Mortgage rates top 7.2% as 10-year yields soar and the leveraged panic. Welcome to October 2022. George Gammon is now forecasting mortgage rates north of 8% by the end of 2022. And he goes on to say that even 10% mortgage rates by the end of this year are possible.

ABC News reported last week on the U.S. housing market that,

“Sales fell 23.8% from September last year, and are now at the slowest annual pace since September 2012, excluding the steep slowdown in sales that occurred in May 2020 near the start of the pandemic.”

Higher Mortgage Rates to Crush Housing and Economy

Housing prices are already declining and might soon be in freefall across the United States. The markets that went up the fastest are now coming down the fastest; case and point are the declines across Idaho.

Gammon goes on to talk about the massive risk associated with California real estate. He cites the declining tech sector and even deals like Tesla that continues to get sold off. If interest rates continue to rise along with weakness in the tech space, Gammon is forecasting huge declines in California.

He cites the price-to-income ratios as being “totally unsustainable.”

Gammon believes the 2020s will look a lot like the 1940s. He is expecting huge government intervention to deal with inflation in the coming years. Finally, with mortgage rates continuing to grind higher, the U.S. real estate market may be what breaks the consumer and the economy. Investors should be watching data around the U.S. real estate market closely over the coming months.