It’s not just prospective homebuyers who are suffering the consequences of sharply higher mortgage rates. Homeowners are finding they can’t sell their homes for what they were worth just a few months ago. This is particularly troublesome for couples approaching retirement, such as neighbors of mine who are looking to downsize.
Three months ago, a home very comparable to theirs sold in our neighborhood for the impressive price of more than $1.3 million. But the couple recognize they are now selling into a declining market, so they listed their home for just under $1 million. It’s as if a chunk of their nest egg has suddenly been snatched from underneath them.
Sadly, had the Federal Reserve been more vigilant on its inflation watch, much of this pain could have been avoided. The Fed’s mandate is to maintain price stability while attempting to maximize employment, and among its primary tools is the Fed funds rate. It’s the cost of borrowing for banks. They, of course, pass that cost onto their customers, while also tying their mortgage rates to Treasury bond yields, which have shot up this year, reflecting rising inflation expectations.
THINK Good! Bring the prices of houses down more! The past 3 years showcased obscene wealth hoarding!
THINK Welcome to the Carter years young people!
THINK Audit the Fed
THINK Yet Dems’ refuse to walk back their massive deficit spending which was a major cause of soaring inflation.