The 30-year fixed mortgage rate crossed 7% this week. First time in over a year. Home prices keep climbing. Sales keep falling. Somewhere a first-time buyer just refreshed Zillow for the nine hundredth time today and felt nothing.
Here's what happened. Rates went up. Houses cost more. Fewer people bought houses. This is the entire story. Financial journalists wrote forty-seven articles about it. Each one contained the phrase "affordability crisis" and a quote from a realtor named Brett who thinks the market will stabilize in Q3.
Brett is lying. Brett has been lying since 2019. Brett will continue lying until the heat death of the universe or until his commission check clears, whichever comes first.
The technical analysis here is bulletproof. Draw a line on a chart. Any line. Doesn't matter. The rate is 7%. Last year it wasn't. Now it is. You could have predicted this by flipping a coin. You could have predicted this by asking a golden retriever. You could have predicted this by doing absolutely nothing and then making something up after the fact, which is what every mortgage rate forecaster did anyway.
The average American now needs to save for fourteen years to afford a down payment on a median-priced home. That's assuming they save ten percent of their income and never spend money on food or shelter during those fourteen years. Minor hiccup in the plan.
But don't worry. Some kid with $847 in his Robinhood account just read that homebuilder stocks are "oversold" and decided this is his moment. He's buying calls on Toll Brothers because he watched a YouTube video called "3 HOUSING STOCKS ABOUT TO EXPLODE." The video was posted by a teenager in his mom's basement. The teenager's last successful trade was selling his Xbox.
The rate will go to 8%. Then 6%. Then 9%. Then 5%. None of it means anything. The only certainty is that someone will write an article about each move and pretend they saw it coming.
Photo by on Unsplash
Leave a Comment