A lot of you are probably like me.
A few years back, you bought a nice little starter house. You and your husband or wife started adding kids to that house. Now you're ready to expand a bit after saving your pennies and you'd like a bit more land, an extra bedroom and bathroom, a better location, or a neighborhood that better fits your lifestyle.
The thing is, inflation is killing you. That raise you got at Christmas didn't even cover half of the increase in the cost of living this year. Your grocery and gas bills are twice what they were in 2020. You need a new-to-you car, but those are beyond expensive too.
If you're like me, you look at it all and say, "Welp, guess we're gonna camp out here for awhile," because you probably locked into a sweet mortgage payment and you don't want to shell out an extra grand a month for that extra bedroom.
In fact, for those of you in this category, I know that's exactly what you're doing because the data show it:
Jeff Weniger (not to be confused with fake lawyer Jeff Winger from the NBC hit Community) is the head of equity, stocks, and markets at WisdomTree, a NYC-based asset manager.
That right there is how much the average monthly mortgage is with both principal (the amount paid for the house) and the interest rate.
And it's INSANE.
Some of you could afford $3,000 a month, but the median American family makes $87,000 a year, and that would bankrupt them.
And that's the median, not the many tens of millions who survive on less!
I'll tell you something: Here in the Midwest, my wife and I bought a little starter home in 2015 that is less than $800 a month and we have three kids plus pets living in it.
Now the mortgages for homes smaller than ours are twice as much. This can't be sustained, people!
See that chart? Compare the year before the market crash in 2008 to where we are right now.
Not good.
Interest rates were much higher back in the '80s and early '90s, but you could pay $45,000 for a nice house back then.
Now we've got both expensive homes and rising interest rates!
See, human behavior in buying and selling resources is pretty predictable. Free-market capitalism is literally just human nature in action, which is why I'm not surprised that the things I've been personally thinking about are being thought about by a lot of y'all.
The data speak!
Sales aren't just soft. They're going full code blue into cardiac arrest.
This is especially bad because builders have been working overtime to catch up on home construction that was shut down in 2020 so that the record numbers of people looking to buy homes over the last year have a place to move.
What happens when demand flatlines but supply keeps going up? If you have studied 5 minutes of economics, you know what's about to happen.
Translation: Buyers know that their money is worth a lot less these days and they know homes aren't really worth the extra truckload of cash that realtors and sellers think they can sell them for.
So they're going to stop looking. They'll play with their kids, take their wives out to dinner, and maybe save up for a vacation they can afford. A bigger home would be nice, but hey, whatever.
In the meantime, those people who rely on home sales are about to experience life in the slow lane.
It's gonna be an interesting next few months in the housing market!
And now to an appropriate GIF with Community's Jeff Winger:
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