Buyers’ Strike? Everyone Knows the Housing Market Has Gone Nuts: Amid Wild Distortions, Prices Spike but Sales Plunge.

by Wolf Richter
Wolf Street

No housing market can handle the perversity of vacant homes being used as leveraged investment vehicles to generate capital gains by just sitting there.

While 17.4 million people are still claiming some kind of state or federal unemployment compensation, as the delinquency rate on FHA insured mortgages hit a record 17.5% and 2.3 million mortgages are still in forbearance, the beneficiaries of the Fed’s monetary policies are treating homes as leveraged investment vehicles with huge returns on equity. And people are buying homes and moving into the new home without putting their old home on the market to ride up those prices, documented by an explosive surge in second-home mortgages, leading to starved inventories and more surging prices… and yet, sales plunged again.

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