In a disturbing case of history repeating itself, our leaders have once again created a housing bubble that is set to burst with serious implications for the global economy. Over a decade ago, our leaders’ actions resulted in the biggest housing bubble in history, culminating in the Great Recession. Instead of learning from their mistakes and fixing the system, they have simply created an even larger housing bubble.
One crucial lesson we learned during the Great Recession is that home values greatly impact the economy. When home values plummet, borrowers often choose to walk away from their mortgages. This year alone, U.S. home values have suffered a staggering loss of $108.4 billion. This alarming figure should concern all of us.
The west coast is particularly vulnerable to the bursting of the housing bubble. In Washington state, home values have dropped by an average of over $74,000 in the past year. This decline marks the largest drop in the country and has left some homeowners with mortgages that exceed the value of their homes, a situation known as being “underwater.”
This trend is not restricted to Washington state alone. Negative equity is becoming a significant issue all over the nation, forcing homeowners to face challenging circumstances. Experts warn about the worrying signs of negative equity, especially in certain regions.
Despite this disheartening situation, some areas are experiencing a different reality. For instance, Florida has seen a rise in home prices due to an influx of people relocating there. The future trajectory of home prices is expected to be uneven. Major cities and blue states are likely to witness a fall in prices, while rural areas and red states might remain more stable.
However, it’s not just the residential real estate market that is in dire straits. The commercial real estate sector is also facing severe challenges. Numerous commercial real estate loans in the U.S. are already deeply underwater, with delinquency rates rising rapidly.
Data reveals a significant increase in corporate bankruptcies, reaching 340 cases in the first six months of this year alone—an increase of 93 percent compared to the same period in 2022. These alarming numbers suggest that the U.S. economy is not on the right trajectory.
This economic turmoil is becoming more evident in everyday life. Online searches for “pawn shop near me” have reached an all-time high, indicating that cash-strapped Americans are desperate for quick money. Additionally, searches for “is dumpster diving illegal” have also hit record levels, highlighting the growing desperation for affordable food.
Despite the dire circumstances, there seems to be little assurance from President Joe Biden that everything will be okay. The reality is that the economy is heading toward significant trouble, with a bleak long-term outlook. However, this does not mean that we should succumb to despair. We must summon courage and resilience in the face of adversity. Even in the midst of chaos, we can make a difference and shape a better future.
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