By Mike Bodeen · 27 January 2025
And hence, Keep Mortgage Rates High
As if inflation needed any more fuel to add to its fire, recent/current fires in SoCal, and hurricane devastation in multiple Southeastern states will place an unprecedented demand for building supplies and services everywhere. Current estimates of homes lost in SoCal are over 12,000. Many thousands have been destroyed and hundreds of thousands damaged by hurricanes.
As if that wasn’t bad enough, much of our source of timber (some estimates are 50%) is exported from Canada, China, Brazil, Mexico and other countries. Econ 101 tells us that more demand than supply will increase prices. Increased cost of goods and services would affect inflation and that will increase mortgage rates – or at least prevent them from dropping which is the direction they need to go to help us out of our housing malaise. On top of that, a possibility exists that the U.S. will place tariff’s on Canada, China and Mexico, further adding costs to contruction.
America needs to build more homes – hundreds of thousands more nationally to make housing more affordable. Builders will be the ones faced with these material increases, and they will pass along these higher costs to home buyers.
“Econ 101 tells us that more demand than supply will increase prices. Increased cost of goods and services would affect inflation and that will increase mortgage rates or at least prevent them from dropping…”
And yet, we’re all financially affected by these disasters. Many of us who are current homeowners have experienced huge property insurance spikes that insurance companies have passed along to us – these without counting the cost of these latest fires.
If you’re considering remodeling your home, replacing a roof, adding a room, etc, it may be well worth your financial while to go for that now. Just saying.
But in perspective, yes, our housing costs and the cost to buy a home may very well increase, but our costs pale in comparison to the loss of life and the physical and emotional toll being experienced by our countrymen. May God’s great grace be with them.