and sold. BTW, maybe we can get Putin to buy some of those bogus assets.
When will the liberals come to the realization that their party was taken over in the 70’s by marxists. The goal is nothing less than personal domination of the rest of us. We and our descendants are in bondage to these marxists. Time to turn our country back into one that is governed by the Constitution. Folks the INSURRECTION happened on 11/03/2020 not as these traitors try to paint a false narrative that it took place on 01/0621.
Lenders will adjust with 40yr mortgages like they did with 72 month car payments.
It will be all of North America, Canada included. All those who own a house now will loose their house period, there will be no escaping this.
When the Marxist loose, as they will; they will leave massive destruction in their wake, and the housing crash will be just one of the bigger things that will be the destruction.
The housing prices will drop so far, it will be a buyers dream and a renters joy because the renting prices will also fall to extraordinary levels.
Psst… it’s “lose,” not “loose.”
Please learn the difference so as not to embarrass yourself in the future.
It’s LOSE! Lose, lose lose. What is it with you people?
We will not LOSE (not loose) our home. The mortgage was paid off years ago. The same will be true for all others like us, and those whose balances are low.
in my area on the west coast of florida, the majority of home purchases are cash, meaning the baby boomers are bringing their nest eggs with them…they are not being stifled by mortgage rates. they’ll still pay a higher price for a home than the rest of the country going forward since it will probably be their last home purchase and they are not as concerned about the sale price after they are gone. I saw this in the last housing bubble/downturn as well. back in 2008
My issue with all this is, buy a house that you can afford, when interest rates drop, refinance and just stay in your house. We bought our home 15 years ago, we have a 3.5% fixed interest rate and my house has went up a lot in value. I would never sell my house, hoping to pay it off in about 8 years. Then my 3 children will inherit it and they can live in it or rent it out or sell it. So this housing market does not affect everyone. Everyone in my neighborhood has been here a long time. We thought about selling, to downsize, when the children moved out, but we decided to stay, I have put my heart and soul into this house, it is perfect for us!
Yes the market will level off. Big loss in value? No because demand for housing is raising and the supply is not keeping up with demand. That means rents will continue to be high and demand for houses will continue. Yes the sales may slow but they will not crash.
This guy is astounded by the speed of the mortgage rate increase. I was astounded by how long mortgage rates remained low while inflation was several times what the interest was. I’m locked in at 1.75% and can take a 35% house valuation loss.
Never forget Nikita Khrushchev banging his shoe in 1960 at the UN claiming, “we will bury you from within!”
He won.
he’s dead, a loser, and never returning.
We Are About to Experience an Absolutely Epic Housing Crash the Likes of Which America Has Never Seen Before”
Oh really? Obama wiped out the entire housing industry and all companies connected to it. I don’t think you’re going to beat that.
Meanwhile, get ready for 15 year car loans.
I don’t think we are going to see a big bubble pop. I think that the economy is going to shrink and this is going to slow down the housing market. When we come out of this recession, the feds will lower the interest rates again to under 5% and the market will bounce back. I doubt that we will see prices dip less than 15%.
I have seen some of the projections of guys like Harry Dent and the coming “carnage” as you called it, will be profound – I mean 1929 profound. Housing is but one metric of course. Soon it will be a buyer’s market but there is going to be employment layoffs, so people looking for a house are not going to buy it, even if the prices moderate, you will have the higher interest rates. What Bidenomics has done to our country is ugly and it will get worse before it gets better. Compared to the housing market of just 3 months ago, you will find houses discounted 40-50% from these earlier prices in 2024. Try and stay liquid and you may be able to grab that current $600K house for $300K or less. Who knows you might even be buying your next house with gold bars/coins!
What did home prices do in the Great Depression of the ’30’s?