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Most financial planners don’t include home equity as an asset, but they should. It’s the biggest asset most people own.
There’s solid data that suggests that a downturn in the U.S. housing market crash is already underway, and anyone denying that should come out of their bubble.
These fears are especially evident among urbanites, with 75 percent of homeowners and homebuyers saying housing is overvalued and home prices are unsustainable.
No one wants to buy at the peak and find themselves underwater as so many did a decade ago (financial crisis 2008).
There are plenty of signs that the housing market could be about to crash. These are rising home prices, fewer affordable homes, warnings, an increase of unregulated mortgages, and a greater number of flippers.
The US households are now sitting on a record $14 trillion in mortgages, credit cards, student loans and other forms of debt.
Consumer debt is now about $1.3 trillion higher than the previous peak set in 2008. Household debt has climbed about 25% from the post-recession low of $12.7 trillion.
Mortgages remains the largest chunk of Americans’ debt, accounting for $9.44 trillion. That’s up by $31 billion, or 0.3%, from the end of the second quarter, according to the NY Fed.
Student loans climbed by 1.4% to $1.5 trillion, while credit card balances rose $13 billion during the third quarter.
Federal Reserve Chairman Jerome Powell warned Wednesday that business debt is “historically high”.
This gives us another reason to believe that a U.S. housing market crisis is imminent.
The U.S. housing market has started showing signs of weakness over the past couple of months. Sales of new homes dipped in September and prices fell despite a tight inventory situation. Existing homes sales also took a beating, declining much more than what analysts were expecting.
The real estate market could collapse if banks and hedge funds returned to investing in risky financial products. These derivatives were a major cause of the financial crisis. Banks sliced up mortgages and resold them in mortgage-backed securities. These securities were a bigger business than the mortgages themselves. So, banks sold mortgages to just about anyone. They needed them to support the derivatives. They sliced them up so that bad mortgages were hidden in bundles with good ones. Then when borrowers defaulted, all the derivatives were suspected of being bad. This phenomenon caused the demise of Bear Stearns and Lehman Brothers.
How to Protect Yourself from a Housing Crash?
If you’re among the majority of Americans who are worried, then there are six things you can do to protect yourself from a housing market crash…
There are several signs indicating that a U.S. housing market crash is already here. The elements for a “brutal storm” are definitely coming together before the next economic collapse begins …
How to Protect Yourself From the Next Financial Crisis?
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DISCLAIMER: The financial and political opinions expressed in this video are not necessarily of “Financial Argument” or its staff. Opinions expressed in this video do not constitute personalized investment advice and should not be relied on for making investment decisions.) **
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