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Some scholars have begun to worry that history will repeat itself.
In 2006, US mortgage rates also soared rapidly, and high interest rates caused a large number of borrowers to default on subprime mortgages, which eventually led to financial market turmoil and stock market collapse, laying the groundwork for the 2008 financial crisis.
Then house prices plummeted and the global economy plunged into its worst recession since the Great Depression.
After the Federal Reserve began to raise interest rates in March this year, there was a rise in interest rates, a decline in sales, an increase in housing supply, a sharp fall in the stock market and virtual currencies, and a weak rise in the US housing market.
According to the US mortgage formula, assuming a loan of $400000 at an interest rate of 3.11% in December 2021 (about 2.8 million yuan at the latest exchange rate), a monthly repayment of $1710 (about 11993 yuan) for a 30-year loan with a down payment of 20%.
At the latest 6.01% mortgage rate, dollar repayments rose to $2400 (16833 yuan), an extra $690 a month, or 4840 yuan.
In terms of RMB, the home loan will have to repay 1.74 million more interest in eight months, which is too uneconomical for people who buy a house on a loan.
According to statistics, sales of new homes in the United States fell to a six-and-a-half-year low in July, with second-hand housing transactions and single-family housing starts at a two-year low.
By the end of July, there were 464000 new homes for sale in the United States, the highest inventory since 2008.
House prices across the United States fell the most in 11 years as a result of higher interest rates, with the West Coast leading the decline.
Prices in San Jose, Calif., fell the most, falling by 10% in three months.
On the sales side, sales of single-family homes in California fell 14% in July from a year earlier, down 31% from a year earlier, the 13th consecutive month of year-on-year decline.
Apartment sales fell 18 per cent in July from a month earlier, down 36 per cent from a year earlier.
California is the state with the best economy in the United States, and San Jose is known as the center of Silicon Valley, where there are many well-known large high-tech companies. The median house price ($1.39 million in April 2022) is three times higher than that in other American cities ($428000 in the first quarter of 2022).
About 50% of the Chinese who buy houses in the United States choose California.
However, affected by the epidemic, many technology companies let employees work from home, people do not have to squeeze to buy houses in California, there is less demand, and higher interest rates make California house prices less cost-effective, so prices have fallen the most.
In addition, house prices in Seattle (7.7%), San Francisco (7.4%), San Diego (5.6%), Los Angeles (4.3%) and Denver (4.2%) also fell significantly.
You should know that in the process of this round of house price increases in the past two years, cities on the west coast of the United States have the highest rate of increase in house prices in the United States, followed by southern cities.
This is basically in line with the top increases in house prices in the West Coast and South of the United States in the past, while house prices in the Northeast and the Great Lakes region are relatively low.
Generally speaking, the southern United States has plenty of sunshine and no serious environmental pollution, which attracts many people to move in.
The surge in house prices in the past has led to the largest increase in housing inventory in the west, up 70.8 per cent year-on-year, followed by the south, up 56.3 per cent.
The US housing market is cooling sharply.
In fact, the Fed’s retrenchment is more aggressive than it was in 2017-2019, and the recession in the US housing market may only have just begun.
Data show that in the last round (2009-2015), the Federal Reserve carried out three rounds of QE (quantitative easing) in response to the impact of the financial crisis, with an expansion of US $3.5 trillion over the past six years.
In this round (2020-2021), in order to alleviate the impact of the COVID-19 epidemic, the Federal Reserve expanded its table for two and a half years to increase liquidity by 5.14 trillion US dollars.
The monetary policy tap has been turned on, and this time M2 in the United States has grown by more than 20%, compared with a peak of less than 10% last time.
The flood of money has led to high inflation in the United States, where CPI recorded a high of 8.3% in August, down from 8.5% in July, but still higher than expected.