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August 18, 2022

Financials Matter

"It's Not Just About Finance"

Will Interest Rates Kill Real Estate?

Real estate and rentals across the globe have become unaffordable.  But will rising interest rates kill the real estate market?

In order to understand the phenomenal rise in real estate you must first consider the trends that have made home ownership unaffordable in America.

 

  1. There has been a mass evacuation in major cities and in high-taxed states…mostly due to the Covid laws enacted.
  2. People prefer to put money (capital) in hard assets as opposed to keeping it in banks…another way of “Getting off the Grid.”
  3. International capital is running full speed to the USA…mostly because of geopolitical instability and fear in Europe.

 

Ironically (or NOT) these are also reasons why our stock markets haven’t crashed.

Because as bad as things may be here – corrupt administration beyond belief – we’re still the safest place on the planet.

Period.

The old school mentality that real estate declines with rising interest rates is based on the assumption that everyone buys on leverage.

This leads the gloom and doomers to believe that our real estate market will decline by 50% as the FED continues to raise rates.

 

If Interest Rates Kill Real Estate, Then…

Again, gloom and doomers misunderstand the trends because they’re only looking at evacuations from big cities.

And that is happening because of reasons other than interest rates…see trend 2 and 3 above.

In 2021, cash sales represented 25% of existing home sales in the key markets.

As we mentioned in the trends above, this market has been LESS impacted by interest rate hikes than any previous booming market.

And the vast majority is because of the migration from interstate within the US and the flood of European buyers looking for assets outside of Europe.

And as war keeps getting closer and closer, we’ll see more foreign buyers.

Another oversite not considered is that Blackrock has bought over 20,000 homes in Florida in the lower-end of the market for cash.

(And Floridians wonder why rent is so high?)

So, until inflation gets under control don’t expect interest rates to kill the real estate market in the USA.

But even if it does you can expect vultures like Blackrock will be waiting in the wings to buy everything at fire sale prices.

Learn how the Boyz manipulate certain markets and – more importantly – how to avoid their financial traps in our “…In Plain English” newsletter (HERE).

Share this with a friend…especially if they’re waiting for real estate to collapse.

They’ll thank YOU later.

We’re Not Just About Finance.

We simply use finance to give you hope.

https://www.financialsmatter.com/category/in-plain-english/

 

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Invest with confidence.
Sincerely,
James Vincent
World Leader in Simplifying Wall Street
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