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Remember housing in 2019 peaks were already unaffordable in big cities, and that was with lower interest rates. The smart homeowners held on if they could. They are now doing very well and might nearly have a paid-off mortgage if they refi’d for 15 years. The ones who foreclosed, rented for 7 years before they could qualify for a loan again and jump back in at nearly the same price.
It’s hard to tell how long such a wide disparity can last. The standoff between buyers and sellers that Wolf speaks of, especially in still-hot markets, is indeed alive and well. Sorry, but housing is based on supply and demand. The demand curve is substantially lower than where it was in the past. The supply curve is also pretty weak, but that will pick up speed as prices drop further. It is one of my favorite hawaiian restaurants in Los Angeles.
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If inflation gets down to 2%, while assets stay at 2022 levels, that’s great. OTOH, if the Fed’s inflation fighting results in assets crashing to 1990 levels, oh well. At this point at least, the Fed does not care about asset levels, only inflation . And as potential sellers figure this out, their homes are going to sell.
If stocks go up, a lot of times people will spend some of the earnings, thereby increasing the risk of inflation. It is still easy for home owners to deny that home prices will fall much further. They look at year over year and say that it is only back to where home prices were in 2021, so no big problem. As prices continue to melt down, this denial will start to fade. And demand might plunge even further, since the new downward trend will be very obvious for all to see.
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Subprime was only 12% of the market in 2008. This seems to be the key to put the final pin in the housing bubble. Many of these investors who purchased vacation and other rentals last year thought their investments would always pay off as home prices appreciated .
I have however, went outside my norm and have tried other dishes such as the spam dish, bbq chicken and the seared ahi tuna. The seared ahi is absolutely wonderful and for the price and portion, you can not beat it in comparison to the price of seared ahi at other restaurants. My gut feel (for what that’s worth, which is not much), tells me that we’re going to experience the tepid first half of the 90s all over again in the housing market. House prices could drop a bit and flatten until they meet back up with the long-term trendline. It took the us 2-1/2 centuries to grow our M2 money supply to $15.5 trillion , and then we printed another $5 trillion in only 2 years!
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The house was over-improved for the neighborhood but, as I told my daughter, we couldn’t duplicate it for what we paid. We won because it was a bank owned property and they just wanted to get it off the books and our offer caused them the least brain damage. This feels more like the early 1990’s, where real estate didn’t collapse, but rather had to work off the excess appreciation of the late 1980’s. In my area, prices took maybe only 10-15% hit from peak 1989 early 1990 prices. This happened over 1-2 years, but then prices stayed flat until 1998.
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It’s absolutely not the time to buy anything in Fresno. With tech layoffs and all of the Bay Area transplant wfh folks… perhaps you’ll find a deal here. The median priceof all types of homes whose sales closed in October fell for the fifth month in a row, to $370,700, down 10.4% from the peak in June. This drop slashed the year-over-year gain to just 3.5%, down from a year-over-year gain of 15% a year ago. If you get the plate you also get a Miso soup to start.
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Looks like households have lots of fuel left to throw on inflation, if they’re in the mood. It is my guess that sellers will get more aggressive once they start to feel the pain. With so much home equity to burn through, it will take layers and layers of selling for many months to get to a point of panic.
Cash buyers are massively pulling back. All-cash sales accounted for 26%, or for about 85,000 homes, of the total 326,000 homes sold in November, as measured by actual sales, not seasonally adjusted annual rate. This was up from a share of 24% in November 2021. But given the much higher number of homes sales in November 2021 , the 24% share of all-cash sales amounted to 120,000 all-cash sales.
Location has alot of snow birds who own for the cool 6 months. Ian did significant damage, but nothing like fort Myers and other surrounding areas. Companies like opendoor are buying the properties that cut their prices on the mistaken belief that they can flip them for higher prices. Soon opendoor will be out of business for good. Zillow was smart to get out of the flipping market. Real estate is a utility asset that has been overmarketed into an investment asset by an industry busily serving its own interests at the expense of the naïve.
So almost 10 years of nothing appreciation wise. If I had to place money on a scenario, this would be my largest odds bet. Based on affordability calculator on zillow. At $78k and a 20% down payment and a debt ratio of 36%, a family can afford a $310k home which would put us around 2020 prices. Inventory still low and the price discovery ongoing. Rent and wait until this ZIRP and Free Money period for 15 years works its way through the economy.
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But, there’s also a lot of other factors to consider. I suspect this market will get alot tougher after 1st of year and cash will really talk. Inventory rising, sales slowing alot.
People renovating and additions mostly in the blue states but in the red states also and people moving from blue states to red states where covid restriction weren’t so crazy. Then you ave shut downs or restrictions from the covid scared policies effecting production increasing demand companies that are still at work. This is not to mention all the free money that we all got. Yet prices in Fresno shot up easily 100k in a year on houses that were only going up 10k a year.
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