As Mortgage Rates Climb, Will The U.S. Housing Market Crash?

Trends in home buying among younger people are in decline, and have been in decline for some time now.

One need only look at the wisdom of Robert Kiyosaki, and his definition of an asset vs a liability to see why. Unless real estate is purchased as an income producing investment it is a liability.

Homes are expensive, illiquid, likely overvalued, and even when they are purchased as income generating properties they generate a great deal of headache; they also typically pale in comparison to investments made in stocks or cryptocurrencies.

The concept of American home ownership is also a myth—it doesn’t exist. Pay off the mortgage on your home, but neglect to pay the property taxes on that home, and you will see who truly owns your home—it isn’t you.

It is for all these reasons that the U.S. housing market is now more delicate than ever—despite rising home prices.

The recent interest rate hikes by the Federal Reserve in response to runaway inflation could place further stress on this archaic system of ‘home buying’, and cause an overvalued market to correct.

Here’s the latest data and reports on the rise in mortgage rates:

https://twitter.com/lenkiefer/status/1503357604189421571?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1503357604189421571%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwelovetrump.com%2Fwp-admin%2Fpost-new.php

Still almost a full point below 2018 when the Fed last tried to press rates higher – U.S. Mortgage Rates Jump, Topping 4% for First Time Since 2019 per @FreddieMac via @_constantjo @business https://t.co/BpFWocaYpS pic.twitter.com/H0cBjYrw6E

— Jonathan Miller (@jonathanmiller) March 17, 2022

The Associated Press reports:

Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year loan this week jumped to 4.16% from 3.85% last week. That’s a sharp contrast from last year’s record-low mortgage rates of under 3%. A year ago, the 30-year rate stood at 3.09%.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, climbed to 3.39% from 3.09% last week.

 

To burst or not to burst, that's the question pic.twitter.com/zMO1u6dbmH

— Wim Grommen (@wimgrommen) March 17, 2022

"If, as expected, the Fed’s policy committee moves to hike interest rates at its March meeting, it will begin closing the door on a remarkable wealth event that has seen U.S. homeowners refinance almost $5 trillion in mortgages over the past two years."https://t.co/AYQyP5KrvG

— J.J. McCorvey (@jjmccorvey) March 15, 2022

The Hill offered a different perspective on home buying demand and the recent interest rate hike:

Because of the Fed’s action, prospective home buyers will see higher interest rates on mortgage loans, which could push consumers to buy homes sooner to avoid high interest rates, economists told The Hill this week.

Consumer demand for home buying spiked during the pandemic, raising home prices 19 percent last year amid limited housing supply in many places.