Posted on 11/27/2023 8:04:51 AM PST by Kaiser8408a
Hammer time!
With existing home sales collapsing to their lowest SAAR since 2010, new home sales are the only pillar left holding up any hope in the US housing market. However, with housing affordability at its lowest since at least the early 1980s, (and homebuilder sentiment slumping as mortgage rates rose), it’s no surprise that analysts expected new home sales in October to tumble 5.0% MoM (after their unexpected 12.3% surge in September).
As a reminder, The Mortgage Bankers Association’s index of home-purchase applications tumbled to 120 – the lowest level since 1995 – as mortgage rates hit 8% for the first time in 23 years in October.
Source: Bloomberg
So, it should be no surprise that new home sales were even worse than expected, plunging 5.6% MoM (and making it even worse, the 12.3% MoM jump in Sept was revised down to +8.6%)…
Source: Bloomberg
The trend of downward revisions continues…
The New Home Sales SAAR of 679k is flat from April (that was below all economists’ forecasts)…
Source: Bloomberg
It appears the homebuilders finally hit their wall eating the gap between these two lines was just not sustainable…
Source: Bloomberg
And as we noted previously, homebuilders can’t be filling this gap either – between the current 30Y mortgage rate and the effective rates that borrowers are currently paying on their home loans – (i.e. subsidizing new home sales) forever…
Source: Bloomberg
The median new home price fell 17.6% y/y to $409,300; average selling price at $487,000
That is the lowest median price since Aug 2021, catching back down to existing home prices…
Source: Bloomberg
Is Powell winning his war on affordability? Or crushing the middle class’s main source of wealth? Or is it Hammer Time??
(Excerpt) Read more at confoundedinterest.net ...
“County Assessments are not “appraisals”.”
When I worked at protesting them they were called “mass appraisals”. What you call it doesn’t matter, it’s how your taxes are set up or down.
“Most states wont automatically reduce the value related to property taxes. Homeowners need to file a petition to get the value lowered to market.”
1. States don’t set property values and taxes, counties do.
2. Most counties reassess every two years and then set the value using those 2 prior years of sale prices. That means assessments peak about two years after prices peak, and assessments bottom 2 years after assessments bottom.
Building Permits are down about 15% in the Atlanta metro area.
However, it is still the 5th largest volume market in the country.
In order of the amount of building permits:
1) Houston
2) Dallas/Ft Worth
3) Phoenix
4) NYC/Newark
5) Atlanta
FYI, as a percentage, Nashville has a higher percentage increase (26% +) than any other metro area. Followed by Riverside, CA(22%+), Miami (12%+), Sacramento(6), Charleston & Charlotte(5%)
All other metro areas are down in permits in comparison to 2022.
“Most states wont automatically reduce the value related to property taxes. Homeowners need to file a petition to get the value lowered to market.”
Oh, and counties will automatically lower taxes if their assessments go lower. What you are probably thinking of is the protest system. You get a letter when your assessment is updated. If you think the assessment is wrong, you have a specific period during which you can protest. (This used to be one of my side hustles).
“NEW construction sales were at a 18 month high in September”
Sept had houses built without lumber costs being out of this world. Homebuilders are reducing the amount of loaned money they use for projects. It is very typical a big gross sales number is put up with any product before the buyer demand goes to zero. Houses hopefully have dropped off the get rich quick list and gone back to keeping rain off your head list.
Lumber COSTS are no longer high. They have been actually back to normal for over a year now. OSB is still fairly high, but it is because there are only about twelve mills that control all the OSB production in the the WORLD.
Why? With computers why all the delays?
Again let me repeat we have a very low inventory of houses and every tom, dick and democrat in the north is moving here. Interest rates will be dropping soon not going up. The housing market here will not likely crash anytime soon.
my bad, I meant counties. Most counties dont automatically reset value.
Live in CA all my life and not once did the county reset my property value even during the obvious times. I had to petition.
Appraisals determine market value at a point in time. Assessments determine the taxes collected by the thieving government. ;)
“Live in CA all my life and not once did the county reset my property value even during the obvious times. I had to petition.”
My last prior house went up and down in assessed value in Colorado. My taxes went up and down when it happened without me doing anything. In Colorado you get the assessment every two years. If you think it’s too high, you “protest”. You argue your case to a panel. If you lose you can appeal. Eventually a decision is final. I used to get paid to help property owners protest. Lost more than I won, but when solid evidence was available we would win.
“Why? With computers why all the delays?”
They use a 2 year history of sales, and reassess every two years. Nothing to do with computers. The assessment and the taxes on my various properties moved up and down over the years lagging the cycles somewhat. It’s the govt, they do what they want. Don’t pay, they take your property.
They could take it but it would come with price.
Yes wealthy people from democrat states are definitely holding up housing in state with lower taxes.
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