It’s a Great Time to Buy a Home
Inflation was low during the 2007 housing bubble. It was a simple, old-fashioned bubble where the fed gave the monopoly game players lots more money for little more cost. Thus the price of baltic ave and boardwalk soared. When the bubble deflated, home prices went down.
The current bubble is different. The fed is still injecting monopoly money into the hands of buyers at a low cost, that part is the same. But this time we have rampant inflation. As I showed in a recent article, the cost to build a home has increased 55% in 4 years. So the idea that house prices will crash could be true, but the downside crash in prices is limited because the cost to build has increased.
If it costs $175 a sq. ft. to build a house, how much further below that floor can the price of housing go?
Costs Going Up In All Directions
The consumer is growing poorer in 3 directions:
1 – the cost to build has risen 55% in 4 years.
2 – the cost of money to buy a house – mortgage rates – has increased.
3 – the economy itself is tanking, job loses are mounting, and inflation is eating away the value of the dollar.
Is it a Good Time to Buy a Home?
I think that this could be a good time to buy a home – if you can find a deal close to or below build cost. I don’t think any one of the 3 factors listed above is going to abate anytime soon. Housing prices will continue to increase:
#1 – Inflation is still soaring. The cost to build a home might continue to rise rapidly from here. If that happens, this will be looked back upon as the ‘good old days’ for buying a home…a time when a person could still afford a home. Inflation is still seen as a temporary condition – the average seller hasn’t realized that inflation is going to increase from here. They have bought into the ‘housing price crash’ to some degree. This will
#2 – The cost of financing a home is increasing. Mortgage rates are well over 6% now. They could, and should go to 10% or more to slow inflation. Whether the fed has the fortitude to do this we don’t know. We do know that if they lower rates the price of housing will soar, which puts the current home buyer in a good position. If the fed continues to raise rates the cost of financing will get more expensive. Rates are still low enough to be considered ‘cheap money’.
#3 – If he loses his job this is not good for his prospects for keeping his home, but if he loses his job he won’t be able to buy either. Inflation will ‘help’ him pay off the home faster.
Americans Growing Poorer
This ultimately is another fascinating example of americans growing poorer, which has been the sole objective of the federal reserve since its inception. To transfer money from the people of the country into the pockets of insiders and those who own the federal reserve. This transfer has been ongoing and continues unabated to this day.
At some point, americans will only be able to afford a tin shack, like many people in poor countries. The people of haiti would much prefer to live in a 3 bed 2 bath brick home on a lake. Unfortunately, they cannot afford it. Such will be the case for americans, hard as it might be to believe at this time. If the cost of a home goes up, the cost of financing a home goes up, and you have no job to even try to buy a home, you are poor and will live in a tin shack if you can cobble one together. This is where america is headed, the end destination of this long and winding road of fiat banking.
One looks around and sees strip malls and platted subdivisions – the wealth of america. The idea that this is not how it will always be is anathema to virtually every american. But the country has been hollowed out by the money masters – by those tasked with ‘protecting’ your wealth and money. They have, for their entire existence, been stealing from your grandparents, parents, you, and your children. This has been their stated objective. We shouldn’t be surprised when we “wake up homeless on the continent our fathers conquered.”