Higher interest rates are absolutely strangling the real estate industry, and there is no relief in sight. The sudden shift from a very low interest rate environment to a much higher interest rate environment has paralyzed sales. As I have discussed previously, very few homeowners that are currently locked into a mortgage at a low interest rate want to sell, because buying a home to replace the one that they are selling would mean taking on a mortgage at a much higher rate of interest. And millions of potential home buyers have been chased out of the market because of the exceedingly high mortgage payments that they would be facing if they pulled the trigger on a purchase right now. So sales of previously-owned homes have dropped by more than 32 percent over the past two years. In other words, about a third of the entire previously-owned home market has already been wiped out.
When home sales crash, everybody that works in the real estate industry suffers.
And it turns out that home purchases by investors are falling at an even faster rate. Wall Street Silver posted the following to Twitter earlier this week…
I was stunned when I first saw that, but I also knew that I had to confirm if this was true or not.
And I discovered that it is true…
45%
That’s how much investor purchases of homes have fallen since last year, as of the second quarter, according to data from Redfin, as homebuying looks less profitable than during the pandemic housing boom.
Investors, just like private buyers, think it’s a bad time to buy a home.
We have got a major crisis on our hands, and it is not going to go away any time soon.
Things are even worse on the commercial real estate side.
The Wall Street Journal just published an article entitled “Real-Estate Doom Loop Threatens America’s Banks”, and that headline does not exaggerate the current state of affairs at all.
Commercial real estate prices are plummeting all over the nation, and our banks have trillions of dollars of exposure…
The WSJ analysis put total bank exposure to commercial real estate at $3.6 trillion, which it estimates is 20 percent of their deposits. Holdings of CMBS and loans to nonbank lenders accounted for $623 billion of that total at the end of last year.
In the past decade, regional banks went to town on commercial loans, never expecting how quickly the tide would turn against them. Today, losses on loans are leading banks to cut back on lending, furthering the drop in property prices and more lender losses — in other words, a doom loop.
Banks are already pulling back. Debt origination fell by 52 percent for the second quarter year-over-year, according to Newmark; lending volume among banks fell by 48 percent. M&T Bank said it would reduce commercial lending as nearly 1 in 5 of its loans to office landlords was in trouble.
So many of our financial institutions are going to be in very serious trouble because of this.
If the Federal Reserve were to push interest rates all the way to the floor immediately, that would help.
But instead, Fed officials continue to insist that rates are going to go even higher, and that is going to escalate this crisis into a full-blown real estate apocalypse.
And higher rates will also do an incredible amount of damage throughout the rest of the economy as well. This is a point that the Shark Tank’s Kevin O’Leary made very well during a recent interview with Fox Business…
In a recent interview on Fox Business, Kevin O’Leary, the “Shark Tank” investor slammed so-called “Bidenomics” for leaving small businesses behind. He warned that chaos is about to kick off for the “little guy”, which are the 33.2 million small businesses in America, due to the Federal Reserve’s aggressive rate hikes.
“They’re struggling because the Fed has raised rates up to 5.5% in a matter of months,” O’Leary said. “You’re going to hear a lot of people crying about this in the next few months because they can’t borrow anything anymore and they can’t run their businesses.”
He is right.
Small and mid-size businesses all over America are really struggling right now.
Economic activity is slowing down all around us, and they are starting to lay off workers.
In fact, in just the past two months the U.S. has lost a whopping 670,000 full-time jobs…
Well, one look at this month’s adjustment and it’s literally a shocker: you will not hear anyone from the Biden admin or associated economist cheerleaders mention this, but the BLS reported that in August the number of full-time jobs dropped again, sliding by 85K to 134.2 million, and followed the whopping 585K plunge in July which brings the two-month total drop in full-time jobs to a whopping 670K, the biggest 2-month plunge since the covid lockdowns in early 2020 when 12.5 million full-time jobs were lost in one month!
When the official numbers that the government gives us start looking this bad, you know that the hour is late.
And the job cuts just keep on coming. On Wednesday, we learned that Roku will be conducting a third round of layoffs…
Video streaming company Roku shares spiked Wednesday after it announced plans to lay off more than 300 people, or about 10% of its workforce, and pull certain content from its streaming platform to ease operating expenses.
This is the third round of layoffs from Roku in recent months after the company let go of about 400 employees total between November and March. The company had roughly 3,600 full-time employees across 14 countries at the end of last year, according to its annual report.
I actually really like Roku, and so I hope they can turn things around.
But the reality of the matter is that everyone is going to have to deal with the very hard times that are now upon us.
Hordes of middle class Americans are being pushed into poverty, and hordes of impoverished Americans are being forced into the streets.
So far this year, we have actually seen “the biggest ever spike in homeless people living on the streets”…
The United States has seen the biggest ever spike in homeless people living on the streets – as preliminary figures showed a record 11 percent increase in one year.
There are nearly 600,000 rough sleepers across cities and towns in America, and the jump from 2022 to 2023 so far is the highest since the government started tracking the data in 2007, according to the WSJ.
Places like Oakland and San Francisco in California have become hotbeds for homelessness, as people living on the streets are like ‘drug tourists’ who arrive to have easy access to narcotics.
But this isn’t supposed to be happening.
The Biden administration told us over and over again that “Bidenomics” was working. Of course the truth is that we have now entered the very early chapters of a full-blown economic nightmare.
Things are going to get a whole lot worse for the real estate industry. And things are going to get a whole lot worse for the economy as a whole.
So I hope that you have been getting prepared for what is ahead, because most Americans are going to get completely blind-sided by what is coming.
Sound off about this story on our Economic Collapse Substack.
Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here. Article cross-posted from The Economic Collapse Blog.
Bypass Big Tech Censors
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.