The Looming Home Equity Slaughter
Economic crack two is the looming home equity slaughter.
This is the same chart I showed you earlier.
It shows the amount of money our government has borrowed in the past four years.
Well, about $7 trillion of that was checks sent to people during Covid.
And I’m not saying there’s anything wrong with helping our fellow Americans during a crisis. But we must now live with the consequences.
And one of the biggest consequences has been soaring housing prices.
This chart from the St. Louis Federal Reserve shows just how far housing prices have risen since 2020 alone.
Never before in the history of this country have homes ever been this expensive.
You don’t need me to tell you this. Just look around. It’s crazy.
Prices of homes have doubled in the past 10 years.
In 2014, the average home in America cost $200,000. Today the average home in America costs $400,000.
But the problem is average incomes in America haven’t doubled in the past ten years. They’ve only increased by 13.8% since 2014.
In the short-term, housing prices are based on whatever people will pay for them.
But in the longer-term, they’re based on incomes.
And the fact that housing prices have doubled in the past ten years, while incomes have stayed about the same….
…means homes are unaffordable to most of the buyers in America.
If the 2009 real estate collapse taught us anything, it’s that housing prices can’t go up far beyond the point where home buyers can afford them.
Prices will have to come back down to a level where buyers can pay for them.
It’s already begun.
Prices are now starting to go back to where they were before the start of the pandemic.
As homeowners, we should be very concerned about this.
The only reason housing prices haven’t gone down faster is that the government is still borrowing $1 trillion every 100 days.
But when that finally ends, and the hangover hits this country, housing prices will have to drop 40% to get back down to the level folks can afford them.
Much of the equity homeowners have will get wiped out in an instant, but I have found a way for my friends and family to survive and prosper.
I want to share that with you. It starts with you getting a complimentary copy of my new book, “Midnight in America.”
But I have a bigger plan for you to prosper for years to come as I will describe in a moment.
But first, let’s take a look at the other cracks in our economy that are forming underneath our feet.
