Posted on 09/19/2023 7:05:26 AM PDT by Diana in Wisconsin
US home building sank in August, dropping 11.3% from July levels, as mortgage rates stayed elevated amid lingering inflation.
Housing starts, a measure of new-home construction, dropped to a seasonally adjusted annual rate of 1.283 million last month, well below expectations of 1.44 million, according to data released Tuesday by the Census Bureau.
It was the lowest level since June 2020.
The number of units started was 14.8% lower than a year ago.
Single‐family housing starts, which account for most of the construction, dropped 4.3% in August from the revised July figure, at a seasonally adjusted annual rate of 941,000.
After rising in July, new home starts dropped in August as mortgage rates climbed back to their late 2022 peak.
“The combination of high interest rates, high pricing, and limited inventory has continued to plague the housing market,” said Kelly Mangold of RCLCO Real Estate Consulting. “In many cases, even repurchasing their same home at today’s mortgage rates would be out of a typical buyer’s price range.”
More than 90% of homeowners have a mortgage rate under 6% and many have rates closer to 2% or 3%. Few want to sell and buy a new home with rates now over 7%. This has led to extraordinarily low inventory of existing homes for sale.
(Excerpt) Read more at channel3000.com ...
The monthly index looks at current sales, buyer traffic and the outlook for sales of new-construction homes over the next six months. September’s reading was the first time in five months that overall builder sentiment levels dropped below the break-even measure of 50.
‘Transitory.’
Let’s Go, Brandon!
“Crushing” mortgage rates.
Someone forgot about the early-mid 1980’s.
“In many cases, even repurchasing their same home at today’s mortgage rates would be out of a typical buyer’s price range.”
It would be interesting, if people would calculate, if they could buy the home they live in now, at today’s prices and today’s interest rates.
Personally, I could not buy the house I have lived in for 30 years, at today’s prices.
And the key reason is that the cost of housing has gone up far more than my income has gone up over the years. I’m sure that has happened with a lot of people.
Here in west Ocala, FL (my neighborhood) they’re building houses left and right, literally. The main road out of the subdivision is usually blocked by trucks and workers building. Me hates it....
7.74% is the long term mortgage rate average*. Today's realtor.com rate is 7.751%, so rates are just now at the long term average.
sources:
* Kiplinger: The Magic Mortgage Rate Number to Tip the Housing Market
Blackrock sitting on the sidelines ready to pounce and buy millions of homes from super leveraged sellers. You’ll own nothing and be happy.
Many of the “in my day” posters here aren’t running the numbers.
What was median income in the late 70’s?
What was the cost of an “average” car?
Goods and services?
University costs?
Many entered the workforce without a degree and had decent jobs with upward mobility. There are very few decent jobs now without a degree. You either show the fat black lady in HR your degree, or you don’t get the job.
Things are rapidly changing in a bad direction.
Then there’s the females nearly doubling the labor force and unqualified minorities getting jobs and promotions.
Don’t be surprised if the commercial real estate market in NYC, LA, San Francisco, Chicago and Philadelphia has a collapse in early 2024, soon to be followed by a collapse of residential values. These cities are unlivable and already have unsustainable commercial vacancies. Many investors are walking away from their holdings and are not refinancing. Once the cascade starts, it will only stop at a very low level.
Someone is looking at a singular measurement.
What was average income to average home price then?
Now?
Do you have a pension? Does anyone remotely new to the workforce?
I’ve heard that about 30% of homes are owned by investors, in some major cities.
And the investors being in the housing market, has helped push up prices.
What’s up with Blackrock? How and why did they decide to invest in the housing, instead of other types of investments?
Not to oversimplify, but their actions force ordinary people to have to pay more for housing than they would otherwise, if Blackrock and other investors were not distorting the housing market.
They’re just making room for the fleeing New York and California folks heading your way. ;) :(
Blackrock has $9.4 TRILLION AUM. Housing is just one just one little slice of their vast portfolio. Their ability to manipulate the market with their buying power is why they do it, among other reasons. For sure money maker
No kidding. I bought my first home in ~1982. 14% interest. And I was glad to get it. Down from 25%.
“Buying power” is great on the way up—but that turns into “selling power” on the way down—adding an insane level of potential volatility into the housing market.
“US home building sank in August, dropping 11.3% from July levels, as mortgage rates stayed elevated amid lingering inflation.”
We are seeing an interesting trend with relatives and friends in many cities/areas of America.
The home owners in those cities in their late 50’s and up are making their current homes more adaptable and livable for those of us not wanting to move into a senior citizen environment.
We are seeing that trend increase locally, and in the SW, the MW, New England, S. Carolina and Florida.
The opposite is happening in many areas of California, most of Oregon/Washington, DC area and most blue states/cities. People are leaving those areas.
About ten years ago my wife and I and many family members and friends our ages, started to retro fit our homes for senior citizens/us. The goal of most of us was to be carried out feet first versus going into a strange place to stay until you die.
Since, the covid BS, only one family in our 2 cul de sacs have sold their home out of 50 homes. Basically every home is being modified for seniors or has been in recent months.
One relative in the midwest, who lost his wife to cancer, had his home remodeled from 3+ bedrooms to a guest room and his bedroom and inside storage rooms for his
hunting, fishing and other sports. He had it designed to basically close it down after Christmas until Easter. He heads south for the winter.
The most recent couple to do the retro had two guys in the retro business basically alter the inside of their home to accommodate his new and heavy inside/outside wheel chair.
They now only have 1 guest bedroom and an office/den for each of them. They spent a lot of time at our place to gather ideas for their new retro home.
3 families in different parts of Floriduh have done similar retros in their homes.
We’re in that same camp. Next projects are remodeling the bathrooms so they are more ‘age friendly.’
The room I use on the first floor as an office/craft room will eventually be the Master Bedroom with the bathroom next to it - I may even break down a wall and make it ‘en suite.’ Haven’t decided, yet.
Unless something drastic happens to us both, at least one of us can remain here, comfortably, well into the future. The Paid Staff can live upstairs. ;)
Blackrock is not the only investor in these markets. They just seem to get the most press. There are many companies who only own real estate as an investment. They buy existing apartment complexes. They build new apartment complexes. In some markets they may even buy single family homes. They are renting these units monthly. They make money and a long term good ROI.
In addition to these investors there are also small time real estate investors. People that have one to twenty apartment houses. They are typically long term real estate investors that rent apartments to people on a monthly basis.
The relatively new type of real estate investor is the AirBnB buyer. These are people that buy a house to rent SHORT TERM to someone as a vacation rental. This has greatly affected the real estate prices in Miami, Cape Cod, Palm Springs and any other area where weekly and nightly primarily vacation rentals are desired.
This is the POTENTIALLY most leveraged segment of real estate today. There are many of these AirBnB properties that have been purchased since covid at or near he top of the market. Some are financed based on their short term potential rental income. IF we go into a recession and people take less vacations many of these properties will not make money and will be the first to get DUMPED.
“We’re in that same camp. Next projects are remodeling the bathrooms so they are more ‘age friendly.’”
We had a walk in shower installed in our Master bath. It has been a GodSend with my wife’s new hip.
All of the baths have the hi rise stools to get on and off easily. We kept the kitchen, dining room and living room basically the same except for their own hivac system and thermostat. The kitchen has a skylight that can be opened or closed to what my wife wants temp wise. There is a sliding window over our sink and where my wife preps our meals.
One of our sons was a chef, and he helped my wife to design a small but comfortable kitchen space to work in.
Another, son is a licensed project manager, and he and the installers designed the HVAC systems. Besides the wall controls, we and our sons can control the temps throughout
our home via smart phones.
The room I use on the first floor was an office and is now mainly a storage area for modems and printers.
My new Chromebook works well from our family room and my Lazy boy. My wife basically only uses her kindle and smart phone from her smaller sofa in our family room. That is our key room during waking hours.
Like you, “Unless something drastic happens to us both”, at least one of us can remain here, comfortably, well into the future. The Paid Staff can live far away with its own bathroom and HVAC and future living area, my former office.
Our PG&E bill is about 1/3 of our neighbors’s bills to 50% less. Our living area has its own HVAC and control and I can control it with a smart phone, chromebook or by my fingers.
The areas where we don’t live stay at 60 degrees most of the time. When our outside temp is 70-80, our unlived in areas get zero heat or ac.
Wage level and price are irrelevant to what interest rates were, which is the subject of the article.
Then again, how many FReepers actually read the article, but rather go off on the Headline and react to comments before checking anything else out?
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