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Do you remember what happened precisely 14 years ago? In 2008, the housing market collapsed and the subprime mortgage meltdown made national headlines day after day as unprecedented panic swept through Wall Street. To many of those that were working in the financial industry at that time, it seemed like the world was ending. Of course the world was not actually ending, but without a doubt it was an extremely painful episode for our nation. Countless Americans lost jobs or homes (or both), and the ripple effects of that crisis can still be felt today.
But did you know that there was another housing crash exactly 14 years before the one that we witnessed in 2008?
In 1994, surging mortgage rates caused new home sales to plunge dramatically…
The average 30-year fixed mortgage rate increased by around 2 percentage points in 1994, ending the year north of 9%. New home sales slumped. In December 1993, the seasonally adjusted annual rate of new single-family-home sales was 812,000. A year later, in December 1994, it had fallen over 20% to 629,000.
That kind of sounds like what we are experiencing right now.
And if you go back 14 years before that, you will find another housing crash.
The U.S. housing market was booming in 1978 under Jimmy Carter, but higher interest rates caused things to cool off in 1979, and then in 1980 home sales really began to tumble. Ultimately, the level of existing home sales tumbled by about 50 percent over a four year period…
From the peak of 4 million existing-home sales in 1978, there was -50% drop in home sales over the next four years, so that by 1982 only 2 million homes were sold (data here, Table 7). It took almost two decades, or until 1996, before home sales exceeded the 1978 level of 4 million units.
The Federal Reserve knows what has happened in the past when they have aggressively hiked rates.
But they are doing it again anyway.
So here we are 14 years after the last housing crash, and it is starting to happen again. We just learned that sales of new single-family homes were about 30 percent lower this July than they were last July…
The plunge in home sales is just stunning. Sales of new single-family houses collapsed by 12.6% in July from the already beaten-down levels in June, and by nearly 30% from July last year, to a seasonally adjusted annual rate of 511,000 houses, the lowest since January 2016, and well below the lockdown lows, according to data from the Census Bureau today.
Those numbers are absolutely horrible, and every region of the country is getting monkey-hammered…
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- Northeast: -37%
- West: -50%
- Midwest: -23%
- South: -21%
Sales of new single-family homes have now dropped for six of the last seven months.
That is clearly a trend.
Of course sales of previously owned homes have been falling quite rapidly as well…
Sales of previously owned homes fell nearly 6% in July compared with June, according to a monthly report from the National Association of Realtors.
The sales count declined to a seasonally adjusted annualized rate of 4.81 million units, the group added. It is the slowest sales pace since November 2015, with the exception of a brief plunge at the beginning of the Covid pandemic.
Sales dropped about 20% from the same month a year ago.
They are calling this a “housing recession”, but that isn’t what we are actually facing.
The truth is that we are in the early stages of another full-blown housing crash.
Just like we experienced in 2008. Just like we experienced in 1994. Just like we experienced in 1980.
Things are particularly bad in the markets that were once the hottest.
For example, just check out what has been going on in Boise, Idaho…
Nearly 70% of home sellers in Boise, Idaho cut the asking price on their house in July, Redfin reports; a remarkable turn for the once-hot real estate market.
Nationally, 32 percent of all home sellers cut their asking price last month.
Needless to say, prices are still way too high and they are likely to come down a lot more in the months ahead.
If you bought a house near the peak of the market, I really feel sorry for you.
Lots of people locked in mortgages at vastly elevated prices.
And now a lot of those same people are deeply regretting those decisions…
As the U.S. housing market cools, feverish competition for homes in the past couple of years has left 72% having regrets about their home purchases, according to a recent survey from Clever Real Estate.
The number-one reason for the buyer’s remorse: 30% of respondents said they spent too much money.
The exact same thing happened last time around too.
We never seem to learn from our mistakes, and now the stage is set for what could be the biggest housing crash of them all. We shall see what the Federal Reserve chooses to do.
If they stop raising rates, that will help. But if they decide to keep aggressively hiking rates, that will be absolutely catastrophic for the housing industry.
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I have been warning that this sort of thing was coming for a long time, and now it is here. If you are looking to sell a home, try to do it as quickly as you can.
Because prices are going to continue to fall all over the nation, and it won’t be too long before vast numbers of homeowners are underwater on their mortgages.
***It is finally here! Michael’s new book entitled “7 Year Apocalypse” is now available in paperback and for the Kindle on Amazon.***
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Article cross-posted from The Economic Collapse Blog.
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People who bought overpriced houses for cash may be sorry, but those who bought overpriced houses at lower interest rates did not necessarily make a bad decision. A $1000 principal and interest payment on a 30-year loan would buy a $245,000 house at a 2.75% mortgage rate but only a $174,000 house at a 5.75% rate. A person could have overpaid by $50,000 and at the lower interest rate, still have a better deal. Just think of it as giving your overpayment to the seller is better than giving it to a bank.
What is your proposal for bringing inflation down from the sky high rates we are seeing without interest rate increases?
YES, 14 YEARS is a CYCLE – It is called 7 Yr Jubilee, or Shemitah.
It is Hebrew – Israeli, part of the Abrahamic and God Jehovah Blood Covenant, and it affects the PLANET entirely.
It happens every 7 Years, then after 7 Shemitahs, and the 49th year celebration, Then the following year, the 50th Anniversary, THAT is the Golden Jubilee and it is AMPLIFIED. (There is much more to the cycle, for 50 yr anniversaries, etc…)
FORESHADOWS to SHEMITAH happening at the beginning of Shemitah, and warning of the End of the Shemitah on Sept 13, 2015
Lev 25 – bells, shofar
Sept.19 – States quit defending the traditional definition of marriage. Now in december – 36 States have ended the traditional definition of Marriage
The Tower opened up
Sept 25 – stock market news
Sept. 26, Wall street began to reel violently
1st Case of Ebola manifested in USA, in Texas on Sept 25
Sept 25, a 6.0 earthquake hit America (a 6.o or higher only happens usually about 6 times a year (America, or Worldwide,
By 2nd week, China overtook America as financial power
America within one week of Shemitah, Russia overtook America militarily
What this cycle does is it is a Law of the Earth, of Sowing and Reaping, that every 7th year, the Land MUST BE ALLOWED TO REST, and the people survive not sowing and reaping that year, by Gleaning, and by what they have stored up in their supplies, from the Previous 7 years. If they have done Right, and done Well, they will have a HUGE BONUS Blessing Shemitah Year.
IF THEY DO NOT ALLOW the LAND TO REST, and so on with other business, too, THEN that Shemitah Year is Disastrous for them.
If they have done wrong, even EVIL, and not obeyed the Laws of the Rest, of the 7 years that is commanded, then they will suffer for it and bear Great Loss.
For instance, 9/11 happened at the Anniversary of the Feast of Harvest, on the 7th Year.
I went back to about 1900, and all the major, Great Stock Crashes happened EVERY SEVEN YEARS, along with many other major disasters, as well.
PART 2:
These things ALSO happen within Days or WEEKS of a nation doing something TERRIBLE to Israel.
For instance, October 30, 1991 – the first time Geo Bush SENIOR Forced Israel to agree to a Land for Peace deal with the PLO, within hours the PERFECT STORM began and it hit his Beach House with 35ft waves, knocking the flooring out, those the walls were Popped and remained standing, looking like they were ok, the entire flooring was destroyed and most of the furnishings of it washed out to sea by the waves, leaving the SHELL looking unharmed.
AUGUST 2005 — Katrina also. We forced Israel to forcibly evacuate ISRAELITES from ISRAELI LANDS and give it to the so-called pals.
THE HOUR that Israel used the Military to haul those Israelites out, killing some of them in the doing, Katrina formed in the Mid Atlantic and 4-5 days later, hit the US Coast.
The IDENTICAL PERCENTAGE of deaths, for Israel’s forced evacuation and the deaths from Katrina was NO COINCIDENCE.
“This disengagement was a response to the American Foreign Policy pressure being exerted by Condoleeza Rice. As the world watched the Jews being removed from their homes, a weather system was forming in the Atlantic . This storm became Hurricane Katrina, which destroyed New Orleans , Louisiana (Miss Rice’s home state) and an area the size of Britain , rendering thousands of Americans homeless and leaving thousands dead. Hurricane Katrina also spoiled the “Southern Decadence” weekend planned by the homosexual community for New Orleans and supported by the mayor of New Orleans . By September 7th, further parallels were becoming apparent. The Mayor of New Orleans, having been heavily criticized for ineffectiveness has ordered troops (local people) and police to evacuate all residents who refuse to leave. The police chief has expressed reservations about tackling defiant householders as it would be a “PR disaster.”
Was my comment deemed unacceptable?
Since late last year I have been advising prospective home buyers to be patient and wait for the crash. Soon they will be able to buy at steep discounts. If they can afford a 15-year mortgage (lower APR), so much the better.
In case I hit the wrong button, a while ago, I will try to repost my suggestions for lowering inflation and interest rates:
Yes, OPEN UP the Gas and Oil Pipelines, the Coal Mines, the Farming and Trucking industries, Restoring the Farms that have been forcibly shut down and confiscated, back to their Rightful Owners, providing Complete Restitution to the Farmers for Compensatory and Punitive Damages, from the pockets of the Dirty Politicians, and their offices that abused the Constitutional Parameters of their SUPER-RATIFIED Constitutional authorization, created by the Constitutionally Proper SOVEREIGN Citizens of this nation of the USA, Extracting all possible from the politicians who VIOLATED the Constitutional FIDUCIARY TRUST AND OBLIGATIONS of their offices, and any of their Financial supporters to their degree of Complicity and/or Bribery in the matter, to Restore the Farmers to their Rightful State of Operation, physical Restitution for them.
Also include all other businesses the Wrongful Govt Public Servants also robbed and displaced, as well as Home and Land Owners – NOT including those who were involved in operating in these scandals – such as Paul & Nancy Pelosi, and Joe and Hunter Biden, for instance.
CUT the deliberately PROHIBITIVE and DESTRUCTIVE UNCONSTITUTIONAL TAXES. And bring the recalcitrant Public Servants to Justice.
THAT will work to fix Inflation and high interest rates.
NICE!