This Housing Slowdown Is Nearing the Worst in History

The devastation in the mortgage market is as crazy as it gets. But the slowdown also tells us something important – so far, housing is passing the "stress test"... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [DailyWealth] This Housing Slowdown Is Nearing the Worst in History By Brett Eversole --------------------------------------------------------------- We still haven't seen a recession take hold in the U.S. But a "Great Depression" is well underway in one part of the housing market... namely, the mortgage business. Housing itself has yet to crash. It's a matter of supply and demand. We simply don't have enough homes for the folks who want them. Prices have mostly held firm. Financing activity, however, has taken a huge hit. The average 30-year fixed mortgage rate has now eclipsed 8% for the first time since 2000... And with rates soaring, mortgage applications are down more than 60% from their 2021 highs. The devastation is as crazy as it gets. But the pain in this part of the market tells us something important: Housing is passing the "stress test"... Specifically, home prices have made it through without a major decline so far. And that means it's unlikely we'll see them crash anytime soon. Let me explain... --------------------------------------------------------------- Recommended Links: ['The End of America? It's Here.']( On October 26, company founder, Porter Stansberry, is returning for the first time in more than three years to issue one of the most important warnings of his career. If he's right, the next several years could be a very, very difficult period for investors and everyday Americans. [See why right here](. --------------------------------------------------------------- [1907, 1929, 1998, 2007 – and Now 2023?]( The Washington economist who called the Lehman Brothers collapse says the exact same scenario that occurred in four of America's biggest economic calamities is unfolding again today. It all centers around an unregulated sector that could be on the verge of "blowing up" once again. [Critical details are posted here](. --------------------------------------------------------------- Last year, for a time, there were around five realtors for every listing in the U.S. That was up from a ratio of 1-to-1 before the pandemic began. The market was every bit as crazy as the housing bubble of the 2000s. The difference was that wild speculation and easy financing didn't fuel this decade's boom. It was simply driven by a seemingly insatiable demand for homes from qualified buyers. You know what happened next... Mortgage rates soared. They've climbed from less than 3% to more than 8%. That surge has had a twofold effect... First, it cut down on the frothy demand. Everyone could see that buying a house with a 3% mortgage rate was an incredible deal... But at more than double that rate, it isn't such a no-brainer anymore. Second, higher mortgage rates locked a lot of would-be buyers into their existing homes. Homeowners can't afford to trade up because of the massive increase in mortgage rates. The result has been a collapse in housing activity. We can see this by looking at the Mortgage Bankers Association ("MBA") Purchase Index... This index tracks mortgage applications on single-family homes in the U.S. It covers the entire market... namely, conventional and government mortgages. Recently, this index hit its lowest level in nearly three decades. Take a look... This index is down more than 60% from the 2021 high. And it's down 74% from the all-time high in 2005. The worst of the collapse happened last year, when we saw the fastest rise in rates. But 2023 hasn't brought any relief. The MBA Purchase Index is now at its lowest level since 1995. In short, buying activity in the housing market is about as bad as it gets. There aren't nearly enough homes for sale today... And high mortgage rates have whittled down the number of prospective buyers. Despite all of these headwinds, though, home prices haven't budged much. Existing-home prices are actually up over the past year. And if prices haven't fallen after a collapse in mortgage applications, it's hard to imagine what it would take to cause a major decline. To sum it up, the housing market is completely out of whack today. But the resilience we've seen so far tells us housing prices won't tumble anytime soon – in fact, they could rise even higher from here. Good investing, Brett Eversole Further Reading "If you own a home already, you have a massive incentive to stay put," Sean Michael Cummings writes. No one wants to take on a higher interest rate. But America's homes are aging – and folks still need their homes to be safe and well maintained. That's setting up an opportunity in a specific group of stocks... [Read more here](. Affordability has plummeted, and mortgage rates are soaring. But as long as supply is still far greater than demand, we won't see a crash in U.S. housing prices. And one quirk in today's housing market is adding to this dynamic... [Get the full story here](. --------------------------------------------------------------- [Tell us what you think of this content]( [We value our subscribers' feedback. To help us improve your experience, we'd like to ask you a couple brief questions.]( [Click here to rate this e-mail]( You have received this e-mail as part of your subscription to DailyWealth. If you no longer want to receive e-mails from DailyWealth [click here](. Published by Stansberry Research. You're receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. 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