FED CHAIR SAYS, ‘SOME PAIN’ IS ON THE HORIZON!   EQUIVALENT TO YOUR DENTIST RUNNING OUT OF NUMBING MEDS DURING YOUR ROOT CANAL!  

Disclaimer: Good Day, Readers.  WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.  

 

FEDERAL RESERVES HEADQUARTERS

HOME SALES ARE SLOWING AS MORTGAGE RATES HIT SIX PERCENT – RED ALERT, BRACE FOR IMPACT/RECESSION!

The Fed Chair vows to bring down inflation and “keep at it until the job is done,” Powell said.  But that plan involves a series of hefty interest rate hikes and will bring “some pain to households and businesses.” 

Fed Chair Jerome Powell says ‘SOME PAIN’ on the horizon

FEDERAL RESERVES MEETING

“SOME PAIN” TRANSLATION

  • Greater than five million Americans will lose their jobs
  • The unemployment rate almost doubles from ~3.5 to ~6.0+%
  • Tens of thousands of small businesses and jobs will be DESTROYED as interest rates go up
  • A decline in home sales and prices
  • Make it official – WE ARE IN A RECESSION

HOME SALES ARE SLOWING AS INTEREST RATES HIT SIX PERCENT – RIGHT AS I LIST MY HOME FOR SALE!

Jazzy’s Home

We are selling Jazzy’s home {she will graciously bring her servants with her}.    If you are a cash buyer, I have good news (NOT SO MUCH FOR SELLERS LIKE ME).  Most U.S. home prices are moving down.  

Little Boss – Jazzy Silver Beauty Powers

The Federal Reserve continues to combat inflation by aggressively pushing up the federal funds’ rates {the rates the Federal Reserve charges banks to borrow money}.  This increase in cost to banks is generously passed forward to you, the borrower for home, car, credit cards, etc. loans

The 30-year mortgage increased this year from ~three to six percent.  

ASSUMPTIONS – JAZZY’S HOME SALE

  • Sales Price: $700,000.00
  • 30 YEAR Mortgage Interest Rate: Six+ percent
  • Down Payment: $150,000.00
  • LOAN BALANCE: $550,000.00

ONE YEAR MAKES A YUGEEEEE DIFFERENCE

 Using the above assumptions, a September 2022 buyer versus January 2021 will pay almost $1,000.00 MORE EACH MONTH.  

BUYERS OPTIONS: 

  • Buy the home paying the higher monthly mortgage
  • Buy a cheaper home
  • Add more to your down payment, making the monthly cost fit your budget.
  • WALK AWAY

CONSEQUENCES – FEWER BUYERS, LOWERING DEMAND, LOWERING PRICES = BUYERS MARKET!

The impact of doubling 30-year mortgage rates in 2022 

OPTIONSLOAN AMOUNTDOWN PAYMENTMORTGAGE RATEMONTHLY PAYMENTTOTAL INTEREST PAIDTOTAL PAYMENT INCLUDING INTEREST 30-YEAR LOAN 
1- 2021 January Rate$550,000.00$150,000.003%$2,318.82$284,775.20$834,775.20 
2-September 2022 Rate$550,000.00$150,000.006%$3,297.53$637,110.80
$1,187,110.80When interest rates doubled, payments increased by $978.71, or 42%.
        
3 September 2022 Rate – Keeping the payment the same as the first Option$438,600.00$150,000.006%$2,314.27$447,137.20$833,137.20If the buyer can only afford an ~$2318.00 monthly payment, they must reduce the purchase price from $700,000.00 to $588,600.00. 

To keep the payment the same as January 2022 three percent rate, a buyer today would drop from a $700,000.00 to ~$590,000.00 home. 

CONCLUSION

The dirty R word – WE ARE IN A RECESSION!  

The majority of Americans cannot afford the official annual inflation rate of eight percent.  But the eight percent rate calculated by the Federal Government is about as accurate as Putin’s promise to turn Europe’s gas supplies back on! When you add gas, food, utilities, etc. {you know things we all NEED}, our inflation rate is greater than twenty percent!  The average household spends an extra $500+ each month due to inflation, while their income has essentially remained flat. 

If considering buying or selling real estate, research the cost trends in your city or region. Let the data answer if now is a good or bad time to buy or sell. WAITING IS ALWAYS AN OPTION!

REAL ESTATE IS ALL ABOUT LOCATION, LOCATION, LOCATION!

LET’S MAKE SOME MONEY – CRYPTOCURRENCY IS STILL ACCEPTED! 

WHAT SUBJECTS DO YOU WANT TO READ NEXT? WHAT QUESTIONS CAN I ANSWER? UNTIL NEXT TIME!

YOUR GREATNESS IS NOT WHAT YOU HAVE; IT’S WHAT YOU GIVE! – SOME CHARITIES I SUPPORT

St Jude Hospital:  https://www.stjude.org/

Wounded Warrior Project:  https://www.woundedwarriorproject.org

Folds of Honor:  https://foldsofhonor.org

Wilson’s No-Kill Animal Shelter:  https://wcnkas.org

TRUST ME – YOU WILL LIKE THE BELOW BLOGS! 

 

NEW SERIES – CRITICAL THINKING 

 

USING CRITICAL THINKING IN PURSUIT OF POST-HIGH SCHOOL EDUCATION – CRITICAL THINKING SERIES – PART 2

TEENAGERS’ – SIX-FIGURE, LOW ROI COLLEGE LOANS – CAN HAVE LIFETIME CONSEQUENCES! CRITICAL THINKING SERIES PART 3: WHAT ARE THE UNIVERSAL STANDARDS OF THINKING?

https://wealthbuildingpowers.com/2022/09/12/teenagers-six-figure-low-roi-college-loans-can-have-lifetime-consequences-critical-thinking-series-part-3-what-are-the-universal-standards-of-thinking/

ARE ADJUSTABLE RATE MORTGAGES RIGHT FOR YOU?

ARE ADJUSTABLE-RATE MORTGAGES RIGHT FOR YOU? 

STEP#2: IT’S ALL ABOUT THE LOCATION, SILLY

STEP #2: IT’S ALL ABOUT THE LOCATION SILLY

QUESTIONS AND ANSWERS: DO YOU RECOMMEND HAVING A MINIMUM 20% DOWN PAYMENT

QUESTION AND ANSWER:  DO YOU RECOMMEND HAVING MINIMUM OF 20% DOWN PAYMENT (AND AVOIDING PMI PAYMENTS) PRIOR TO BUYING A HOME?

IS BUYING A HOME A GREAT, GOOD, OR RISKY INVESTMENT – TODAY?

Is Buying A Home A Great, Good, Or Risky  Investment – Today?

The Oracle of Omaha’s Investment Strategy Explained

Bill Gates Says This Is the Most Important Thing He’s Learned from Warren Buffett.  (Hint: It Has Nothing to Do with Money) Two billionaires are linked by one common denominator.

WARREN BUFFETT’S NET WORTH IS DRIVEN BY THESE IRONCLAD TEN RULES


Warren Buffett Says This 1 Simple Habit Separates Successful People From Everyone Else http://flip.it/_AzPx9

 

WARREN BUFFETT UTILIZED COMPOUND INTEREST TO BECOME THE 3RD RICHEST MAN ON THE PLANET!

WARREN BUFFETT UTILIZED COMPOUND INTEREST TO BECOME THE 3RD RICHEST MAN ON THE PLANET!

 

WANT TO LEARN HOW TO BECOME WEALTHY – READ “THE MILLIONAIRE NEXT DOOR”

 

COMPOUND INTEREST IS THE EASIEST WAY TO DOUBLE OR TRIPLE YOUR MONEY

COMPOUND INTEREST IS THE EASIEST WAY TO DOUBLE OR TRIPLE YOUR MONEY

 

FINANCIAL LITERACY IS JUST NOT THAT COMPLICATED – TRUST ME!

https://wealthbuildingpowers.com/2019/04/01/financial-literacy-is-just-not-that-complicated-trust-me/

 

 

 

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ABOUT ME

I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an NC.  State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.

I left a corporate career because I desired to make a difference as a speaker and writer.  I was blessed to be coached and mentored by strong women and men in my family and professional life.  It is my time to serve and give back.

DISCLAIMER

I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, and real estate and am happy to share my finance and investment lessons.  I am NOT a licensed financial advisor.  Please do not construe my suggestions on this blog as recommendations for your situation.  As an investor, you must establish your risk/loss tolerance.  Investment in any asset involves risk, including complete loss. 

 Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.  

I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy.  I will help you get there.

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Powers Investments Management, LLC

This blog will provide, information and simple strategies, that will assist you to achieve YOUR financial objectives and long term targets. For over 30 years, I solved multi-million dollar problems, for Fortune 10-250, companies. My formal education includes: Business, Finance and Chemical Engineering {Problem Solving} at: Harvard, Rutgers and North Carolina State. And an additional 30+ years, managing my family’s investment decisions. I currently manage/advise people with net-worths ranging from the tens of thousands to several million dollars.

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