It won’t, even if they stop. No subprime mortgages to fall apart. Prices will stabilize, but not collapse.
I’m doing a u-turn on my initial opinion here. I think a collapse of the housing market will happen, but not based on bad loans. Right now everyone with a low rate is holding, but everyone’s cost is still going up. I’m using my own situation as an example. I bought my house in 2020 and while I have an excellent rate at 2.75% my monthly payment has jumped over $200 a month and I expect that to be $300 more by next year. Reason being property taxes and insurance has jumped up big time. The increased value of people homes while good from an equity standpoint is not without consequences. My house was worth about $100k more than what I bought it for at its peak, but now it’s worth about $75K more. Still good from an equity standpoint, but property taxes aren’t going down. I‘m an insurance agent so I know rates are up across the board. Car insurance is double what it was a year ago.
The cost of living increases are not sustainable for most people and they are starting to dip into their 401k‘s at record numbers. Crefit card rates and usage is much higher and wages obviously aren’t keeping up. Now that the moratorium on rent, student loans and forebearance is lifted the squeeze is going to be massive on the middle class. I can tell because this month last year, I was averaging around $12K in gross sales on my shoe reselling business. I’m at about $4k in gross sales last month and we’re in 4th quarter the busiest sales quarter of the year. People don’t have disposable income. Once the credit cards are maxed and you can’t take from your 401k anymore the foreclosures will start in flood in. I totaled my Q7 last month and was about to cop another one. At the last minute I said fuck that lemme buy a cheap car cash and save that $700 a month payment which is exactly what I did. When the shit gets worse and people start getting their cars repoed(which has already started) I’ll look around next year for the deals on something nice again.
Bottomline, is if you don’t need the expense get rid of it and cut back on your spending. The people that have some cash on hand in next few years will reap the benefits just like 2008. Get a side hustle. Get a side hustle. I repeat get a side hustle! This economy is about to be fucked up, but you can get in front of this shit.
Just my humble opinion.
www.dailymail.co.uk
crazy rates
