Millions of mortgages could potentially default in the coming years, causing the U.S. Housing Market to plummet. Already, house prices are falling and sales are struggling.
Governments around the world are grappling to control and contain the financial markets against rising inflation and the higher cost of borrowing.
Compounding the problem are the soaring post-pandemic work-from-home figures, leaving offices bare.
Could it be a recipe for disaster?
Mortgages Come Due in Force
Over a trillion dollars of mortgages could face dire straits in 2024 as they come due in force. As interest rates continue to be cripplingly high and empty offices squeeze property prices, the outlook looks grim.
This is no elephant in the room scenario.
Hiding in Plain Sight
In fact, this potential horror threatening to crumble the housing market is hiding very much in plain sight. And now people are starting to face the reality of post-COVID life, it is becoming more inevitable every day.
A Snowball Effect
The U.S. is teetering on the edge of a potential recession, putting mortgages more at risk.
The majority of bank owned mortgages are paid by small, relatively unprotected lenders.
Defaults on this lending sector could start a snowball effect; drifting into other areas of the economy, rolling faster and faster towards the brink.
Collapse of Regional Banks
Already in 2023, the U.S saw the collapse of three regional US banks; Silicon Valley Bank, Signature Bank and First Republic Bank.
This provoked a severe and negative impact on the financial sector and stock prices.
Millions of office buildings lie empty, reaching almost 20% already this year with no chance of recovering from the pandemic as ways of working change irreversibly.
Just In Time for the Presidential Election
Add the real estate market imploding in on itself, and the economy could dive bomb into oblivion just as political candidates embark on the presidential election.
So how will the candidates use this to their advantage and convince U.S voters they can save them from this nightmare?
But even they admit, there is little that can be done to slow or swerve the inevitable disaster. It seems more like when, than if the bubble will burst.
Senator John Kennedy is Worried
Senator John Kennedy wasn’t mincing his words when journalists asked him if he was concerned.
“Am I worried? The short answer is yes,” and “The long answer is hell yes!”
The potential of recession didn’t loosen its grip on the economy this week as interest rates were hiked again for the tenth consecutive month.
This rise did nothing to ease pressure on real estate, the banking system, or the consumer.
Knock, Knock, Knock
Federal Reserve Chair, Jerome Powell, continues to describe the banking sector as strong, yet media interest is building as some authorities urge lenders to protect themselves and their sector. In a contradictory move, the FR highlighted real estate as a potential area of risk in its May financial reports.
Some hope that these dire consequences will be isolated to the commercial sector – others claim it is a fool’s error to underestimate the wolf pounding at the front door, trying to get in.
Property: 5 Good Reasons We Might See House Prices Fall
We all know the story. The pandemic hit the world, leading to lower mortgage rates and a greater desire for people to have their own space. Property: 5 Good Reasons We Might See House Prices Fall
Signs of a Housing Market Crash – Will the Housing Bubble Pop?
Perhaps it’s hope or greed, but no one likes to consider the possibility they’re buying just before a housing market crash. Signs of a Housing Market Crash – Will the Housing Bubble Pop?
Real Estate Stocks: What They Are and How To Invest In Them
It’s funny how sometimes life can give small clues as to how you should be handling your finances. Real Estate Stocks: What They Are and How To Invest In Them
House Price Data Brings Festive Cheer Prices in Some States Up 24%
With the end of the year drawing into focus, homeowners will reflect on a year that has seen a return to inflation, a higher cost of living, and fears of a recession. House Price Data Brings Festive Cheer Prices in Some States Up 24%
Even if the Housing Market Crashes, Gen Z Will Struggle to Buy
According to Consumer Affairs, 78 percent of Americans believe there will be a housing market crash by the end of the year, while 50 percent expect it to happen next year. Even if the Housing Market Crashes, Gen Z Will Struggle to Buy
The article Massive Threat to U.S. Housing Market Hides In Plain Sight – Should You Be Worried? “Hell, Yes!” first appeared on Wealthy Living.
Featured Image Credit: Shutterstock / Steve Heap.