Things seem to equalize. It may take 1-2 years but once the inflation situation gets straightened out, then the prices will drop.
Housing market
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Updated my post with more info. We've already been searching for two years. Might have to wait a few more, I guess. But we're outgrowing our place, and the HVAC is now about 20 years old. Hanging on its last legs.
Home prices cooled in July at the fastest rate in the history of S&P Case-Shiller Index
July's year-over-year gains in home prices were lower compared with June in each of the cities covered by the index.
www.cnbc.com
Love how they say 15% isn’t that bad since the month before it was 17%.Home prices cooled in July at the fastest rate in the history of S&P Case-Shiller Index
July's year-over-year gains in home prices were lower compared with June in each of the cities covered by the index.
I don't know that they'll drop, at least around here, but a slow in the growth of prices probably. The underlying lack of supply in the market will still keep things propped up, but hopefully there's a bit of relief in how much of a mess things have been with bidding wars above ask and such.
This was somewhat surprising to read:
Sales of newly constructed homes jumped 28.8% in August from July and were down just 0.1% from a year ago
Sales of newly constructed homes jumped 28.8% in August from July and were down just 0.1% from a year ago
A lot were probably in process and had money down before the rates jacked up. Next year will tell us what the rate hikes did most likely.
I don't disagree with you on this, we're effectively giving the Community Reinvestment Act a 2nd chance. The argument is that history shows there will indeed be a higher default rate on these LMI mortgages but there is also a good segment of those loans that will finally build equity/wealth for the first time; it's a hard thing to balance. There are many institutions here in Iowa that have been doing 0 down loans for years, think of how many buyers now have $50k+ in equity they would have never built due to not having funds for 3-5% down payment.
And not going to stop. I think we will see 8-8.5% by the EOY
I think there is an interesting study to be done on the effects of CoVID on the housing market in terms of how people are viewing mobility and doing things now vs thinking/planning for the future.
I think CoVID has (maybe subconsciously) caused people to rethink how they live their lives and satisfy their wants.
The mindset being “sure this isn’t optimal but how much WORSE is it going to be in 1,3,5 years? Let’s get to where we want to be while we can and figure out the rest later”
It was. I remember it vaguely, through my parents as I was young at the time. What the chart shows is, is that sub7% is abnormal for most of history. Current borrowers have had a HUGE advantage over previous generations
I think it will be interesting to see which markets turn for the worst. There is a school of thought that it will be markets people flocked to during COVID with work flexibilities now being taken away in many cases.
Interesting article I saw today about markets with high percent of contracts being canceled by buyers. All southwest and sunbelt.
Interesting article I saw today about markets with high percent of contracts being canceled by buyers. All southwest and sunbelt.
If commercial building slows, it could switch some of those to multi family structure building to keep crews somewhat intact. Commercial builders and single family housing builders aren’t generally the same groups. We can use more multi family structures and that could alleviate some of the housing shortage.
Except that basically caused a big spike in home values relative to previous generations. Current generations are still spending way more of their income on housing.
I would counter that the huge difference in housing generation to generation is the houses themselves. I have a 1750 square foot home. My parents never owned one this large. Many homes from my parents generations were 700-1000 and a few much smaller. Many had single car, unattached garages, not 3 car attached. Lots were enough to fit the house, not 1/3 to 1/2 acre lots.
I don’t think I’ve seen a house under 1500 square feet built in the town I live in since we moved here nearly 20 years ago. Houses are much different.
They might have had the benefit there actually for people that bought at that time. Home prices depressed, then rates go down and property values go up and they can refi too.
While I haven’t looked at it recently, it costs a couple times a persons salary more to buy now than it did past generations.
For example, if an average house costed 100k, but average household salary was 50k, it cost 2x someone’s salary to buy a house. We’re today it may cost 300k, it average salary is 100k, now 3x someone’s salary. Shows that housing costs are j creasing more than salaries can keep up. Also, these are just numbers I used as examples. I don’t know the actual, but the number of times it takes a households average salary to buy a house keeps growing.
Said another way --
A complex but discernable pattern of historical circumstances and deliberate policy decisions created a one-time windfall for those born between '46 and '64 that cannot and will not be repeated. In fact, those that come after are going to be paying the real cost of many of those decades-old decisions.
It’s important to consider a few things in how home prices have increased over time.
Wage growth and low interest rates are certainly part of it.
But as the average size of an American household has actually shrunk, the average size of home has doubled. At the same time, most new developments in the suburbs have enacted much larger minimum lot sizes for new homes.
So you’ve got far less people occupying each acre of land that you did in the past. Of all the discussions about housing shortage, these are perhaps the two most understated factors.
Wage growth and low interest rates are certainly part of it.
But as the average size of an American household has actually shrunk, the average size of home has doubled. At the same time, most new developments in the suburbs have enacted much larger minimum lot sizes for new homes.
So you’ve got far less people occupying each acre of land that you did in the past. Of all the discussions about housing shortage, these are perhaps the two most understated factors.