Posted on 02/22/2022 6:40:25 AM PST by Browns Ultra Fan
The S&P CoreLogic Case-Shiller National home price index remained HOT in December, growing at a 18.84% pace. M2 Money YoY is still smoking at 13.11%.
All 20 metro areas in the Case-Shiller 20 index grew at 10% or higher YoY with my former home city Phoenix leading the way at 32.5% YoY house price growth. Washington DC, aka Mordor on The Potomac, was in last place at 10.5% YoY.
In terms of active inventory of housing, only Phoenix and Columbus Ohio are showing positive growth in active inventory YoY. But even Phoenix and Columbus saw a decline MoM (or month-over-month).
Including Existing Home Sales Active listings in the first chart, we see The Federal Reserve continuing to pump money at at 13.11% clip while active inventory is at an all-time low.
This is nuts.
(Excerpt) Read more at confoundedinterest.net ...
Wait for the screaming when housing prices start down.
Now THAT will be epic.
Now that statistic really makes a point. It is astonishing.
And probably most importantly, money is nearly free (but not for long).
“... Prices DOUBLE in less than three years....
“Now that statistic really makes a point. It is astonishing.”
It’s done that before. And millions of people are still buying right now. Why? Because they need housing and they can afford it. If they couldn’t afford it, they wouldn’t qualify, and those that can’t qualify it aren’t buying.
How amazing to have millions of people who can afford these prices, they must be doing pretty well.
I know all about supply and demand. Still, inflation has only been strong for one of the three years. Our population has not grown significantly except for illegals. So, why the extreme surge? Pandemic passing? Fear of more inflation? Sudden disdain for the old pace? It is a perfect storm of some sort.
And probably most importantly, money is nearly free (but not for long).
Why not let supply and demand determine price and not financing. If financing must be the tool to manipulate prices, why not require a minimum of 25% unencumbered cash down payment? No skin means walkers at the first sign of a price decline.
It’s a strange economy at the moment. Many people I know are either working a lot of overtime or have a second job. Yet there are still a lot of entry level jobs that are going unfilled. Perhaps the true unemployment rate is actually negative?
There was an article in the NYT a couple days ago about Spokane. It actually doesn't say Spokane is the hottest market, but prices are up 60% in two years, so it is near the top. Lots of pleasant things in the Inland Northwest are attracting people from Seattle, Portland, and California...but bringing all the typical problems with them.
Astonishing and so dismaying and saddening. We are living in turbulent times and this economic mess is making it a lot worse.
At the beginning of the 20th Century, mortgages required a high down payment and I understand were short term, five to ten years. Home ownership was really out of reach of people then.
The real estate mess in 2008 showed how bad it is when people have no skin in the game. As you say, people bail out and leave the bank with the debt. Of course, the banks get bailed out and then we get the bill in the end. But taxes pay only a fraction of those costs, so the government runs deficits, the fed prints more money, and we get sky-high inflation that destroys all of our savings.
The favorite liberal word is “sustainable,” but none of this economic catastrophe is sustainable.
“It is a perfect storm of some sort.”
Exactly. It’s a confluence of:
Demographics: Millenials have reached home buying age and there are a lot of them, similar to when baby boomers reached the same age. The term is “echo boom”.
There is a housing shortage caused by a lack of building during the pandemic. Unfortunate timing given the high demand.
It will self-correct, at least it has always corrected for the 45 years I’ve been involved with it as a career and in retirement.
We could fix all this radical movement in prices by becoming a communist-style economy. It seems like people want all the freedom of capitalism without the responsibility that comes with it.
Communism would fix every problem you have just identified.
Maybe you’d prefer that.
The imbalance between buyers and inventory will decrease as rates rise, but there’s still a lot of cash sloshing around, and that will take a little extra time to be absorbed.
I’d prefer a well-managed country run by serious, talented and competent people.
I have an example happening right next door. A couple in their thirties have the house next door under contract. It was priced at $625k.
My grandkid is 26 and a diesel mechanic. His wife is stay-at-home Mom. One middle class income, and with no help from parents, they own a home. How can it be?
Still crazy in Massachusetts. Bought our house 8 years ago for $703,000. Refinanced to a 15-year mortgage last year at 2.25%. Appraisal was $1.2 mill.
Sold our previous house in Boston in 3 days well above asking.
Live in one of those 99% white towns in the suburbs with excellent schools and no crime. Life is good.
“I’d prefer a well-managed country run by serious, talented and competent people.”
So would I but I have to make it with conditions as they exist.
Abraham Lincoln: “The most reliable way to secure your future is to build it yourself.”
No monetary Angel is going to take care of us, we have to do it ourselves.
“...we have to do it ourselves.”
While we are figuring out how to do that, our life savings are wiped out by inflation. As recent retirees, these are especially scary times. Over 40 years with inflation in check by a reasonably competent Fed, then the bastards used the COVID crap to scare the daylights out of us, shut down the entire economy, then pour untold trillions of dollars out of helicopters to those who weren’t working. And here we are.
No need to play the Commie Card. No one is less so than yours truly. FTR, I am doing really, really just fine and on the clear ownership, winning side, regarding real estate.
But a doubling of values in three years is uncanny, even if it has happened sometime in the past. I remember our farm mortgage being shuffled all over creation when our local savings and loan went under and Uncle Sugar took the reins. That didn’t smell like pure capitalism.
I guess they had a down payment and qualified for a loan. It sounds pretty ordinary. Why wouldn't it be?
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