Kitco News: “Red Hot” Housing Market Could Explode

Most of the time, everyday investors don’t see a big change to their lives when the Federal Reserve changes interest rates. However, when big moves are made in a short period of time, all asset classes can be impacted.

That puts the housing market at risk. Already, rising interest rates have led to mortgage rates roughly doubling compared to a year ago. That leads to a big concern, as housing tends to be the largest source of wealth for everyday Americans.

After a slow recovery from the housing bubble bursting in late 2008, the past few years have been great for housing. And the past two years have even been red hot, according to presidential advisor Steve Moore.

This time around, we may not be in a bubble. That’s good news, as such a bubble bursting could impact the entire economy. There’s a higher cost for new homebuyers. But existing homebuyers are sitting on a large pile of home equity right now.

With the runup in housing values, we’re likely at the start of a slowdown in home sales. That may also lead to lower prices. Add to that the recent losses in the stock market, and there may be some more pain ahead in the housing market.

To listen to the full interview with economic advisor Steve Moore, click here.