U.S. Mortgage Rates Skyrocket: Doubled Since 2021 Amid Economic Turbulence

The housing market just got punched in the gut—U.S. mortgage rates have doubled since 2021, turning the American Dream into a spreadsheet nightmare.

The Rate Reckoning

No fancy jargon here: borrowing costs for homes have officially 2X’d in four years. Thanks, inflation.

Who’s Left Holding the Bag?

First-time buyers? Squeezed. Refinancers? Roadkill. Wall Street? Probably shorting the whole mess.

One thing’s clear: the Fed’s ‘soft landing’ looks more like a crash diet for homeowners—except the only thing shrinking is their purchasing power.

Rents drain incomes as housing units disappear

But the collapse is hammering renters even harder. An in-depth look by The Daily Upside reveals the U.S. is now short 7.1 million affordable rental units. For every 100 low-income renters, only 35 units exist. That leaves 75% of those renters spending over half their pay on rent.

That squeeze is showing up in national homelessness numbers, which saw their biggest rise since the Great Recession. More families are sleeping in cars or being forced into multi-family homes. It’s not just the poorest Americans feeling it, either. Even middle-class families are stretching paycheck to paycheck, watching rent eat everything.

While buyers hesitate, many sellers aren’t budging. Instead of negotiating, they’re pulling their listings altogether. A new Realtor.com report showed delistings jumped 35% year-to-date and 47% higher than this time last year.

Meanwhile, active listings only grew 28.4% and 31.5%, respectively. Sellers in the South and West are facing more pressure, with inventory climbing and time on the market extending past pre-COVID levels. But in the East and North, home prices have still ticked up slightly, despite fewer sales.

Builders cut back as construction slows

Add in what’s happening with builders, and things look even worse. New construction has slowed way down. Housing starts are down 10% year-over-year, and builder confidence has sunk to levels not seen since 2012.

Some parts of the country, like Florida and Texas, are now facing a risk of having too many homes. Both states saw major construction booms during the pandemic, but now demand has dropped. Meanwhile, in crowded cities, the exact opposite problem exists: not enough supply and no real plans to fix it.

The uneven distribution of housing is only part of the story. In markets driven by tech or crypto speculation, investors are back, and they’re creating chaos. Since Donald Trump returned to the White House earlier this year, investor confidence in crypto has surged again.

His recent decision to sign the first crypto-focused bill into law last week has only added fuel to the fire. Now, certain neighborhoods are seeing real estate get sucked into volatile crypto-driven investment cycles. The result? Even more unpredictability in a market already spiraling.

The crash of 2008 started when banks gave out risky home loans to people with bad credit, often called subprime borrowers. These loans were bundled into complex financial products and sold to investors everywhere.

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