Party Like It's 1995

In 1995 the US population had reached 265 million. A number in which was a steep incline of 12 percent from a decade ago. The 90s was a great decade for most Americans. Back then you could show up at the airport 30 minutes before flight time, the people you considered friends you met in real life, there were only 2 genders, your favorite show came on one night a week. Much simpler times. The 90s had a bit of prosperity as well with the average first time home buyers age as little as 28.

But wait before you step out of your Tesla, scroll down your iPhone, and google what an amazing time the 90s was, you can experience it today. Where might you ask? Ask your local mortgage broker if they are still in business of course.

What we are experiencing in the new mortgage application index we haven’t seen in almost 30 years. This wouldn’t be so bad if the U.S. population didn’t grow by 80 million totaling 340 million since then. And of that 80 million 33 million are within the prime first-time home buyer’s years of 28-38. Not to mention in 2023 the average first-time home buyers age jumped by 5 years from 28-33 from 90s to 2023. Theres a lot that is the cause of such a decline and so much of it we will tackle at another time but what’s most important is that you answer the question that everyone must ask after hearing such numbers. If less people are applying for mortgages, then less people are buyers. If less buyers exist, then your home equity is in for a rude awaken. Just look at the chart below.

There's been enough economic downturns in the past 30 years to suggest that these figures could not be as bad as the dotcom bubble in the 2000s or the great financial crisis in 08 but one would be incorrect. There were more mortgage applications during the 2008 housing crisis than today! And let me guess you didn’t know that didn’t you.

But wait, there’s more. Not only do we see buyers leaving the market, we see existing mortgage defaults rise rapidly.

Home foreclosures saw a "notable" increase in January as Americans continue to grapple with the ongoing cost-of-living crisis.

That is according to a new report published by real estate data provider ATTOM, which found that lenders repossessed 3,954 U.S. properties in January, a 13% increase from the previous month. It marked the first monthly increase in completed foreclosures since July 2023.

The report also indicated that there were 37,679 properties with foreclosure filings – which includes default notices, scheduled auctions and bank repossessions – in January, up 10% from the previous month and up 5% from 2023.

The increase was even greater in some states. In Michigan, completed foreclosures jumped 200%, while they rose 47% in Minnesota and 43% in California. Pennsylvania saw a 36% increase, and Missouri a 34% increase.

I know none of you are surprised. With an average yearly foreclosure amount above 500k and the mortgage forbearance rules made it so no one saw a foreclosure hearing, one can only see that this number has added up. One should expect to see those who would’ve foreclosed since 2020 to be on the front of the court steps now that the forbearance is gone. Mortgage delinquency rates in some mortgage products are up almost 11%! Just a few percent points down from the 2008 housing crisis. The FHA mortgages are particularly the most vulnerable and most likely to go into foreclosure because they have less money in the house to begin with. With only having to put down 3.5 %. They are first time home buyers, so they have the lowest amount of savings of any adults. And here’s the sad part. They are raising the buyers of the future.

Let me guess, you had no idea it was this bad? It sure is a good thing you are reading this right now. Because not only are mortgaged defaults growing, so is credit card and auto loan defaults growing. Which should suggest to you that the consumer is not doing very well. And I know that’s not what you hear when you turn on your national media outlets but hey at some point if you live long enough you learn one thing is common amongst all crashes, NO ONE SEES IT COMING AND NO ONE WARNS YOU!

So rather than behave in the same fashion your next door neighbor might and ignore all the signs, how about this time we try something different. Rather than listen to what media is telling, how about this time you try something different. Trust the data and most importantly trust yourself. Because If you don’t you’d just be doing the same thing expecting a different result. Which we know is the definition of insanity.

I once heard, that the best you can do for the poor is to not become one of them. And when it all hits the fan there will be enough insane people to go around. The best thing for you to is not become one of them.