Housing prices in the United States have soared to record levels over the past few years.
The Fed has been trying to get it under control, but it seems like they’re only making it worse.
And a top CEO says there’s only one way to save Americans from this insane housing market.
Average mortgage payments are up by nearly 20 percent in the past 12 months
Mortgage payments are through the roof in the United States, and no matter what the Federal Reserve tries, it doesn’t seem to slow it down. Americans are under an enormous economic burden from the skyrocketing cost of housing and the middle-class is feeling the crunch.
Redfin reported that the average monthly payment on a home loan in the four weeks ending July 30 was $2,605. This is up nearly 20 percent from the average price during the same period in 2022, which saw the average price at approximately $2,190.
Experts claim that the current real estate market is one of the least affordable environments in the history of the United States. They said the primary drivers of the average monthly payment are increases in the cost of lending and increases in the average price of homes.
Increase in mortgage payments is being driven by skyrocketing interest rates and average price
The Federal Reserve has been increasing the interest rates to try and bring down the price, but it’s not working as planned. According to Freddie Mac, the average interest on a 30-year fixed mortgage is at an eye-watering 6.9 percent, yet the sales price continues to soar.
Redfin’s report showed that the median sales price went up by 3.2 percent in the past twelve months and the American Enterprise Institute (AEI) said that Americans should expect to see them up by 6 percent by the end of 2023. They should continue to climb to 7 percent in 2024.
AEI said that the prices continue to rise due to a “historically low supply” and added that other economic indicators were not helping. They cited weaker than expected job numbers, a lack of foreclosures, and “continuing home price arbitrage opportunities.”
Robert Reffkin, the CEO of the online real estate firm Compass, said that there’s only one solution.
Reffkin says rates need to come down to at least 5.5 percent to unlock inventory
Reffkin sat down with CNBC for an interview where he discussed the major issue that’s affecting millions of Americans. He said we won’t see prices return to normal unless the Fed takes the unexpected action of reducing the cost of borrowing. He said mortgage rates need to come down to about 5 percent.
“The issue we are seeing is that we need to have an unlock of inventory. It’s probably going to happen when mortgage rates get to 5 or 5.5% on a sustainable level. At that point, I would expect there to be a flood of inventory in the market, and it’ll feel like the pandemic craze all over again,” Reffkin said.
Right now, the average homeowner won’t consider selling because the rates have nearly doubled for most people in the past few years. This is leading to lop-sided supply and demand, which is what ultimately hurts homebuyers.
Patriot Political will keep you up-to-date on any developments to this ongoing story.