The Market Just Peaked | How To Stay Safe

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The Market Just Peaked | How To Stay Safe

The real estate market just reached a peak
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HAS THE MARKET PEAKED?
Let’s look at the facts. So far this year our inflation is setting 40 year record highs, our central bank promised to raising rates at .5% which is the fastest pace in the last 20 years, we have started dipping into our savings accounts because CNBC is reporting that Americans have $9,000 less in savings on average this year than they did before.

Bloomberg reports there’s a 5 trillion dollar wealth shock as a result of the stock market having the third worst start to the year since 1939, crypto lost 300 billion dollars last week partially thanks to the collapse of a stable coin, the Wallstreet journal is saying the housing market is surviving on borrowed time, we got a negative GDP in the first quarter of this year which means we’re halfway to a recession and yet – CNBC also says the US economy is nowhere near a recession.

ARE WE IN A RECESSION?
Not yet – but we’re half way to starting one.

WHAT’S HAPPENING TO REAL ESTATE? THE FACTS:

-The national average for mortgage interest rates on a 30 year fixed mortgage is now 5.25%.

-Eighty-eight percent of all homes sold last month were listed on the market for less than a month.

– Mortgage payments have gone up 44% year over year.

– Mortgage applications for new home purchases have gone down 2.4% from the month before and 10.6% in April when compared to April a year ago.

– 60.7% of homes have competing offers and the last time that time it was that low was last year in March.

– We’re selling less homes. Existing-home sales are now in their third straight month of declines and we are now almost at a 2 year low.

– We’re now at 28% of first time home buyers which is down from 31% just a year ago.

HOW WE GOT HERE:
The median home price went from $329,000 in 2020 right before the recession – all the way to $429,000 which is a 30.4% percent increase in just two short years. That’s not normal when you consider the fact that real estate should be growing at a rate of 3-5% per year in a normal year.

We lowered the federal fund rate to essentially 0 to spur the economy, we inflated the supply of money by going from 15 trillion dollars in 2020 to now over 21 trillion. To put that in perspective just how crazy that is – that is a 40% increase all the money that has existed in just 2 years, so the cost of materials, labor, combined with supply chain problems made everything more expensive.

Combine all this with high demand, low inventory and low interest rates with institutions chasing yields which they couldn’t find because interest rates were 0 – institutions started to heavily buy residential real estate which gave them their “guaranteed return” and helped drive the prices even higher.

IS REAL ESTATE IN A BUBBLE? SHOULD I BUY A HOUSE TODAY?
Watch the video to find out my personal thoughts!

SOURCES:
https://cdn.nar.realtor/sites/default/files/documents/ehs-04-2022-summary-2022-05-19.pdf
https://www.freddiemac.com/pmms
https://www.mba.org/news-and-research/newsroom/news/2022/05/19/mortgage-applications-for-new-home-purchases-decreased-10.6-percent-in-april
https://www.barrons.com/articles/april-existing-home-sales-mortgage-rate-prices-51652971167?refsec=real-estate&mod=topics_real-estate
https://www.nar.realtor/newsroom/existing-home-sales-retract-2-4-in-april

https://www.bankingstrategist.com/housing-pricetoincome-ratios#:~:text=The%20average%20for%20the%20U.S.,is%20shaded%20in%20dark%20blue
https://www.businessinsider.com/is-there-a-housing-bubble-market-crash-2022-5?r=bubble-teaser

*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.

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