Real Estate is crashing! Brace for impact

in LeoFinance2 months ago (edited)

Hi HODLers,

You know that interest rates are going up but I am not sure everyone realizes how this is crushing the real estate market.

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10Y T-Bond (US Government) is now close to 4% while a 30Y mortgage is getting close to 7%. This is more than double what it was a year ago!


But what does that mean?

Well let's take this example for someone looking for a house in San Diego, California. This couple has a budget of $3,000/month for a potential mortgage

  • A yer ago: This person could have purchased a 1,373-square-foot home
  • Today? With the same budget he could only get a 931 square foot home.

Downsizing by 30%+! This is important!

Of course, this means that today, buyers are going to be people either selling their current house (and having cash then) or people who already have large cash amounts in the bank.

This is not going to help out the economy as housing is the biggest component in most developped market.

Sales have already started to decline as well as average price.

Existing-home sales have dropped for seven months in a row through August. Home prices are still rising on a year-over-year basis, but the pace of growth has slowed, and prices are starting to decline month over month.

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Real Estate is crashing? Wow never thought this could happen.

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It does sometimes but less often than stocks or cryptos haha 😂

It is going to get ugly!

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Looking at used cars 🚘 prices, looks like a shitcoin. I expect Housing market to be the same. Opportunities for millennials which saved money for a while though.

mostly nobody can nowadays purchase a house, everyone is forced to rent. China is already in a pretty bad situation regarding real estate

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Yup, people with cash will be ahead. Prices will go down 30% which should allow a few to finally buy at “affordable” prices. The issue is that those without cash/capital will never be able to borrow the amount needed at 7% interest rates…

I think it's possible it already happened in China

One thing that could keep real estate price high or, at least, keep the prices from falling down further, is the notion very popular in my part of the world. Real estate is seen as long term investment, often a convenient way to park wealth you aren't comfortable putting in banks or stocks. Some people won't sell their homes no matter what, unless there is war and revolution. That and the collapse of construction industry over supply chain issues might keep supply of new homes low.

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