Two news articles to consider.
First:
Nearly 60,000 homebuyers walked away from deals in October as the average mortgage rate reached 7%, according to a report from Redfin, a Seattle-based real estate firm.
The dip in pending home sales was the largest drop since Redfin began tracking the data back in 2013, the report said. While pending home sales fell across the country, Allentown Pennsylvania led the nation with a 54.9% year-over-year decline. Greensboro, North Carolina had the second highest pending home sale cancellation rate with buyers walking away from half of homes that were under contract.
Rising home prices have been a chief scourge for homebuyers and homebuilders alike throughout the pandemic. Since March 2020, the median home price in the US has increased by more than 41%, according to the Federal Reserve Bank of St. Louis.
These advancing home prices have quelled homebuying demand, especially among first-time homebuyers. The National Association of Realtors estimates that home sales will decline from 5.2 million in 2022 to 4.8 million in 2023 because of high mortgage rates and inflation, which is putting additional pressure on homebuilders to offload newly built properties from their balance sheets.
Second:
Amazon confirms it has begun laying off employees
Amazon confirmed on Wednesday that layoffs had begun at the company, two days after multiple outlets reported the e-commerce giant planned to cut around 10,000 employees this week.
The initial cuts at Amazon will impact roles on the devices and services team, per a memo shared publicly by Dave Limp, senior vice president of devices & services at Amazon
Amazon and other tech firms significantly ramped up hiring over the past couple of years as the pandemic shifted consumers’ habits towards e-commerce. Now, many of these seemingly untouchable tech companies are experiencing whiplash and laying off thousands of workers as people return to pre-pandemic habits and macroeconomic conditions deteriorate.
Facebook-parent Meta recently announced 11,000 job cuts, the largest in the company’s history.
The housing market is crashing and the country’s second largest retailer is laying off 10,000 people just before Christmas.
I can’t think of stronger signs that the economy is fucked far beyond imagination.
Yes, the Biden Administration has been lying to us. We feel it every time we buy groceries or fill up our cars.
But holy fuck, what were seeing must be the tip of the iceberg that is going to rip a hole in our ship of state and sink our economy like the fucking Titanic.
In our small “company” town up in the mountains, we’re seeing an interesting real estate market. The demand is very high, as the “company” is hiring and commuting from nearby towns is a significant time expenditure; but the higher-end houses just aren’t selling, and the time-to-sell has also increased significantly on the mid-to-high tier.
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Basically, we’re seeing people downscale on their purchases, on average going for smaller and less expensive homes – a rational response in the face of significantly increasing mortgage rates, and the local situation.