The Fed just hiked Interest Rates the most since 1994 in order to combat Inflation. These higher Interest Rates are causing Mortgage Rates to explode, which is inevitably going to lead to a Housing Market Crash.
That’s because US Homebuyers don’t have the money to afford homes anymore. The cost of a Mortgage is up by 67% over the last Year while Wages are only up 6%. The result is a Homebuyer Boycott that is leading to massive surges in Inventory, Homes For Sale, and Price Cuts.
Many key players in the Housing Market are preparing for a Crash. Redfin just laid off 8% of its workforce. The Chief Economist for Freddie Mac is predicting the worst Real Estate Contraction since 2006. And now Real Estate Investors are rushing to get out of the back.
Redfin reports Investor home purchases fell by 17% in Q1 2022, especially in hot Sun Belt Housing Markets such as Atlanta, Las Vegas, Charlotte, and Jacksonville. These declining investor purchase are certainly related to Jerome Powell’s interest rate hikes, as higher mortgage rates mean that real estate investors earn a lower return.
Meanwhile Homebuilder Sentiment is crashing just as Homebuilders are building a record amount of homes. And as a backlog of Foreclosures is set to be released to market.
The net result will be a massive surge Inventory and a Home Price Drops over the next 6 Months. I predict this Housing Crash will be most severe in the following markets;
Among others. Reference the Reventure Consulting Home Price Model to see the metros that I believe will have the biggest price drops.
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