I’ve Seen This Movie Before, It Does Not End Well

With rising interest rates, the housing market is rapidly contracting and the median price of a house hit a record.

This is actually not a surprise.  Most of the decline in housing market has been in low-end starter homes, and when you cut out the bottom of the market, the median rises.

2008 is calling, it wants its housing crisis back. 

The U.S. housing market continued to soften in June, with home sales falling and mortgage demand hitting a 22-year low as rising interest rates and recession fears held off would-be buyers.

Existing-home sales are down 5.4 percent compared with May, according to data released Wednesday by the National Association of Realtors, marking a fifth straight month of declines. But they’ve tumbled 14.2 percent compared with June 2021.

The data reinforce signals the nation’s once-frenzied housing market is in the midst of a cool-down and may portend its next phase as the Federal Reserve presses its aggressive campaign to subdue soaring prices. Central bankers are raising the cost of borrowing for businesses and households to slow spending, which in turn is supposed to slow inflation. But the Fed’s tinkering also runs the risk of tipping the nation into recession and icing consumers — who as a result have less buying power — out of the housing market.

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Mortgage demand fell more than 6 percent last week, to the lowest level since 2000, according to data published by Mortgage Bankers Association. The median price on an existing single-family home was just over $423,000 in June, according the national Realtors group, up more than 13 percent from this time last year.

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The average rate for a 30-year fixed rate mortgage is 5.5 percent, according to Freddie Mac, up 2.6 percentage points from a year ago — a difference that can add hundreds of dollars to a monthly mortgage payment. The rise also coincides with a flattened stock market and higher prices for just about everything, making saving for a down payment even more difficult. The resulting squeeze on affordability is locking buyers out and leading to fewer deals.

I would note that a 5.½% fixed rate mortgage is still pretty damn low.

When I bought my house in 2004, I counted myself lucky to get a 5¾% mortgage.

Much like the last housing crash, I expect to find a morass of corruption, fraud, and self dealing, just like the last time around.

Hopefully, this time, we will prosecute the criminals, unlike the last time, when Barack Obama, Eric "Place" Holder, and  Lanny Breuer, decided to go along to get along.

In any case, fasten your seat-belts, we're in for a bumpy ride.