Record Inflation and Rising Interest Rates Lead to Slowing Housing Market

Shocking new data released on Wednesday shows inflation in June rose 9.1% from a year ago – the biggest 12-month rise in 40 years.

The news reinforces fears of a recession. This is also affecting the housing market, and sky-high house prices are finally coming down to earth.

Not so long ago, some open days drew queues on the street.

“It was madness. It was all about offers before the open houses even happened,” said real estate agent Elizabeth Kluft-Badway.

But with inflation soaring and an interest rate approaching 6%, that is no longer the case. Across the country, 60,000 deals collapsed before the close last month as buyers couldn’t afford the new mortgage payments.

Realtor Mike Closky recently hosted an open house in Sherman Oaks, Calif., and no one showed up. This was after knocking $300,000 off the asking price of $1.3 million.

Rising interest rates create a double whammy. Buyers are finding they can’t afford a mortgage as large as they were just a few months ago, and sellers are being forced to lower their asking price.

House prices are falling across the country.

Realtor Lindsay Katz has listed a home in Los Angeles for $849,000 ahead of a bidding war. The price has been reduced by $10,000 and may need to drop.

“The real estate boom that was induced by the pandemic — which was the biggest boom I’ve personally ever seen and I’ve been doing it for 20 years — it’s over right now,” CNBC correspondent Diana said. Olick.

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