Home Prices Just Did Something That They Have Never Done Before

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Everyone could see home prices were spiraling out of control, and now we are seeing some solid numbers that are just shocking. Home prices are rising at the fastest pace ever recorded, and millions of potential homebuyers are getting increasingly frustrated with how competitive the housing market has become. All across the country, average hard-working American families are being completely priced out of the market. Prior to the health crisis, the biggest price bubbles used to be in big cities and major urban centers along both coasts. But right now, buyers have been looking for the safety and comfort of rural and suburban areas, whose markets all over the nation are red hot. Bidding wars are happening so frequently that offering more than one million dollars over the asking price has become a common thing. Buyers are so desperate to purchase a home that in addition to cash bags they have been offering trips, cars, and even to buy another home for the seller. This crazy frenzy is sending home prices to dizzying heights, and the latest numbers can prove so.
On Tuesday, headlines all across America were reporting the latest reading of the S&P CoreLogic Case-Shiller home price data, which revealed that in the month of April, U.S. home prices jumped the most in over 30 years. Other financial experts with ZeroHedge affirmed these sharp price increases “make sense” thanks to “trillions in stimmy checks, near-record low mortgage rates, and an exodus away from cities”. Experienced economists are telling us that this euphoric market is only expanding the growing divide between the haves and have-nots in housing, with sales activity dramatically rising on the higher end of the market but falling on the low end as increasingly more buyers are getting priced out.
They note that the Federal Reserve is responsible for keeping mortgage rates artificially low through its bond-buying program, and those suppressed rates helped to fuel the home buying boom over the past year. Even though they have ticked slightly higher in recent days, that wasn’t enough to offset the huge price gains. “So much for the Fed’s all-inclusive monetary policy where lower income people now can’t afford housing,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Those who are being left out of the market have no other alternative rather than renting a place. However, rent prices have also been on a relentless rise in many areas around the country. The latest price increases are coming at a time U.S. renters collectively owe more than $30 billion in back rent. Some states, such as California, are trying to pay off unpaid rent accrued during the recession before mass evictions begin. At least 10 million workers who live paycheck-to-paycheck remain on the verge of losing their homes as soon as the CDC moratorium expires next month.
These days, companies are taking advantage of heated demand for products and dwindling supplies to stretch prices as much as they can. That goes from homes and vehicles to everyday items and food. At this point, every time Americans take a trip to the grocery store they end up paying more for the same products. But higher food prices aren’t just affecting financially strapped families and the working poor. The truth is food price inflation is getting very painful for food banks just as well, which is making their mission of helping those in need much more expensive.
And if rampant inflation wasn’t bad enough, U.S. consumers are also dealing with extensive shortages. For instance, now that the holiday weekend is just around the corner, several gas stations around the nation are already reporting widespread gasoline shortages. In the meantime, the 43 million Americans that are getting ready to hit the road for the July 4th holiday should brace for some of the highest gas prices in almost seven years, which are averaging $3.10 a gallon, a 42% increase compared to a year ago. The current shortages are being mainly caused by a lack of available truckers to deliver fuel, and according to CNN, this means that thousands of stations will not get any gas delivered at all. If we see the same we’ve seen after Colonial Pipeline was shut down for a week, this implies that we’re headed to another wave of panic buying and chaos across the country’s stations.
Although the mainstream media keeps trying to sugarcoat the devastating effects of high inflation, saying that these widespread shortages are a sign of a “booming” economy, the reality is much more bitter than many realize. We’re effectively living a rerun of the Jimmy Carter era of the 1970s, and unfortunately, this is just the beginning of this crisis. Just like back then, Americans’ financial pain was extended through years and years, and today, our economy’s long-term outlook never looked so despairing.

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Epic Economist

Epic Economist

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