The Next Housing Market Crash (Worse Than 2008)

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THE HOUSING MARKET:
Redfin just reported that “the median U.S. home sale price fell 3.3% in March, to $400,528” – which, was the largest year-over-year drop since 2012.

This is just the AVERAGE throughout the entire country, which means – other areas are seeing SUBSTANTIALLY WORSE declines – for instance, Boise Idaho has fallen 15.4% from a year ago with 78.8% fewer pending home sales, Austin, Texas is down 13.7%, Sacramento is down 11.9%, San Jose is down 10.5%, and, Oakland is down 9.7%.

NEW MORTGAGE FEES:
A new rule was announced that would “force homebuyers with good credit scores to pay higher mortgage rates and fees to subsidize those with riskier credit ratings who are also buying houses.” Although, in order to understand what’s going on, you first need to familiarize yourself with a term called “Loan Level Price Adjustments.”

These were introduced 15 years ago, after the mortgage crisis, to compensate for risks associated with lending money. In January of this year, NEW changes were put in place in an effort to level the playing field between those with GOOD CREDIT and those with BAD CREDIT – and, starting May 1st, the biggest discounts will be given to those with BAD CREDIT.

Here is the BEFORE / AFTER:
https://singlefamily.fanniemae.com/media/33201/display
https://singlefamily.fanniemae.com/media/9391/display

The largest changes really come from those with good, but not GREAT credit, in between 700 and 780 – and, this heat map really shows who’s paying the most:
https://a.mortgagenewsdaily.com/assets/63c9a2932026a02d6ca2665a/63c9a2932026a02d6ca2665a.png

Keep in mind, those with BAD CREDIT still pay more in fees than someone with good credit – but, people with good credit now get less benefit than they did before, while those with bad credit no longer don’t need to pay as much.

THE DEBT CEILING:
The United States is quickly running out of money, at – at current estimates – this could happen as early as June 2023. In terms of what could happen, JP Morgan believes that “they expect the debt ceiling to become an issue as early as May, and that the debate over both the ceiling and the federal funding bill would run “dangerously close” to final deadlines.”

As the New York Times pointed out, “breaching the debt limit would lead to a first-ever default for the United States, creating financial chaos in the global economy. It would also force American officials to choose between continuing assistance like Social Security checks….and paying interest on the country’s debt.”

Let me know what you think about this in the comment sections – or, if you’re actually reading this (I have no idea who actually makes it this far down), feel free to comment ‘LOBSTER.’ It’ll be totally random and no one will have any clue what you’re talking about – but, it’ll be our little secret. Thanks!

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