The FED’s increases in interest rates are starting to impact the real estate market experts warn.
We reported late last week that banks are preparing for millions in losses in 2023. This is due to Biden’s horrible economy and rising interest rates. These are some of the highest liabilities on the books in years.
BIDEN ECONOMY: Banks Are Preparing for Billions in Losses in 2023
Related to this is the expectation that the housing market “is in big trouble”.
As the Federal Reserve continues its hawkish market reset – which has contributed to a rise in interest and mortgage rates – real estate experts are sounding the alarm that “big trouble” lies ahead for the U.S. market.
“When you have a rise and increase in interest rates like we’ve had, that is a big problem for housing. Interest rates are like the mother’s milk of housing,” Pulte Capital CEO Bill Pulte told FOX Business’ Maria Bartiromo Thursday. “And if you cut it off, you’re in big trouble. And when you’ve had these massive increases in interest rates, it just puts a lot of things to a stop.”
“It’s a tale of two cities. I hate to relate it to politics, but the more red states, places like Florida, Texas, the office buildings are pretty busy. Business is booming. There’s more demand and supply,” Thor Equities CEO Joe Sitt said later on “Varney & Co.” “It’s more, I hate to say it, markets like ours here in New York, Chicago, San Francisco is a ghost town. San Francisco’s been destroyed.”
One of the nation’s largest homebuilders, KB Home, released its Q4 report Wednesday which indicated more signs of housing weakness. According to the report, KB Home saw a 68% cancelation rate on new construction projects.
Mortgage rates also increased last week, with the 30-year rate rising to 6.48% and the 15-year mortgage coming in at 5.73%, up from 5.68% the week prior. Higher mortgage rates continue to test homebuyer affordability, according to the Mortgage Bankers Association (MBA).
The cancellation rate on new construction is a big concern. Construction is always an industry that suffers during recessions. This is concerning for those in the banking and construction industries.
The economic news for 2023 is not good.