We Are About To Experience A Shocking Housing Crash The Likes Of Which America Has Never Seen Before

We’re about to witness an absolutely shocking housing crash that's unlike anything we have ever seen before. Over the past couple of years, home prices jumped by nearly 40 percent in the United States. Now, mortgage rates are rising at a pace that is truly breathtaking, and they’re likely to go even higher in the coming months as the Federal Reserve continues to fight a relentless battle against inflation. Higher mortgage rates translate into higher mortgage payments for potential homebuyers, which means that millions of Americans are being completely priced out of the marketplace. For them to be able to come back into this environment, home prices need to cool off, and that’s already happening in some major markets across the country. Once again, another massive housing market bubble is coming to a burst, and at this point, it’s only a matter of gravity - what goes up must eventually come down, and we have just entered the “down” side of that equation.
Prospective home buyers are facing the worst buying conditions in over a decade. A historic housing bubble was already being formed as we headed into 2020, and over the past two years, we have seen another housing bubble develop on top of the previous housing bubble. A study conducted by Moody’s Analytics which analyzed whether economic fundamentals, including local income levels, could support local home prices found out that, on a national level, U.S. home prices are on average 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. On the flip side, this also means that if the Federal Reserve continues to raise interest rates throughout 2023, we are likely to see a carnage that may rival the 2008 housing disaster. In short, prices can come down by almost 25 percent in some areas, while others, that have experienced much sharper price increases are at risk of witnessing an even steeper decline.
Economist and financial analyst Peter Schiff highlighted in a recent article that the last time that average 30-year mortgage rates crossed the 6 percent threshold was just before the last housing crash of 2008. Until mid-April, mortgage rates were in the 4% to 5% range. Just one month ago, rates were 5.49%, he notes. Likewise, Wolf Richter calls the spiking mortgage rates along with the 40 percent increase in home prices over the last two years “a toxic mix”.
At the same time, home builders are also facing the enormous implications of this slowdown. "Production bottlenecks, rising home building costs and high inflation are causing many builders to halt construction because the cost of land, construction, and financing exceeds the market value of the home," NAHB Chairman Jerry Konter, a home builder and developer, said in a statement. 
The day of reckoning we have been repeatedly warned that was coming is already upon us, and from this point on, we’re all going to suffer the consequences of reckless monetary policies that inflated this bubble in the first place. Unfortunately, those who are searching for an easy way out of this mess can stop looking because there simply isn’t one. We are heading to a disaster that is going to make 2008 and 2009 look like a Sunday picnic, and its repercussions will shake our nation to the core.

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