Posted on 02/18/2022 7:37:29 AM PST by Browns Ultra Fan
Surprise! US existing home sales in January rose to 6.50 million units SAAR versus the expected 6.10 million units. That is a 6.7% increase over December.
The disturbing news is the continued lack of available inventory that peaked in Q4 2007 and has continued its decline to today … the lowest level of available inventory since 1981. Despite the Fed’s massive stimulus that they allegedly will take away. Median price of existing home sales rose to 15.4% YoY. Making homes affordable should NOT be a slogan for The Federal Reserve, the Biden Administration or Congress.
The massive Federal stimulypto (fiscal and monetary) has helped push existing home sales to 6.50 million units SAAR in January. What will happen after The Fed withdraws it stimulus??
What is surprising is that with declining REAL wage growth, we saw a surge in home buying in January.
Remain calm, all is well!
(Excerpt) Read more at confoundedinterest.net ...
Lack of inventory, millions of ILLEGALS spread out across the country.
What could possibly go wrong?
This is actually good news. People finally are going to stop pouring money down the drain paying rent.
No, housing prices are ridiculously skyrocking so anyone wanting to buy, is doing so if they can asap.
I locked in a mortgage rate about six months ago to purchase a small home. I was partially motivated by concerns that mortgage rates would rise. As it turned out, they are rising (later than I expected) along with home values, particularly in certain parts of the country.
That said the onset of a recession could quickly reverse the rapid price appreciation.
One of their tools is to “threaten” to increase rates.
Reminds me of a joke going around during the last housing (credit) bubble: A guy tried to rent but his credit score was so bad he couldn’t get anyone to rent to him - so he had to buy a house instead.
I’m happy that my kid recently bought a nice semi-rural property with a lot of land.
Inflation expectations often help increase the rate of expectations.
People who still can purchase a house often times think, I had better buy now versus 6 months from now because it’s only going to be more expensive.
Inflation is self-fulfilling proposition; the more people think prices will increase the more they are likely to increase because people get into a frenzy.
Combine inflation expectations with all the loose money floating around and you have the recipe for hyperinflation.
Just keep in mind that if the appraised loan value doesn’t meet the asking price, you will have to go with a cash purchase.
Our daughter and fiancé just got outbid for a new home near Spokane, WA. They bid about 8% over asking; the people who won the bid went 10% over asking.
Now, with rising rates, they won’t qualify for as much mortgage on their next bid which will make it even harder to win.
This really sucks.
I understand the low inventory, but home prices are out of line with wages - whose income is jumping +200%? It’s unstable and will break down soon. The next 2-3 years I believe buyer’s remorse will set in. People are left with high mortgage notes -and- maintenance costs - siding, roofing, plumbing, etc. and cannot pay.
When everything is panic, nothing is panic. This is the completely normal consumer reaction to interest rates starting to move up.
Pro Tip: Real estate markets don’t crash when there is a shortage of housing. The current shortage isn’t going away soon. Demographics (ignored by fly-way market watchers) says housing demand will remain strong, there are millions of young people hitting home-buying age and they have the credit and money to buy. Many will be helped by parents also.
Everyone ignores supply and demand these days and talks about all the factors that don’t matter as much. That’s a big mistake. There is big demand for housing, interest rates are still historically low, not enough building going on, and very low inventory nationally.
The real estate market won’t be shooting up in price going forward, now it will become more normal and easier to deal with. Most of the 256 identified sub-markets look just fine going forward.
If you need a house and you feel you can stay in it at least 7 years, this is an OK time to buy one and millions will.
I don’t know if this is still true, but I recall hearing a few years ago, that about 25 to 30% of home sales in major cities, were to investors. rather than people who were buying a house to live in.
Investors often pay cash. They are not bound by how much their earnings from a job are. So don’t have concerns about qualifying for a mortgage based on earnings.
Inventory is being bought up by investment groups of all shapes and sizes. You see the ads on TV “I’ll buy your home for cash” but those guys are mostly scams. The big banks, hedge funds and other large investors are buying much of the supply. They are buying entire tracts from the home builders too.
I don’t know why exactly. Perhaps they have excess cash and that’s another diversification. Perhaps they expect to rent them for cash flow. They are not always easy to liquidate (they are now but not always, its cyclical) but cheap to borrow and generally will appreciate steadily over time. Less volatility. And the book value doesn’t change like stocks do since they are hard assets.
“What is surprising is that with declining REAL wage growth, we saw a surge in home buying in January.”
Its probably just Blackrock and other investment groups snapping up properties so they expand their rental holdings.
That's a sane response to the current economy and backs up the statistics from this article.
Last night we had an another economic discussion. This one dealt with bear markets. She hasn't seen a real one in her short investment life. She is now researching alternatives to equities during high-inflation and high-interest rate times.
Sane, rational decisions will follow. This is simply self preservation. Now waiting for a significant market downturn/crash and long-term bear market.
I'm a proud Daddy. I just kinda point her in the right direction. She does additional research and makes the decisions. Pretty decent for a 24-year old.
You’re exactly right (I don’t know if it is 30% but I wouldn’t doubt it). The question is why. I had some ideas in my post above but it may be an even deeper game than just what’s on the surface. It threatens freedom and individuality when people literally can’t buy their own homes because they can’t afford them or they aren’t available. It’s a road back to serfdom.
We had a major fire over Christmas that wiped out over 1000 homes. It was terrible. Very little loss of life, though. I think that only a couple of people died.
But that will affect supply. Also, it may be many years before the homes and structures are rebuilt because of supply chain issues.
I also purchased a small home a couple of months ago, and was able to lock in a low rate thanks to my very astute mortgage loan officer. I knew, as soon as the fraudulent "election" came about, that our prosperity would end under the dummo-communist rule and that I'd better act fast. G-d favored me by a word-of-mouth notification that the little house I wanted was now on sale and I nabbed it, at the favorable mortgage rate. Now I'm watching mortgage rates rise, along with house prices and just going "Wooooo" in relief I just scraped through under the wire.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.