Posted on 06/03/2022 6:15:53 AM PDT by devane617
The housing market is starting to show signs of a slowdown. If the trend persists, the U.S could see an impact in other sectors of the economy — starting with big-ticket items that go into furnishing a new home.
"The housing market is very much a leading indicator of the economy because of the knock on effects through the various sectors, like consumption of durable goods," Eric Basmajian, founder of EPB Macro Research, told Yahoo Finance.
He predicts durable goods such as large appliances that go into a home could cool off as fewer homes are sold.
“We’re going to see a cooling of new orders, and then we're going to see a pullback in industrial production or the manufacturing sector more broadly," said the researcher.
New orders for durable goods in March were up .4%, a slowdown from .6% in the prior month. Retail foot traffic compiled by SafeGraph and analyzed by Bloomberg for the 3rd week of May showed the sector with the biggest decline was home improvement and home furnishings, down 24.6% year over year.
The housing industry has already seen a substantial decline in number of sales and loan applications as 30-year mortgage rates shot up from around 3% at the end of last year, to current levels north of 5.25%.
(Excerpt) Read more at finance.yahoo.com ...
Even a return to 2008-2010 would be absolutely horrible.
“How a housing downturn could impact other sectors of the economy”
“COULD?”
Housing used to be a bellwether for the economy. Housing involves so many things. Lumber, labor, trucking, major and minor appliances, flooring, siding, paint, furniture, and on and on. Has this changed?
“Could” should be changed to “should” or “will”.
A cow, a few pigs, chickens and a garden....wood stove.
Then there was the well in front and outhouse in back.
Ditto
Our apartment project has lotsa problems getting appliances. I’m in Upstate NY.
juxtapose this prediction against housing shortages in the south where peeps are fleeing.
We’ve got serious shortages in Phoenix....any other cities ?
Housing is still a major bell weather of the economy. That is why there is an announcement of housing starts and permits once a month. As you stated the construction of a new home affects many other industries in the worldwide economy.
Just like the unemployment rate, inflation rate, fed funds rate and the stock markets are all economic indicators.
I live in Florida and it’s almost a fight among bidders when a house is for sale. Most houes never put up a sign...Its just sold the next day.
Appliances, romex wire, electrical panels, rebar, gypsum, osb, plywood and lumber have all been effected by covid closures and logistical issues for the last two plus years.
As a lumber broker I can tell you that the price of lumber has come down significantly on the wholesale level since its highs of last summer and its recent highs this late winter. Roughly a 50% decrease in price. We are still heading down and will not bottom out until the fall.
We are still having problems with the major railroads(BNSF, UP, CN, CPRS, NS, CSXT) moving freight across North America.
Trucking rates are up about 30% in the last six months due to the price of diesel fuel.
All of the building industry is currently busy but sees the storm clouds on the horizon. Housing prices are at all time highs and interest rates are going up. It does not take an Ivy League Economist to know that something has to give.
The other thing effecting the supply of lumber in the US is that there is NO demand in Europe. The European countries construction has slowed down dramatically since the UK war.
This is because the steel mills that were destroyed along with the gypsum plants. These were some of the largest manufacturers of those products that supplied the European continent.
It is hard to build a new building without rebar and drywall.
Its a fight down south for homes. I agree, there seems to be plenty of money in florida. People that bough 2-3 years ago are getting 150% or more for their homes. I have a friend in the villages who made 135k on a 220k home she bough 3-4 years ago.. and its maybe 1200 sq ft with a yard you could barely park a car on either side of the house. And the back yard is about the size of a singles volleyball court
I have zillow sending me updates daily and daily prices are being reduced in the area I’m interested in.
Here in Raleigh it’s the same so I do not see prices dropping here because it’s a NY, NJ and CA favorite. Plus an excellent job market.
“This is because the steel mills that were destroyed along with the gypsum plants. These were some of the largest manufacturers of those products that supplied the European continent.”
Oh, I guess the EU hadn’t considered that in their mad rush to ‘stick it to Putin’. Better luck next time!!!
It’s not just in building. Our company has ordered Tyvek lidding for a medical tray and three months have passed...no Tyvek. No tray either.
I have an testing protocol for our new packaging configuration but don’t have the parts to test because of enormous lead times.
“All of the building industry is currently busy but sees the storm clouds on the horizon. Housing prices are at all time highs and interest rates are going up. It does not take an Ivy League Economist to know that something has to give.”
Absolutely. In 2008 the housing market went on for several months apparently walking on water (fundamentals collapsing underneath), and then one day...
In the 2008 case, there were the the really bad loans, Option ARMS, where people were paying and qualifying with $1600 payments (for example), on loans of $500,000.
These loans would then reset after 5 years, and now the home ‘owner’ would have to pay $4,000. They had three choices at that point:
1. Pay the $4,000 for the next 25 years.
2. Refinance to another loan, with payments closer to $2500.
3. Sell the house and get out.
Option 1 didn’t work, because they simply didn’t have the money (for the above loan, they might only make $60k a year).
Option 2 didn’t work, because they had no equity in the house yet, as that is how Option ARMs work, plus any appreciation in value was ‘extracted’ via home equity loans. Also, this option required qualifying for a loan with much higher payments, something very few of these people could do.
Option 3 didn’t work, because selling the house into a topped out market wasn’t possible, as they couldn’t pay off what was owed (plus the expense of selling).
They walked away and the companies holding the loans were simply out luck as their watched their AAA-rated loans become worthless, right before their eyes.
It’s worth noting that these really bad loans, the Option ARMs, were not available after 2008, but regular ARMs are available and so the market will sink, but maybe not quite as bad this time.
As I suspected. Writer has a NE bias.
Apartments —which sprout up in Phoenix everywhere I turn—come with lots of big-ticket durables, too......ovens, refrigerators, furniture,etc.
Quoted EPB Macro Research-—based in Manhattan....and out of touch with USA
In Phoenix, realtors advertise a premium service which advises what properties will become available before the general public learns of them. Intense competition here leading to highest home inflation in the country.
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