Soon the only entities that will be able to buy houses will be ones that can pay cash. This means that investors will buy up even more - so more inequality and rents that people can't afford.
Your comment is in line with the perspective that has led to the current predicament. Every bit of financialization that has claimed to make housing "more affordable" has actually done the exact opposite over the long term, by driving up abstract asset prices that are unrealizeable to actual resident homeowners but keep new buyers out of the market. While having higher interest payments seems like a bad thing, with market feedback it actually reduces the amount of the principal, making it easier to pay off a mortgage early. If this return to having interest rates actually continues (as opposed to being reversed by the Fed in favor of Wall Street), this is short term pain for long term gain.
Not necessarily. Right now, 70+% of house sales are to owners who will live in them. If they're (mostly) gone, house prices will collapse, and some existing investors will get spooked and start selling, driving prices further into the ground. Many investors will vow to never buy another house, and others will stay away.
Here is something from the National Association of Realtors. Granted, it varies across states (TX leading with highest 28%)
> Institutional buyers made up 13% of the residential sales market in 2021, with the median purchase price of institutional buyers typically 26% lower than the states’ median purchase prices (Slides 6 – 15).
The biggest shock from this is that decreasing mortgage applications reduce the total sum of money in circulation thereby destroying wealth explicitly.
More Money is created by banks via mortgage loans than QE by the fed. As more existing loans are paid off, the money is removed from the pool due to reserve requirements.
Dropping house prices create a credit freeze that can only be resolved by excess QE but QE is not happening anytime soon unless....
