Posted on 01/06/2024 9:03:58 PM PST by SeekAndFind
There may be light at the end of the tunnel for Americans struggling to afford a home, but it will take at least three and a half years to get there, according to Joe Seydl, JPMorgan’s senior markets economist.
Why three and a half years?
According to Seydl, that’s when Americans' paychecks will catch up to soaring housing costs.
That translates to an annual income growth of 7%.
“If you are looking to buy a house in the United States, don’t wait for, or expect, a home price crash,” Seydl wrote in a research report.
“We don’t foresee one coming (thankfully), nor do we think one is necessary to restore affordability at the national level. We think time and continued robust income growth can cure the problem on their own,” he explained.
There’s just one caveat to Seydl’s analysis: While housing affordability could potentially be restored in 3.5 years nationally, it’ll take longer in major metro areas.
If you are looking to snap up a house in Miami, Chicago, Houston, Las Vegas, Los Angeles, or New York, the wait may extend to five years.
While Seydl’s analysis should provide a boost of confidence to Americans struggling to afford their first home, they shouldn’t celebrate just yet.
Seydl’s conclusion hinges on "incomes continuing to rise at a robust rate." But can such growth be sustained?
According to the Atlanta Fed, wages were growing at 5.2% from September to November—much higher than at any point over the last two decades but down from a peak of 6.7% in mid-2022.
Meanwhile, inflation still remains well above the target and keeps eating into Americans’ paychecks. In fact, adjusted for inflation, Americans' wages have shrunk by 5% since pre-Covid.
Looking ahead to 2024, labor experts aren't expecting a wage renaissance either, pointing to shrinking annual budgets for payrolls.
"By all expectations, the mood for [wage growth in] 2024 is radically different than what it was going into 2023," Aaron Terrazas, Glassdoor’s chief economist, told CNBC.
According to a recent industry survey by Mercer, American companies are budgeting for a 3.9% increase in wages this year, down from 4.1% in 2023.
While higher wages would certainly improve housing affordability, fixing the chronically low supply of real estate may prove to be a much bigger challenge.
According to the National Association of Realtors (NAR), America is grappling with a "severe housing shortage that’s years in the making."
There are so few listings that even one of history's largest jumps in mortgage rates hasn't shaken the housing market.
In fact, as of November, median home prices stood at $409,000—16% higher than before Covid.
According to NAR, this has affected average or 'middle-income buyers' the most.
"Middle-income buyers face the largest shortage of homes among all income groups, making it even harder for them to build wealth through homeownership," said Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors.
"Even with the current level of listings, the housing affordability and shortage issues wouldn’t be so severe if there were enough homes for all price ranges," she said.
According to Redfin data, there were just 3.82 million existing homes for sale in 2023—a 7.3% decline from the previous year and the lowest since 2010.
The main factor may be the age of babyboomers.
Over the next fifteen years, Boomers are going to be retiring, moving, downscaling and, sorry, dying.
OTOH there’s a human wave crossing the south border.
A 3D printed house is 2/3 the cost of traditional frame. They can be printed on-site or in a factory, then assembled.
They are so much less because machines do much of the labor instead of people.
You can add masonry if you want and finish it out any way you please.
They can even add reinforcement for earthquake zones.
If you’re a home builder you should check it out. Construction companies that go this way could make a fortune in the future. Just like the landscaping guy who buys robotic lawnmowers can do eight yards at a time versus one.
THere have been some impressive container can houses that were built for the price of 6 C-cans and sweat.
there won’t be a housing price crash.
why?
with mega investing companies like van guard and black rock sucking up as much real estate as they can, any drop in price will immediately be met with more demand... driving it up.
they have a goal. to buy everything they can and get everyone into a rental... paying them.
and with trillions per year to invest, they can make it happen.
best move is to restrict such buying and hold onto what you and your family has for as long as possible.
QUICKER ANSWER: Round up and deport all illegals! Start with E-Verify to start starving them out. Close the border as well.
I’m torn amongst the new construction methods. Light gauge steel is used in the Mississippi delta for insect resistance. 3D concrete is a better insulator. Container homes in the neighborhood where I want to build might make the neighbors go insane. They want paper McMansions on 1-2 acres of land.
Once the container houses are built, you can’t really tell. Many of them are really very nice.
“annual income growth of 7%” = annual home price growth of 7%
*We think* = * We 're planning*
I was watching a video of large aerial drone doing agricultural field spraying. The drone could only do about a one mile pass (1/2 mile out and back) before a battery swap and refill the pesticide tank. But it sure looked like the wave of the future.
The video didn’t compare the total costs of conventional tractor-towed boom sprayers vs drone spraying, but it sure looked intriguing.
You still needed a full time operator to land the drone, change the battery, and refill the tank, so there didn’t appear to be any labor saving. But I could see automation being applied to battery pack change-out and tank refill.
As the technology becomes more capable, there will be automation. Overtime, as drones become more durable, there won’t be as much maintenance I reckon as well. So less technicians will be needed over time. Also, the more technology advances, the bigger the farms can get.
5.2% is much higher, but for no good reason, it's going to grow at 7% for three years. LOL!
>> Seydl’s conclusion hinges on “incomes continuing to rise at a robust rate.”
Where do these “economic” “experts” come from?
Robustly rising wages without a commensurate rising productivity is INFLATION.
The snake is chasing its tail!
Plant a garden. Raise backyard chickens. Or risk starving due to the global elite’s “new monetary theory”.
Like mini home TV and pawn reality debuting under Obama-container homes etc...they’re normalizing impoverishment.
Not directed towards you-
the homebuilder etf is up nearly 60% in two years despite sky rocketing rates=shortage of new homes.
Yes, this is Gen 1 drone at spray. It will really improve.
I’m not sure battery power is the best in this application, though.
“...get everyone into a rental...”
Why? If they go rental the worth of the depreciating property is going to crash faster than the rental income can collect on. Plus the use of liguid funds for further expansion is not going to be realized until after the possibilities are gone.
Investment is not based upon future realization but substantial growth. As the wages continue to grow but shrink at the same time, the interest on its worth will stagnate until it shrinks with the wages in desparation to stay afloat. There is a major difference in perceivng the funds recognized and having them in hand. Plus, as long as the government can collect on your land that you don’t really own, you’re at their beck and call. Also besides the shift in cost of everything based upon the needs of the people around you, that loaf of bread will continue to be more expensive as they have to pay the people to stock the shelves. So an estblished rent cost is not going to satisfy your investors if it has no way of staying up with the Jones’s in cost. And when an outhouse gets to expensive for the public to rent,that’s when the bottom drops out from under the transactions and the in coming income and you’re stuck with something that can’t cover it’s price.
wy69
Well, at least these "experts" are consistent.
They didn't see the last three housing crashes coming, either.
Regards,
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