"Why the Housing Market is Set to Collapse" - Dylan's Diary 7/12/24

Good Morning! This is Dylan Jovine from Behind the Markets.
In today's episode, we're diving into one of the most pressing issues in our country - the housing crisis. It's shocking and disheartening that this topic isn't getting the attention it deserves in national politics.
Let's start with some numbers. The average income in America is $74,000. Now, if someone earning that amount wants to buy a house, what can they afford? Mortgage lenders typically approve loans based on one-third of annual income. That translates to a $2,000 monthly mortgage, which should cover a $200,000 home.
But here's the problem: in the past decade, due to inflation and rampant government spending, the average home price has doubled from $200,000 to $400,000. This has turned many Americans into renters instead of homeowners, significantly impacting their net worth and retirement plans. Think about it - a large chunk of retirees' assets comes from the homes they own.
Another factor driving up housing prices is the influx of hedge funds and Wall Street investors buying single-family properties post-2009 financial crisis. This additional demand has further inflated prices, making it even harder for average Americans to afford homes.
So, where do we go from here? For the housing market to stabilize, either home prices need to decrease, or incomes need to double in the next five years. Neither scenario is particularly appealing. If housing prices drop, it may benefit potential buyers but hurt current homeowners. On the other hand, if incomes double, we could face severe inflation, reminiscent of the Weimar Republic.
This housing crisis is one of the five critical cracks in America's foundation, as I discuss in my new book, "Midnight in America." It's a serious long-term problem that needs addressing. Just think about the future - in 10, 20, 30 years, those unable to afford homes now will be more dependent on the state during retirement due to a lack of personal nest eggs.
We need our national politicians to start talking about this issue and work towards solutions. The consequences of inaction are too significant to ignore.
Anyway, have a wonderful weekend. This is Dylan Jovine, signing off from Behind the Markets.
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[@JeffreyBarnhart-wx2xr]

As always, very good.

[@behindthemarkets]

Thank you, Jeffrey.

[@Dieselpwr]

They want to say look keep buying

[@Dieselpwr]

Still too high