Posted on 12/27/2022 7:30:25 AM PST by Kaiser8408a
The US housing market continued to sag in October as the impact of higher mortgage rates and concerns over the economy rattled buyers and sellers.
Prices fell 0.5% from September, the fourth consecutive monthly decline for a seasonally adjusted measure of home prices in 20 large cities, according to the S&P CoreLogic Case-Shiller index.
The market began downshifting earlier this year as the Federal Reserve started hiking its benchmark interest rate, with the goal of easing high inflation that’s been driven in part by skyrocketing housing costs.
Rates for 30-year, fixed mortgages reached 7.08% in October — and again in November — though they have since retreated, Freddie Mac data show. With borrowing costs roughly double where they were at the start of the year, and inflation leaving less savings to put toward a down payment, homebuyers have pulled back. Sellers are also reluctant to list their properties, yet houses that are on the market are lingering and getting discounted as demand slumps.
The Case-Shiller National Home Price Index “cooled” to 9.24% YoY growth as The Federal Reserve tightens its monetary noose.
Of the top twenty metro areas, both Miami and Tampa Florida were up over 20% YoY. Hot ‘Lanta, Charlotte and Dallas were over 10% YoY. Mordor on the Potomac was up “only” 6% and all other metro areas were under 10%.
Finally, The Federal Reserve’s massive balance sheet is still out in force.
(Excerpt) Read more at confoundedinterest.net ...
biden — slowing the people’s move to Florida. !!
If construction costs are prohibitive some can’t afford to escape their current states and woes.
I suppose it’s all very different from 2008, but I have this nagging feeling that there is some sort of economic bomb out there that is about to go off.
Single family homes in my over-55 neighborhood in the Austin area that had been selling in a few weeks have now been sitting on the market for a few months.
My guess is that would-be buyers may be having trouble selling their existing homes.
Everything acting just as it should.
Percentages really mean nothing.
House prices are so inflated over the last five years or so, that the ability to purchase (not inherit) a home is well beyond a huge number of citizens and is likely going to get even worse. It is nearly impossible to “save up for the down payment,” with the costs of how escalating, the increase in interest rates, general inflation and the near stagnation of wages.
You either own your home (or inherit your home) or you are, more than likely, won’t be able to buy a home, in the traditional way . . .
I do not understand the people are surprised by this.
Real estate prices have been going up for 11-13 years straight depending on where you are located. The increases the last five of those years were the highest percentages.
Did people really think it was going to go up forever?
House prices are so inflated over the last five years or so, that the ability to purchase (not inherit) a home is well beyond a huge number of citizens and is likely going to get even worse. It is nearly impossible to “save up for the down payment,” with the costs of how escalating, the increase in interest rates, general inflation and the near stagnation of wages.
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Yup. The mathematics of large numbers says with high enough inflation, or *ahem* “low” inflation of 2% (which will just take longer to destroy everything), Your wages increasing with inflation will not keep up with housing prices increasing with inflation.
That 5% increase, if one is so lucky, on a median salary of 70,000 is a net gain of $3,500. A 5% increase on a median $450,000 home is $22,500. 20% of that (for a hypothetical downpayment) is $5,000. So even if one was able to take *all* of their salary increase (forget about rising food and fuel) and put it toward a house downpayment, you end up falling behind. The house price downpayment amount will accend faster than you can save.
Of course games can be played for awhile, like lowering the percentage of the downpayment and extending mortgages to 40 years (buy when you’re 30, retire mortgage at 70), but eventually the gimmicks run out.
I hope the supply/demand numbers get into balance.
About a year ago my wife and I looked at two houses in nice, but not wealthy, suburbs north of Atlanta. One house had 23 offers over the first weekend. The other had 18 offers, and the owner kicked most of the offers back and was only cosidering cash offers. You had to provide a bank statement verifying you had the cash for your offer to even be considered.
Real estate agents were loving it.
Correction: 20% of $22,500 is $4,500 and not $5,000, but the potential buyer is still on the wrong side of the equation. They cannot catch up to the rising prices.
“I do not understand the people are surprised by this.”
We live with many millions of financially ignorant people. They scream at everything and are powerless because they have no clue how to deal with an obvious economic cycle even though it repeats itself. They are short-sighted in planning, undisciplined economically and uneducated about finance. It’s an educational failure by design that encourages government dependence.
That’s the math and math never lies . . .
“You had to provide a bank statement verifying you had the cash for your offer to even be considered.”
People continue to ignore the most important current fact about real estate We have a national shortage of housing that has gotten worse for 10 years and we aren’t catching up. We have a young demographic that makes good money and wants housing.
In a normal housing market it takes 90 days to get a house under contract. People would call that a “crash” these days.
“House prices are so inflated”
This is backwards. Housing prices aren’t “inflated”. There is a shortage of housing.
Yes, this cycle lasted about three years longer than it should have. I still blame the effect of Obamacare. It made the recovery from the Great Recession too anemic. So, they had to keep interest rates too cheap for too long. Then when consumer confidence kicked in after Trump was elected we had ten years of pent up demand for real estate. Everyone pig piled in all in the last five years.
We can “blame” many things but it doesn’t matter. We have to live in reality and most people don’t. They have a fantasy about how things should be in a pretend world that will never exist. This leads to a permanent state of discontent.
“There is a shortage of housing”
This is a fact. It was not until the last few years when we got up to 1.3 to 1.4 million starts when we were building enough homes(single & multifamily) to keep up with a population of 350 million people.
For ten years we under built.
I think another factor not mentioned (new construction) is the cost of lumber and every other item used in constructing a house was increased say 30-50k per new home....builders are not profiting as well as you think. I am in the trades and I know the numbers. It is starting to decrease but it will take a while,and existing homes follow new construction pricing to an extent. Still this is nothing compared to the interest rates under Carter...less than forty years and I only see it spoken of in comments on free republic?
“For ten years we under built.”
And as you know from your business, we aren’t catching up.
And most people still demand to live far about their means.
You could evenly divide all the wealth in America among the citizens and in 7-10 years the wealth distribution would be right back where it is now and the same people would be poor, middle class and rich again.
The only major demographic change from when we were kids/young adults is the amount of twenty somethings still living with their parents. Mostly because they can not afford rent in the area they live in.
Here in southern NH a two bedroom apartment is over $2000/month. In Boston/Cambridge, MA it is over $3000.
In the suburbs of Boston a bedroom in a house/townhouse goes for $1000-1250 to share a place. My 24 year old son just moved in with a buddy to share a two bedroom townhouse. He is paying $1250. He was paying $1750 to rent a one bedroom apartment. He lives about an hour NW of Boston.
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