2008/2009 the bottom fell out of the American Economy….
The Federal Reserve IS raising interest rates to combat Inflation….
Their actions haven’t stopped consumer high prices despite the gas price’s dropping…..
But the home ownership market HAS slowed….
The average rate on a 30-year fixed-rate mortgage, the most popular home loan, was 6.02 percent as of Thursday, Freddie Mac reported, up from 5.89 percent the week before. The average rate for an identical loan was 2.86 percent the same week in 2021.
Sam Khater, Freddie Mac’s chief economist, said in a statement that the rate increase would help cool the housing market but that the number of homes for sale was still inadequate to meet demand.
“This indicates that while home price declines will likely continue, they should not be large,” he said.
The rate on a 30-year fixed-rate mortgage may feel particularly high given its recent history; it was 3.72 percent at the beginning of 2020 and spent much of the past two years below 3 percent. With a longer view, however, rates averaged about 7.8 percent over the past half-century, according to Freddie Mac, which began tracking borrowing costs in 1971. In the early 1980s, rates stretched well into the double digits, exceeding 18 percent in 1981.
But the combination of higher mortgage rates and already inflated home prices has significantly limited what prospective home buyers can afford, pushing many of them out of the market….
With fewer home sales, more people will continue to rent, potentially causing rent costs to go up.
“Rising rents significantly impact consumer price inflation,” said Mr. Yun of the National Association of Realtors. “In a sense, at least for the short term, raising interest rates will further push up inflation.”
And if higher rates cause more homeowners to remain in their homes — unwilling to trade in their affordable mortgages for costlier ones — housing inventory could tighten further. “Only by drastically boosting supply of homes, both apartments and for ownership, will housing prices and rents become manageable,” Mr. Yun added.