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 ...
“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
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
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.
“Unexpectedly” to a moron maybe.
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
As someone who sold his CA house in April and is looking to buy a house in another state now...excellent.
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.
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.
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.
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.
Who loses in the end, the person who purchased high at 2.99% interest or the person buying lower at 4.99%?
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.
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.
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.
That’s the plan.
The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.
Vladimir Lenin
1. The mortgage rates are variable.
2. The homeowner is forced to move and sell the home a few years after buying it.
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.
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.
Joe Biden’s build back better.
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