the staff of the Ridgewood blog
Ridgewood NJ, U.S. housing affordability fell last month to near the lowest level ever as home prices surge. Mortgage interest rates now exceed 5.2% – up from 3.6% two years ago. And the Fed is raising rates again – as it should – but this too will likely raise mortgage rates.
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The average mortgage payment is now $1,800 a month. That’s 70% higher than the pre-Covid high. The only other time home payments were this high was in 2007 on the eve of the 2008 Financial Crisis.
As the chart below from Black Knight’s mortgage monitor shows, home prices are up 19.9% over this time a year ago. Yes, that’s very good news for homeowners as their home equity surges, but a killer for home buyers – especially first-time buyers.
Loan to income levels are also rising, which makes defaults more likely.
It’s the 2008 all over again . All of this has been artificially inflated by years of artificially low rates, Fed policies of purchasing hundreds of billions of dollars of mortgage-backed securities, and Congress passing out hundreds of billions for taxpayer funded rental assistance. It’s all helium pumped into a balloon that could soon pop.
On March 11, 2008, Mad Money host Jim Cramer (who believe it or not is still on CNBC) told a viewer who wrote into his show, “Bear Stearns was fine!” right before the stock absolutely collapsed. The stock was trading at $62 per share. Just 5 days later, the firm was mercy folded into JPMorgan Chase (read: bailed out) at $2 per share.
On May 3rd 2022, CNBC’s Jim Cramer at it again defended Federal Reserve Chair Jay Powell and said that the beaten-down state of previously inflated stocks shows the Fed chief is on the right track to corralling inflation. “He wants to take the air out of everything I just mentioned and guess what, if you look at the stock market, sadly, for the bulls, or perhaps good for the economy and the country, he’s winning,” the “Mad Money” host said…….. hummmmm.
Cramer is a fraud