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Wednesday, October 26, 2022
Biden's Housing Market Bomb: Home Sales Plummet in Record September Drop
Thanks mostly to President Joe Biden’s policies and unprecedented Democrat-backed spending, America continues to suffer through record 40-year-high inflation. To combat what the Biden administration once called a “transitory” problem, the Federal Reserve has hiked interest rates at a breakneck pace, with additional hikes expected before the end of 2022.
As predicted by anyone with half a brain, rising interest rates, coupled with the vast number of uncertainties under the Biden administration and record inflation, mean the housing market is in trouble. Home sales are dropping… no, they’re plummeting.
Real estate giant RedFin released a bombshell report this week that revealed a record drop in home sales for September. The number of homes sold last month fell a staggering 25%. Equally alarming, new listings fell 22%, indicating a substantial pullback in the market by both buyers and sellers.
The drops marked records in each category, excluding the beginning of the pandemic, when the reason for such low numbers had nothing to do with an uncertain economy and higher interest rates.
From the RedFin report:
The U.S. housing market is at another standstill, but the driving forces are completely different from those that triggered the standstill at the start of the pandemic,” said Redfin Economics Research Lead Chen Zhao.
“This time, demand is slumping due to surging mortgage rates, but prices are being propped up by inflation and a drop in the number of people putting their homes up for sale. Many Americans are staying put because they already relocated and scored a rock-bottom mortgage rate during the pandemic, so they have little incentive to move today.”
There was more terrible news, including the estimated earliest point that America could see a decline in interest rates.
“The housing market is going to get worse before it gets better. With inflation still rampant, the Federal Reserve will likely continue hiking interest rates. That means we may not see high mortgage rates—the primary killer of housing demand—decline until early to mid-2023,” Zhao said.
The contract rate on a 30-year fixed mortgage rose 6 basis points in the first week of October, marking an eighth-straight increase, according to Mortgage Bankers Association data released Wednesday. That pushed down a gauge of applications to purchase or refinance a home by 2%, the eighth drop in nine weeks, to the lowest level since 1997.
The concerning report added additional statistics that spell troubling times ahead. In September, some 60,000 home contracts were canceled, which equals about 17% of homes that went under contract that month, nearly 1 in 5.
In many Democrat-led areas, like Chicago, the market conditions are even worse, especially as more Americans hightail it out and nobody moves in to buy the available homes. The median time a home spent on the market in Chicago was 57 days, according to the report, making it the slowest market in the country.
The average 30-year fixed-rate mortgage was 6.92% as of last week, according to Freddie Mac. The average rate has more than doubled since January.
Home prices are falling as sellers seek to entice wary buyers to act. The median sale price tracked by Redfin fell 0.5% to $403,797 in September, though prices are still up 8% year-over-year.
A severe downturn in the housing market will only serve to exacerbate existing economic conditions, as fewer homes built, bought, and sold means fewer contractors being hired, fewer materials purchased, and fewer real estate agents working. It will undoubtedly have a cascade of adverse effects that will harm the economy.
President Biden, who continues to score low marks in the approval department, has crippled his party in the eyes of the American people as it is. One can only imagine how much worse that will be when he’s eventually rightfully blamed for what will likely be another type of housing crisis.
Sadly, it could be years before the market returns to reasonable numbers, and that’s only if Republicans manage to win in the midterms and the 2024 presidential election so that they can begin to reverse course and move away from the actions that brought us to this point. Scary stuff.