DEBT RECORDS BEING SET EVERYWHERE
WILL REAL-ESTATE BUBBLE BE NEXT
While the narrative seems to be all is well with the economy, alarming statistics are being reported almost daily.
Household debt has now set an all-time record of $17.1. Trillion.
Credit Card debt is now a record $1.2 Trillion with interest of 25%
Savings rate has declined to 3.5% and savings, have declined by over $1 billion per month since January, 2023.
Delinquencies on auto loans and consumer debt is increasing steadily.
Federal Reserve reports that banks are tightening lending standards as they foresee trouble ahead.
Debt to income ratio on mortgages has reached all time high of 40%, surpassing previous high in 2008 of 39 %.
28% of home sales are being purchased by Real estate investors. Average mortgage payments are over $1600 and in Pa. $1505.
Average rent in Allentown area is now $1546 for 850 sq ft. and many over $2000.00.
Average household income in Pa. is $66,000.
Corporate profits are now down an average of 6%.
It appears that many have continued to maintain their lifestyle by increasing credit card debt and depleting their savings. It is forecast that this practice is now going to come to an end within months.
The trigger for the 2008 crash was the default of real-estate debt held by mortgage securities.
Today we now see Real-estate investment groups who have been purchasing, renting and reselling real-estate financed by investors. While returns are increasing everyone is happy, but when returns stagnate and then fall, investors, unlike home owners, will soon want to exit these investments. When investors want to liquidate, it will require the group to sell, decreasing real-estate values and setting in motion a fast decline and crash and also default on mortgages. The rest is easily calculated by history.
This situation then coupled with the effects of sanctions and trade retaliation may very easily set up a horrendous situation, especially for individuals and countries with large debts.
No comments:
Post a Comment
comments and opinions published at discretion of editor