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Housing Market Collapse Steepens: New Home Sales Keep Plunging As Inventory Surges To Highest Level Since 2009
Forbes ^ | August 23, 2022 | Jonathan Ponciano

Posted on 08/23/2022 8:44:40 AM PDT by John W

New home sales unexpectedly plunged much more than economists projected in July for the second month in a row, and amid the falling demand, rising home prices are starting to slow down—prompting experts to predict long-rising housing inflation could be due for a turnaround soon.

About 511,000 new single-family houses were sold last month on a seasonally adjusted annual basis, plunging 12.6% below the June rate of 585,000 and coming in sharply below analyst projections of 574,000, the Census Department reported on Tuesday.

Despite the plunging demand, prices actually recovered: The median sales price of new homes climbed to $439,400 last month from $402,400 in June, when prices tumbled to the lowest level in a year after a record high $458,000 in April.

A rash of data this summer has painted a challenging picture of the current housing market. Historically high savings and low interest rates drove record growth in home sales and prices during the pandemic, but the Federal Reserve's attempts to reduce inflation by raising interest rates have abruptly curtailed demand this year—even as prices have kept creeping up. "We're witnessing a housing recession in terms of declining home sales and home building; however, it's not a recession in home prices," National Association of Realtors economist Lawrence Yun said last week.

(Excerpt) Read more at forbes.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: housing; newhomeprice; newhomesales; realty
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1 posted on 08/23/2022 8:44:40 AM PDT by John W
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To: John W

“median sales price of new homes climbed to $439,400”
median family income ~$68K

That’s more than twice the normal ratio of about 2.5

home prices need to come way, way down,
or incomes go way, way up.

Pass the popcorn


2 posted on 08/23/2022 8:49:09 AM PDT by Macoozie (Handcuffs and Orange Jumpsuits)
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To: John W

I have been subscribing to “Reventure Consulting” videos on YouTube for about six months.

He was one of the first to call for a correction in the housing market. He is calling for a 20-40% correction in many of the western US markets.

The next shoe to drop is going to be foreclosures. People have not been paying their mortgage ever since the government told them they did not need to. These will be coming in 2023.

https://www.youtube.com/watch?v=xKr2nqD0lhs

https://www.youtube.com/watch?v=j6GOL10nuQQ


3 posted on 08/23/2022 8:51:57 AM PDT by woodbutcher1963 ( )
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To: Macoozie

So the new housing area we drive by fairly often had, at one time, a sign at the entrance: “From the $500s.” Recently it’s been: “From the $800s.” Will it soon read: “From the $600s”? Probably not.


4 posted on 08/23/2022 8:56:20 AM PDT by rktman (Destroy America from within? Check! WTH? Enlisted USN 1967 to end up with this? 😕)
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To: John W

“Unexpectedly” to a moron maybe.


5 posted on 08/23/2022 8:57:05 AM PDT by Seruzawa ("The Political left is the Garden of Eden of incompetence" - Marx the Smarter (Groucho))
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To: John W

Middle class America cannot afford these homes today. Corporate America, China, Japan and trans national billionaires can afford to invest those prices. The new owners aren’t interested in flipping the houses. The new owners want to make their money renting the houses to the old owners for the next thirty years


6 posted on 08/23/2022 8:57:34 AM PDT by hardspunned (former GOP globalist stooge)
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To: John W

As someone who sold his CA house in April and is looking to buy a house in another state now...excellent.


7 posted on 08/23/2022 8:57:55 AM PDT by AnotherUnixGeek
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To: John W

Big investment funds will increase acquisitions of these homes to add to their portfolios. Quick cash closings to sellers will make available resales to people more difficult.


8 posted on 08/23/2022 9:10:25 AM PDT by Sgt_Schultze (When your business model depends on slave labor, you're always going to need more slaves)
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To: hardspunned

That is not entirely correct.
Opendoor is a corporation that flips houses. They buy single family homes as an investment. They rent them short term. Then resell them. They are heavily invested in the Phoenix market.

Opendoor is not like Crowdsource, Fundrise or Blackrock. These are real estate investment companies that buy up primarily multifamily apartment/condo complexes to rent them on a long term basis.


9 posted on 08/23/2022 9:12:17 AM PDT by woodbutcher1963 ( )
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To: hardspunned

I can tell you from my exposure to the business that detached single-family homes are really not the best real estate investments out there. For one thing ... unless you are building or buying an entire subdivision, there aren’t any real economies of scale in that market. And your best tenants are almost always going to be people who are better candidates to own a home than rent one.


10 posted on 08/23/2022 9:13:20 AM PDT by Alberta's Child ("It's midnight in Manhattan. This is no time to get cute; it's a mad dog's promenade.")
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To: AnotherUnixGeek

As someone who sold his CA house in April and is looking to buy a house in another state now...excellent.


Have you looked into Prescott or Prescott Valley AZ? Big time Trump country, especially PV.


11 posted on 08/23/2022 9:23:07 AM PDT by chrisinoc
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To: John W

Who loses in the end, the person who purchased high at 2.99% interest or the person buying lower at 4.99%?


12 posted on 08/23/2022 9:23:21 AM PDT by CaptainK ("If life's really hard, at least its short")
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To: CaptainK

If they have to bail in the first several years after buying, the person who bought high is in a worse position potentially being underwater.


13 posted on 08/23/2022 9:45:39 AM PDT by greatvikingone
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To: Alberta's Child

I’m saying those “best tenants” you’re speaking of have traditionally owned their home. A large percentage of Middle America is being priced out of that opportunity. When I had three children at home, I could not have afforded to buy into a market like this. I would have rented a roof over my kids heads and yes, we would have been consider no problem, prompt paying tenants.


14 posted on 08/23/2022 9:57:44 AM PDT by hardspunned (former GOP globalist stooge)
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To: hardspunned

The worst problem is middle class kids won’t be building wealth in their homes. Renting is always easier in the short run.

Problem is when you leave 10 years later you don’t have thousands of dollars to put down on a new home. You leave with the shirt on your back.


15 posted on 08/23/2022 10:28:58 AM PDT by GOPJ ( “...threat to democracy” is shorthand for ... "threat to Democrats". -- Daniel Greenfield)
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To: GOPJ

That’s the plan.

The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.

Vladimir Lenin


16 posted on 08/23/2022 10:32:47 AM PDT by hardspunned (former GOP globalist stooge)
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To: CaptainK
Neither one “loses” unless one or both of the following is true:

1. The mortgage rates are variable.

2. The homeowner is forced to move and sell the home a few years after buying it.

17 posted on 08/23/2022 10:34:18 AM PDT by Alberta's Child ("It's midnight in Manhattan. This is no time to get cute; it's a mad dog's promenade.")
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To: hardspunned
I own a single-family home, and I can tell you with absolute certainty that I never would have lived in this kind of home as a tenant. Even if I had several kids I would have rented a tiny apartment until I saved enough money to buy a bigger place.

Depending on the region where you live, it would seem ludicrous that most people can’t afford a mortgage payment. The rent for a home is usually higher than the mortgage payment for a comparable property — especially for homes owned by institutional investors.

18 posted on 08/23/2022 10:40:07 AM PDT by Alberta's Child ("It's midnight in Manhattan. This is no time to get cute; it's a mad dog's promenade.")
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To: GOPJ
The worst problem is middle class kids won’t be building wealth in their homes. Renting is always easier in the short run.

Yes. Told our youngest daughter that. She has been renting a home for $3,000 a month. Told her that money was thrown away. She just bought a house in the neighborhood, is closing in a couple weeks. Her mortgage is $3,000 a month, but she'll be building wealth in that home. It's a buyer's market now, she got the home $300K under original asking price, seller kept discounting until almost at her offer buying price. Same for other homes in the area, sitting on the market without buyers, resulting in price drops.

19 posted on 08/23/2022 10:43:38 AM PDT by roadcat
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To: John W

Joe Biden’s build back better.


20 posted on 08/23/2022 10:44:31 AM PDT by Parley Baer
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