'It's a National Crisis': Grant Cardone Warns Americans Are Stuck In Homes They Can't Sell

Real estate investors have navigated quite a few headwinds over the past two years. High interest rates have reduced transactions, and those same rates are prompting homeowners to stay put in their homes. That creates fewer opportunities for people who want to sell properties, and real estate investor Grant Cardone recently sounded the alarm. 

Not only do high interest rates make real estate less accessible, but they also make every other type of debt more expensive. The Federal Reserve's high rates result in higher interest payments on credit cards, auto loans, personal loans, lines of credit, and other financial products.

"It's a national crisis," Cardone said when mentioning high interest rates.

Here's why the real estate market hasn't been looking good and what it means for investors.

Don't Miss:

• Peter Thiel turned $1,700 into $5 billion—now accredited investors are eyeing this software company with similar breakout potential. Learn how you can invest with $1,000 at just $0.30/share.
• Invest early in CancerVax's breakthrough tech aiming to disrupt a $231B market. Back a bold new approach to cancer treatment with high-growth potential.

Mortgage Rates Are Sitting At 8%

Cardone mentioned that mortgage rates are sitting at 8% and are discouraging people from buying homes. Elevated interest rates make the monthly mortgage payments more expensive. While high rates can stem red-hot inflation, the inflation rate has been holding steady for several months. 

Higher interest rates made more sense in 2022, but they don't make as much sense now. The Fed anticipates two rate cuts this year that would reduce the total rate by 0.50%.

Reducing rates can boost demand for mortgages and potentially bring up housing prices as a result. Many investors will carefully watch for the Fed's mid-July decision on interest rates. Any rate cuts may create attractive buying opportunities.

Trending: Tired of Grid Failures and Charging Deserts? This Startup Has a Solar Fix and $25M+ in Sales — Now Raising at $3/Share

The Real Estate Industry Depends On Transactions

Transactions fuel the real estate industry. Real estate agents have to close property deals to receive commissions, lenders need deals to receive interest payments, and investors have to make deals to expand their businesses.

When the deals stop, the entire industry suffers, and people look for new opportunities. Cardone believes that these past two years have been some of the hardest years for the industries as people grapple with high interest rates and low demand. 

These dynamics have slowed down housing price increases and resulted in some real estate markets experiencing price corrections. If transactions continue to remain low, fewer people will be incentivized to jump into the real estate industry, and seasoned professionals may look for better opportunities.

See Also: This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, with minimum investments as low as $100.

High Interest Rates Keep The Housing Supply Low

High interest rates don't only deter people from buying homes. They also discourage real estate investors from constructing properties that can add hundreds of residential units to a town or city. These investments are important for keeping housing costs under control since they increase the total housing supply.

Any slowdowns in construction will lead to more layoffs and discourage workers from entering the industry. High rates have hurt the real estate industry, and if they continue to remain high, the industry can endure more setbacks.

Read Next: With Point, you can get up to $500,000 in cash from your property with no monthly payments and no income requirements — even if your credit isn't perfect.