When we talk about the current housing market in the United States there is no disputing the fact that there is a very real crisis affecting many of the current homeowners as well as potential home buyers. This crisis of course affects mostly lower-income people who are trying to move up from renting to owning a property. The reality though is that in the next few months, the state of the housing crisis could change a lot depending on the winner of the general election in November. The real question though is what a shake-up in the housing market change would especially when it comes to people dealing with mortgages. So, let’s look at the current state of the housing crisis and what could potentially change over the next few years.
The state of the housing market
While the housing market is not new in North America or in the world in general the very real reality is that both COVID-19 in the rising inflation have worsened the state of the housing market in general. If we look at the numbers before the coronavirus pandemic and now, we can see that a lot more people are now renting, and the homelessness numbers have also risen dramatically in many places. While many people are worried about how we can fix this the reality is that it is important to see what causes this. There is of course a profoundly important discussion to be had about the role of private companies in this crisis especially when we see the rise of short-term renting like Airbnb and similar companies taking a lot of places in cities. The issue is of course much deeper when we talk about the commodification of basic needs.
The potential housing market changes
Currently, we see that President Trump and Vice President Harris have a lot of plans when it comes to dealing with the housing crisis. The reality though is that we won’t know for sure which plan is the best until it is applied to the current situation in the United States. Whether we talk about the republican plan to de-regulate the construction industry or the democratic plan to provide new home buyers with a $25,000 credit the reality is that these are mostly Band-Aid solutions that don’t address the root causes of the housing crisis. This is why many people are worried that this solution might cause more armed than good when it comes to current homeowners as well as the financial fears surrounding the housing market. So, it is important to look at the potential effect that these situations could incur on mortgages.
The housing crisis and mortgages
When we talk about mortgages in the US currently the general terms when it comes to loans are either 15 or 30 years. Despite the vast disparity between these two terms, the general interest rates vary between 6 and 7%. Despite this, it’s important to understand that compared to more than ten years ago general sales in the housing market have been reduced by almost 40%. This means that generally properties exchange ends much less frequently right now than they used to. So, while many people are discussing the fact that the rising interest rates when it comes to mortgages are worsening the housing crisis the reality is that mortgages are also rising because of the housing crisis.
The future of the housing market and mortgages
The reality is that when we discuss the interest rates in general loan terms applied to the mortgages, they are very subject to change. If for example a few months from now the housing crisis was addressed with meaningful solutions that reduce the general financial inequality between social classes, we could potentially see a lowering of interest rates. Not only that but if people are more fortunate in the way that they can deal with their home payments as well as down payments there would be a more stable housing market and generally a more trustworthy aspect when it comes to applying alone and mortgages to new home buyers.
So, whether you’re trying to get a loan to renovate your home to add custom cabinets for your kitchen or get a larger mortgage to be able to purchase your first home this situation affects everybody. The state of the housing market and the general price of everything surrounding the construction industry as well as the housing market causes a lot of grief to current homeowners as well as potential home buyers. So, this is why no matter what situation you’re in addressing the housing crisis is very important.
