This week, Freddie Mac said the average interest rate on a 30-year mortgage in the United States had risen to 6.70%, from 6.29% the week before and 6.02% two years ago. weeks. A year ago, the average rate was 3.01%.
Potential sellers who have low-rate mortgages are reluctant if it means taking out a new loan to finance their next home. Potential buyers are being forced out of the market as the monthly principal and interest payment on a new 30-year loan, based on Freddie Mac figures, is up 53% from a year ago.
Home sales contracts are being canceled at a record rate in some areas.
But these factors could lead to a buyer’s market in 2023 if prices fall. Here are the areas where economists expect to see the biggest declines in home prices.
The strong dollar and the stock market
The dollar strengthened as the Federal Reserve took the lead among central banks in raising interest rates. This reverberates around the world, making it more expensive for countries to pay interest on dollar-denominated debt and increasing the cost of any commodity traded in dollars.
The rising dollar lowers the prices of imported goods for Americans and may also reduce their international travel costs. But Michael Wilson, Morgan Stanley’s chief equity strategist, warns that earnings for the S&P 500 SPX,
would decline as a direct result of the strong dollar and called the current currency environment an “unsustainable situation” for the stock market.
On the other hand: Companies are trying to blame weak earnings on the strength of the U.S. dollar, but that’s a lame excuse
This is what happens when bearish sentiment is high
Michael Brush interviews David Baron, co-manager of the Baron Focused Growth Fund BFGFX,
which outlines the opportunities that arise as institutional investors dump their stocks. He also explains his winning long-term strategy, which included a very long-term investment in Tesla Inc. TSLA,
A positive sign for the stock market: These 12 stocks have seen strong insider buying
Time to buy bonds?
When interest rates rise, bond prices fall. But it also means that if you have money to put to work, bond yields have become much more attractive.
Khuram Chaudhry, European equity quantitative strategist at JPMorgan in London, argues for buying bonds now.
What about preferred shares?
Preferred stocks have declared dividend yields and prices that move in the same way as bond prices. This means that the prices of many issues are now heavily discounted from face value, and current yields are much higher than they were at the end of 2021. Here’s a detailed guide on how to research preferred shares and make your own selections.
Related: 22 dividend stocks selected for their quality and safety
The problem of macroeconomic projections
Stanley Druckenmiller predicted a US recession in 2023 as a result of the Federal Reserve’s monetary policy tightening. That may not be a stretch, given that the U.S. economy contracted in the first half of 2022, according to revised GDP figures from the Bureau of Economic Analysis.
But investors should be careful – macroeconomic forecasts often turn out to be incorrect, warns Mark Hulbert.
Learn more about stocks: This is the worst September for stocks since 2008. What this means for October.
Recessions and your retirement plans
Alessandra Malito has advice on how retirees and people planning for retirement can prepare for tough economic times.
Also: Reset your retirement calculator now for today’s darker stock markets and make sure you’re still on track
Investors tremble and a central bank scrambles
After Prime Minister Liz Truss’ new UK government announced a massive tax cut along with a new spending package to help tackle rising fuel costs and new borrowing, the pound hit a new low by against the dollar on September 26 as investors and fund managers panicked. and UK government bonds sold. Steve Goldstein explains how and why the Bank of England came to the rescue.
Focus on reverse mortgages
Beth Pinsker digs deep to explain how to use a reverse mortgage as a financial planning tool.
Make fun of Elon Musk
After Tesla CEO Elon Musk said the next Cybertruck would be waterproof enough to “serve briefly as a boatthe San Francisco Bay Ferry offered this advice to customers.
Oant more of MarketWatch? Sign up for this newsletter and others, and get the latest news, personal finance and investment advice.