|Evidence The Housing Bubble Is Bursting?: “Home Sellers Are Slashing Prices At The Highest Rate In At Least Eight Years”
Posted: 21 Sep 2018 04:42 PM PDT
The housing market indicated that a crisis was coming in 2008. Is the same thing happening once again in 2018? For several years, the housing market has been one of the bright spots for the U.S. economy. Home prices, especially in the hottest markets on the east and west coasts, had been soaring. But now that has completely changed, and home sellers are cutting prices at a pace that we have not seen since the last recession. In case you are wondering, this is definitely a major red flag for the economy. According to CNBC, home sellers are “slashing prices at the highest rate in at least eight years”…
It is quite interesting that prices are being cut fastest in the markets that were once the hottest, because that is exactly what happened during the subprime mortgage meltdown in 2008 too.
In a previous article, I documented the fact that experts were warning that “the U.S. housing market looks headed for its worst slowdown in years”, but even I was stunned by how bad these new numbers are.
According to Redfin, more than one out of every four homes for sale in America had a price drop within the most recent four week period…
That is absolutely crazy.
I have never even heard of a number anywhere close to that in a 30 day period.
Of course the reason why prices are being dropped is because homes are not selling. The supply of homes available for sale is shooting up, and that is good news for buyers but really bad news for sellers.
It could be argued that home prices needed to come down because they had gotten ridiculously high in recent months, and I don’t think that there are too many people that would argue with that.
But is this just an “adjustment”, or is this the beginning of another crisis for the housing market?
Just like a decade ago, millions of American families have really stretched themselves financially to get into homes that they really can’t afford. If a new economic downturn results in large numbers of Americans losing their jobs, we are once again going to see mortgage defaults rise to stunning heights.
We live at a time when the middle class is shrinking and most families are barely making it from month to month. The cost of living is steadily rising, but paychecks are not, and that is resulting in a huge middle class squeeze. I really like how my good friend MN Gordon made this point in his most recent article…
And unfortunately, things are likely to only go downhill from here.
The trade war is really starting to take a toll on the global economy, and it continues to escalate. Back during the Great Depression we faced a similar scenario, and we would be wise to learn from history. In a recent post, Robert Wenzel shared a quote from Dr. Benjamin M. Anderson that was pulled from his book entitled “Economics and the Public Welfare: A Financial and Economic History of the United States, 1914-1946”…
Even though the stock market has been booming, everything else appears to indicate that the U.S. economy is slowing down.
If home prices continue to fall precipitously, that is going to put even more pressure on the system, and it won’t be too long before we reach a breaking point.
About the author: Michael Snyder is a nationally syndicated writer, media personality and political activist. He is publisher of The Most Important News and the author of four books including The Beginning Of The End and Living A Life That Really Matters.