The Most Splendid Housing Bubbles in America: Holy Moly. June Update

What we’re looking at: Raging House-Price Inflation.

By Wolf Richter for WOLF STREET.

House prices soared by 14.6% from a year ago, according to the National Case-Shiller Home Price Index, the biggest increase in the data going back to 1987. But it pales compared to the raging mania that has taken hold of individual metros.

Today’s release, called “April,” is based on a three-month average of sales recorded in public records in February, March, and April, of deals made a month or two earlier. So that’s the time frame. The metros here – the most splendid housing bubbles – are in order of the biggest house price increases since the year 2000:

Los Angeles metro:

Prices of single-family houses in the Los Angeles metro jumped by 1.8% in April from March and by 14.7% year-over-year. All Case-Shiller Indices were set at 100 for January 2000. The index value for Los Angeles of 339 indicates that house prices soared by 239% since January 2000, despite the collapse during the Housing Bust, which makes Los Angeles the most splendid housing bubble on this list.

San Diego metro:

House prices jumped by 3.2% in April from March, after having jumped by 3.4% in March from February, and are up 21.6% year-over-year, the second-hottest annual house price increase behind Phoenix. Prices have soared 231% since 2000:

What is this? Raging “House-Price Inflation.”

The Case-Shiller Index, by using the “sales pairs method,” compares the price of a house that sold in the current month to its price when it sold previously. Home improvements are taken into account. The index tracks the amount of dollars it takes to buy the same house over time. This makes the index a measure of house price inflation as it shows the extent to which the purchasing power of the dollar has dropped with regards to the same house.

The charts below are on the same scale as Los Angeles and San Diego to show the relative magnitude of house price inflation between the individual markets since 2000.


House prices in the Seattle metro jumped by 3.1% in April, after having spiked by 4.7% in March, for a classic WTF moment. Year-over-year, the index is up 20.2%, the third-hottest annual house price inflation on this list, after Phoenix and San Diego. Since 2000, house prices have skyrocketed 225%.

San Francisco Bay Area Houses and Condos:

The Case-Shiller Index for “San Francisco” – it covers the five counties of San Francisco, San Mateo, Alameda, Contra Costa, and Marin – spiked by 3.1% in April after having spiked by 3.3% in March, and is up 15.1% year-over-year. House prices have skyrocketed 218% since 2000.

But condo prices in the San Francisco Bay Area have been roughly flat since April 2018:

Portland metro:

House prices jumped 2.1% in April and by 15.4% year-over-year. Since 2000, they’re up 184%:

Miami metro:

House prices jumped 2.4% in April and 14.2% year-over-year. Up 187% since 2000, they have now surpassed the insane peak of Housing Bubble 1:

New York City metro: Condos and Houses:

For the Case-Shiller Index, the New York City metro includes New York City proper plus numerous counties in the states of New York, New Jersey, and Connecticut. This is a vast housing market that includes some of the most expensive submarkets in the US.

Condo prices for New York – condos are heavily concentrated in New York City, particularly Manhattan – declined 0.1% in April and have roughly been at the same level since February 2018, with the high in October 2018. Since 2000, and despite the last three years of flat-lining, prices have soared 174%:

House prices in the New York metro rose 0.8% in April from March and are up 13.5% year-over-year. It took the index 15 years to surpass the peak of Housing Bubble 1:

Washington D.C. metro:

House prices rose 2.3% for the month and are up 13.6% year-over-year:


The Case-Shiller Index for the Boston metro jumped 2.5% for the month and 16.2% year-over-year.

Tampa metro:

House prices jumped 2.3% in April and 15.4% year-over-year:

Denver metro:

House prices jumped 2.7% for the month and are up 15.4% year-over-year:


The Case -Shiller index for the Phoenix metro spiked 3.3% in April, after having spiked 3.4% in March, and is up 22.3% year-over-year, the biggest year-over-year increase in Phoenix since the peak months of the insane bubble days in 2005, and the hottest annual house price inflation among the Most Splendid Housing Bubbles here:

Las Vegas metro:

House prices jumped 2.5% in April and 12.5% year-over-year:

Dallas metro:

House prices spiked 2.9% in April and 15.9% year-over-year. The index is up 126% since 2000. In the other cities in the 20-city Case-Shiller Index, the two-decade house price inflation amount to less than 120%, the cut-off mark for this list. By comparison, the Consumer Price Index, one-third of which is composed of understated housing components, rose by 59% over the same period):

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  488 comments for “The Most Splendid Housing Bubbles in America: Holy Moly. June Update

  1. Poor like you says:

    Whelp. Guess I’ll die.

    • Educated but Poor Millennial says:

      The holiest home town , Los Angeles, is No. 1,
      Shall I die too??

    • Educated but Poor Millennial says:

      Joking aside, I hope this is the end of the price peak, I am getting married and really need to afford a shelter for me and my life partner.

      • Greg Fraser says:

        Inflation and not bubble! Wolf you need to get a grasp on what an increase in $$$ does to hard assets. If and when $$$ is drained from the system then a so called bubble will deflate. Only $$$ printing in america’s future until the bubble bursts! But that is years away!
        Wolf, buddy, this is the same headline u’all ran when prices were 60-70% lower!

        • Educated but Poor Millennial says:

          Indeed a manipulated inflation !!! where no one can afford to buy a crap shack , with this next to nothing pay rate and high unemployment numbers. Go ahead and buy more properties , someone has to hold the bag when bubble pops.

        • Wisdom Seeker says:

          There’s some difference between “bubble” and “inflation”.

          If only credit is expanding, then it’s a bubble; the bubble pops when the credit expansion stalls. Dot-Com ’99; Housing ’06; GFC ’08. Credit is definitely expanding now…

          But if incomes are also expanding, making bubble prices “affordable” (eventually), then it’s inflation.

          I think the jury’s still out on the income expansion.

        • Finster says:

          Wisdom Seeker … It’s inflation the whole way through. Inflation doesn’t affect all prices the same amount at the same time. Asset prices are the canary in the coal mine. Wages lag … unlike real time markets, they are negotiated much less frequently, and since consumer prices embed a large wage component, they lag too.

          Inflation is not recognized as such when it’s mostly asset prices, because asset price inflation is fun … at least for the owners of assets … and TPTB prefer to put off recognizing inflation as long as possible.

        • Kenny Logouts says:

          If all these houses become ‘worth’ half as much, and all the stocks the same, then isn’t that “money being drained from the system”?

          Just look at the charts.

          They go up, then pop, up, then pop. It’s human nature.

          Anyone who thinks otherwise or that this time is different has to assume humans have changed.

        • Winston says:

          “I think the jury’s still out on the income expansion.”

          No, it isn’t:

        • Chubby FIRE says:

          Can’t we have both inflation and a bubble? It doesn’t have to be just one or the other.

      • Janna says:

        There are still cheap houses in rural areas. May require a big commute though. The key is to fix the inside up like a palace and keep the outside like a poor man’s house. I actually like renting though. Most of our utilities are paid with the rent and rent hasn’t risen since 2017. We save more renting than we did owning. Seemed like we were always spending money on some improvement. Little expenses add up!

        • California Bob says:

          One downside to renting I hadn’t considered: in California, at least, your landlord can kick you out with 60 days’ notice if s/he wants to put the property up for sale. This just happened to us; I got a 60-day notice on May 26, we were planning on moving into my mother’s house after a remodel later this year, but now we have to move out, remodel Mom’s house, and move in just 60 days (looks like we’re in for an extended motel stay). To add insult to injury, I’d already paid rent through September. The rental market is tight in this CV town; a neighbor’s landlord told me he put his property on Craigslist, and got over 40 inquiries the first couple days; he said some were offering $200-300 more than he was asking. If we didn’t have an (accelerated) Plan B we could have ended up on the streets.

        • Janna says:

          Cali Bob- ahhh, I had not considered that. That is a great point. I’m so sorry that happened to you, but it sounds like you have a great Plan B…even if it means living with a few renovations at the same time.

        • Turtle says:

          There are still reasonably priced homes in many of the slightly better than average Texas suburbs, too. The problem seems to me to me mostly in HCOL area and the formerly LCOL areas that people from HCOL areas have been fleeing to (the Boises and Renos). Some areas were so cheap that even after nearly doubling, they’re still in accordance with median household incomes.

        • Depth Charge says:

          “…a neighbor’s landlord told me he put his property on Craigslist, and got over 40 inquiries the first couple days; he said some were offering $200-300 more than he was asking.”

          Sounds like the car salesman who called me the other day. He told me he had 3 for me to look at, but to hurry up or they’d be gone. I asked him why he was calling me if he didn’t need to sell a car.

        • Wolf Richter says:

          Depth Charge,

          In terms of car sales, your salesman is likely paid a commission or bonus for the vehicles he sells. So if the other salespeople sell the three cars that are available, he won’t get paid. So HE wants to sell you a car so that HE can get paid. And if you don’t hurry up and buy from him, then another salesperson will get paid for that sale. I think that’s the logic here. For commissioned salespeople, it’s a dog-eat-dog world.

        • Turtle says:

          Hah, I inquired about a car and the sales dude wanted above MSRP. “It’s the hottest car on the market today.” My wife called a salesperson at their sister dealership and had a a much more reasonable salesperson drive the car over to his dealership so we could buy it at the price we wanted. Dog eat dog – no kidding!

          Funny also how when you walk in, they say, “Wait here while I go check if it hasn’t been sold already.” And when they invite you out to take a look at it some back office guy will come out and act like a customer, saying “I just wanted to see this. Think of getting one myself!”

          Not sure why anybody would ever want to get into being a car salesperson. Disgusting tactics.

        • California Bob says:

          re: “… Sounds like the car salesman who called me the other day.”

          Except, unlike the car salesman, this guy had no incentive to shill to me (this was just a friendly conversation, and he already had a new tenant). It’s widely known the rental market is very tight in any remotely desirable area in California. I’ll be watching to see if this results in one of the construction ‘booms’–and subsequent oversupply–I’ve witnessed several times.

        • California Bob says:

          One other thing: According to his RE agent, my landlord is selling all or most of the 20+ houses he owns to finance a couple of apartment complexes along the ‘580 Corridor’ in Manteca and Lathrop (essentially bedroom communities for the SFBA). Multi-family dwellings may be the future for CA; however, Mountain House–one of the ‘ground zeroes’ for the ’08 boom-and-bust—appears to be experiencing massive SFH development again. History rhymes.

        • economicminor says:

          In my rural area, the place is poor so the county residents defunded law enforcement 20 years ago.. Now we have so much illegal activity going on that people are seriously worried about their safety.

          There are no free lunches.. Where homes are cheap, there is a reason.

          I am a little surprised by Phoenix and Las Vegas… as in other places in the desert SW as there is a serious problem with water. People are acting like it doesn’t exist or it doesn’t matter but when the reservoirs and the Colorado River dry up, their property will be worthless..

        • NBay says:

          Janna- Bob,

          Ahhhh, the humanity, the terrible suffering…..are donations helping any?

      • NotDeadYet says:

        Good luck, Mill, I mean that… Be patient. Time will be on your side.

      • jim says:

        What’s a life partner ?

      • MyLadyHumps says:

        Why don’t you look for a home in a more affordable country? Does the US really provide a standard of living that justifies such an enormous price of admission? I don’t understand why anyone would consider paying over $1,000,000 for a shack in Seattle even though it has become such an awful city to live in.

        I got the hell out of the US and I’m glad I did. I can’t understand why the US has not experienced a mass outflow migration. What a horror story. I’m never going back, not ever for a visit (that being said I still love US entertainment, movies and streaming).

        • Where do you find a more affordable country? In my experience, everything tends to cost more in foreign countries when you compare similar quality. I suppose life could be cheaper if you can blend into the favelas in Brazil, settle down in a Nipa hut in the Philippine countryside, or rent a tiny, dilapidated apartment in a third-tier city somewhere in Eastern Europe. But it’s not clear to me that you’d be getting any more bang for your buck.

          Fruits and vegetables tend to taste better and are much cheaper in other countries, but if you can’t afford those, you can always get food stamps or unemployment bonuses here to pay for them. Unless you happen to be fluent in the local language, you’re always at a disadvantage living in a foreign country.

          If I ever start requiring regular medical care, I’m probably moving out of the US because from what I can tell there does not seem to be any upper limit to medical bills. Almost everything else seems less expensive to me here.

        • Turtle says:

          Russia was the hot topic yesterday. Leading the world in responsible fiscal policy, I think it was. And very safe from invasion. They got the nukes, you see.

        • Anthony A. says:

          Turtle, you forgot to mention that no other country really wants to invade and eventually own Russia. There are better targets.

        • Anon1970 says:

          There are still plenty of nice neighborhoods in many suburbs of the US. I am fortunate enough to live in one.

        • Cmoore says:

          I live in rural America, it’s paradise, went kayaking down the river today,beautiful river and afterwards went to s local eatery that was incredibly busy. All the local eateries are busy and reasonable. We have s small farm, grow s lot of our good, bees, chickens. I wouldn’t trade my place for anywhere in the world, but that’s me.. yesterday we went fishing.

        • Tamarind says:

          Good question and I think we are seeing a lot more outflow migration from the US, at least in my experience contracting overseas. I’m based all over but mainly in central or eastern-side Europe, Southern Cone (Uruguay, Chile, Argentina, south Brazil) and occasionally in SE Asia. There was a time back in the 90s when I was the only American in whatever town I got sent to (engineering), now all these places are teeming with American expats, plus plenty of Australians, Canadians, New Zealanders and Brits. I don’t always get a chance to ask them why they emigrated from the USA, but based on the source countries and the fact they all have this corrupt monetary policy and housing bubbles (just like with our Federal Reserve), I suspect that insane US house prices ARE a big factor in the expatriation of the non-Americans too.

          Many of the expat Americans I’ve talked to have indicated that the US housing bubble was a factor, since it’s not just in big cities anymore but spreading out into US suburbs, rural towns and once second tier cities, and at any rate the jobs and incomes usually aren’t sufficient even in the few (shrinking) islands where US home prices are still a bit saner. Even though Europe has had the reputation for expensive housing, that’s simply not true anymore, a myth 2 decades out of date. Especially with the recent housing bubbles in North America, Australia and NZ, I’ve been finding homes esp. in central and eastern Europe to be much, much cheaper, even some of the sub-Paris level cities in France, Germany or the Nordics now have much more affordable housing. And these aren’t backwaters either, they’re full of good jobs and services, even more so now with WFH.

          A lot of expats mention it’s much easier to raise kids outside North America but I suspect, again, a lot of this is due to more affordable housing (and childcare). As I understand, the US governmental agencies only partially keep tabs on the number of expats since they’ve drunk the “US immigrant nation” Kool Aid so long they’re only now starting to realize millions of Americans are emigrating too. In fact when you think about it, selling your overpriced, asset-inflated US home and moving overseas is about the only true way to take advantage of the housing bubble. Your house isn’t exactly a liquid asset, and for US homeowners now, the only “gain” from the housing bubble is higher property taxes and maintenance costs. And if you try to move elsewhere in the USA, whatever proceeds you make selling your home will just get eaten up by higher costs wherever you’re buying. Whereas moving overseas can actually net you real gains. Besides the US expat families where I work, I imagine huge numbers of retirees are selling up and moving to Latin America for the same reason.

        • leanFIRE_Queen says:

          Brilliant! Imho the best way to compensate for the artificially inflated housing costs is by saying “no, thanks” to spending on healthcare in the US. If you are super healthy and you have a very healthy family history, that’s a great way to compensate.

          Healthcare spending in the US has a horrible ROI anyway.

        • Roger says:

          I have to agree with you. For the second time in my life I am considering leaving the US. First time was during Carter administration. Where did you move to and what is it like to live there?

    • jon says:

      Most of the people are wearing colored glasses in general.
      People who have vested interest in home prices going up ( realtors, landlords ) have justifications that prices would either not go down or remain stable.
      Other people think a crash is coming or deflation.
      What about me: I have no idea although I do agree prices are damn high.

      • Turtle says:

        Exactly. Ain’t no crystal balls. Not even the Wolfster, with all that fine data running through his magnificent brain, can predict what will happen or when. All we can know for sure is what we see right now and boy is it wacky.

        • Gian says:

          We do know history has a tendency to repeat itself and what we see now is reminiscent of the 2006 crash. Housing and other prices cannot simply keep rising at these insane levels.

        • Turtle says:

          If I had to place a bet, my bet would be on a significant drop in the housing market within the next give years. But I said that five years ago too. We’ll see.

          It’s hilarious that my $200-something house is “making” $10K per month lately. Definitely not sustainable.

    • BenX says:

      You can’t die until you first shuffle all whats left of you to the “Health Care” industry.

      • Anon1970 says:

        Every year, I get an information booklet from my health care provider. According to the booklet, my maximum out of pocket liability this year is under $5,000 for covered procedures. I can live with that without worrying myself to death over medical bills.

      • leanFIRE_Queen says:

        Nah. I have the opposite view, the best way to adjust for housing cost inflation in the US is to avoid spending on healthcare. It’s the key to leanFIRE as well.

    • 30'sFlashbacksTo20'sInThe20's says:

      (Nods in agreement with an economically induced tick from Reno). No way this will end well based on how inhumane the situation is for the majority of the population who isn’t into property gambling tomorrow’s stability for gains today.

    • Clifton says:

      Well in Auckland New Zealand house prices have gone up 800% or so since 1990. A house that was $120,000 is now $1,000,000. In a good area expect to pay $3,000,000 to $5,000,000 for nice but not top properties.

      And, many parts of the country are up 30% in the last year.

  2. Memento mori says:

    Lots of stuff going exponential.
    Rents are following but nobody seems to notice that there is very little rentals available and everything is priced 20% than January.
    At least we know who to blame for rent increases : greedy landlords

    • JustTruth says:

      Try the government , for grossly intervening (subsidizing) in the housing markets.

    • Richard keene says:

      Here in Austin our property taxes are going up exponentially. As a landlord I am not passing on all the higher costs we are experiencing because we have long term and older residents. So don’t paint us all as greedy. I’m 75 and worked my ass off to get where I am today. I drive a Kia, don’t own a yacht and don’t eat out very often. I want to have a sign that says…Stop the Steal of our property through taxes…it’s confiscation in Texas. 3% Taxes based on increasing value…let me tell you it is a huge burden on unrealized gains.

      • Meppo says:

        And no income tax. Try NJ. Same property taxes plus high income taxes.

      • Anthony A. says:

        We are in The Woodlands, TX and housing prices are still sane. Nobody seems to be fighting over home here yet.

        Our property tax is about 2.1% but will probably go up once the fools that run the township incorporate the place.

        • Raging Texan says:

          Incorrect. TX housing prices are insane. The first cause of insane housing prices is the federal govts unconstitutional monstrosity of the Federal Reserve and it’s interference into millions of areas of life that are not interstate commerce. For example the Fedgov purchases almost every mortgage issued in the USA – local mortgages are not interstate commerce this is unconstitutional. Also instead of using the interstate commerce clause to protect us from monopolies, the Fedgov rigs up abominable huge interstate banking and investor oligopolies and monopolies to buy the houses and drive up prices.

          Also, TX houses are extremely low quality overall and the foundations are garbage. TX houses should be very cheap or free to anyone willing to pay the taxes and maintenance. The annual homeowners insurance premiums are double or triple what I paid in other states when I was a homeowner due to constant damage from weather and also the poor quality. Mold is a huge problem for TX homeowners. Plumbing maintenance is a huge problem for TX homeowners – bring a jackhammer into your master bathroom to fix the plumbing- really! Slab leaks are a major problem for TX homeowners. Nowhere else have I lived do I hear many homeowners complaining about random bills for $5,000 to $20,000 for foundation repair and maintenance.

          For all of the above reasons, and also due to the general housing bubble, I am one of the four Americas on a housing strike. I currently rent and have an exit plan to move elsewhere and rent where property taxes and rents are much cheaper- very soon. And later, after a few more years, will gladly move into a camper. I do not need any stuff or a house to be happy. I will be the homeless multimillionaire enjoying every minute of my life. I feel sorry for so many of my friends burdened with their huge mortgages & property maintenance bills, and making life decisions based on where they think they can buy their next house.

          And the only thing I can think of to restore constitutional order is that I only vote for candidates who will do so. Not Republican or Democrat.

      • MyLadyHumps says:

        You can’t spell Texas without taxes.

        Property taxes in Texas are among the highest in the US (and the world)

        Don’t kid yourself, if your taxes are equal to a rent payment you own nothing.

        • Max Power says:

          Well, they gotta make up for the lack of a state income tax some way.

          Florida too has relatively high property taxes, at least partially for the same reason

        • Anthony A. says:

          I’m pretty sure on a rate basis, NJ has the highest property taxes in the U.S.

        • RightNYer says:

          Anthony, don’t let the local governments get away with that nonsense by adopting their language. The idea that taxes should be based on a percentage of value plays into their hands.

          As an example, say a $500,000 house in Houston would cost $3,500,000 in Palo Alto. It does not (or should not) cost 7 times as much to provide schools, sanitation, police, fire, sewer, etc. to the house in Palo Alto. So don’t let them get away with the argument that an increase in values means that taxes should necessarily be higher.

      • Turtle says:

        I hope your leaders hear you. Up north of Dallas values in Collin County where some many CA headquarters like to move (if not Austin) pretty much went exponential and as a result property tax rates actually went down (did that ever happen before?), but the leadership there is very conservative.

        Godspeed. Oh, and enjoy your Kia. The new ones are better than Cadillacs these days, if you ask me. Love mine.

      • Gian says:

        At least in CA, I am protected from ever increasing property taxes on my rentals by Prop 13, a godsend to landlords and homeowners. However, here in WA, property is assessed every year and the increase has been near exponential. I have fought the assessor 3 times and prevailed twice, reducing my property taxes by a significant amount. Find a seasoned Realtor to run comps for your properties, study the average increase in sold properties and make your case. These appraisers sit on their asses at a computer, know nothing about your house and raise taxes as if their salary and raises depend on it (and it does). I encourage EVERYONE to appeal their property tax bill as a form of protest and a way to reduce your taxes. If everyone appealed, these leeches would have no time to reassess our properties year after year. They will never have enough of our money, make them work for it.

      • Lynn says:

        Good on you. Eventually, when you die you’ll be a peace with yourself. Seriously. Nice to see someone who is happy with what they have and concerned about their community. That is real class. I think I’ve had 3 landlords like you. One of which I had coffee with almost every Saturday morning. Good man. He had enough and was happy. Was very good to his family too. Before he sold he contracted with the city for repairs which put us under rent control.

        3% is outrageous. In California the taxes are usually lower but with inflation and greed the investors buying up housing are increasing the rents beyond what people can pay. Or just leaving the houses empty to sit and rot. As soon as stimulus peters out we will have another boom in homelessness. And squatting. Not good for anyone’s quality of living.

    • Eugene says:

      Rents in NYC are lower 15% since march 2020.

  3. Phoenix says:

    Yeah, I’m never having kids at this rate. Early 30’s, highly educated, work in tech and I can barely afford the real estate in my area. Not sure how anyone in my age group does it. Massive amounts of debt I suppose. Stick a fork in us. This country is done

    • Wolf Richter says:


      Give the charts another look. What happened last time?

      • Joe says:

        Market declined in 2008 due to poor underwriting and loan frauds. Underwriting standards have since become extremely strict and there are multiple checks these days. Banks are in an excellent shape with very low loan losses. In 2008, anybody with a pulse could get a loan and that is not happening now or in near future.

        • Poor like you says:

          Sure, it’s not exactly the same as the ’08 bubble, but the bubble is real. And worse. And there are like ten of them.

        • Harrold says:

          American International Group Inc., better known as AIG sold CDO credit default swaps, so many in fact, that they could never hope to cover.

          I wonder what AIG is up to today?

        • Maximus Minimus says:

          The losses have been nationalized. Next time it will be the US and minions in bankruptcy.

        • RightNYer says:

          LOL. What do banks have to do with anything? Banks don’t hold much residential mortgages on their own books. Nearly all of it gets sold to the GSEs (and thus, the Fed) or to investors via securitization vehicles.

          Underwriting might be slightly better than before, but the mortgages are all based on an LTV created by a bubble. When the bubble pops, the mortgages are underwater. Then, even people who can afford to pay stop paying.

          To deny the parallels to the past is to bury one’s head in the sand.

        • Augustus Frost says:

          Underwriting standards are not strict, except compared to recent history. A 3% down payment is not “strict”, regardless of someone’s credit score and other underwriting criteria.. It’s viewed as “low risk” due the government taking over most of the mortgage market through the GSE’s and other moral hazard (most it also government created).

        • Wolf Richter says:

          Those underwriting standards weren’t an issue until home prices started to fall. Nothing is an issue when home prices rise by the double digits because you can always sell the home and pay off the mortgage. Problem solved. It’s when home prices decline and you cannot sell the home and pay off the mortgage that issues arise.

        • Flounder says:

          Joe, we’ve simply moved from “anyone with a pulse can get a loan” to “anyone with a pulse and a steady paycheck can get a loan for 5-6x their gross income.”

          What happens to these people during the next recession when jobs are cut? Ignoring the service industry workers who lost their jobs in 2020, at least in my area of Boston they ain’t the ones buying houses. These people are leveraged up to the gills on housing and car debt, and many are barely skating by on making their debt payments. Emergency fund, what is that LOL. Wait until when white collar folks start losing their jobs, we’ll see how “high quality” today’s borrowers are after a couple months.

        • Swamp Creature says:

          I understand Fannnie Mae is buying most of the mortgages from the originators. I see their stock is selling for a little over $1/share below the low during the 2008 Global financial crisis. They are insolvent. Went by their building in the Swamp and it looks like it is being demolished. A real s%ithole. No one even goes to work there anymore. All the workers all WFH.

          Its nice to know that all these trillions of MBSs are in solid hands. No wonder the Fed is buying them.

        • Janna says:

          People sometimes over extend themselves with mortgages. They don’t always consider the increase in taxes and insurance plus the maintenance. Also, no one can see the future so what are the chances that your income will pay your mortgage 10 years from now? When you combine these factors with over inflated purchase prices, you can very easily run into a problem if prices decrease and you must sell.

        • TimmyFailure says:

          Fannie & Freddie are in conservatorship and will continue to be administered by the FHFA as per the Supreme Court last week. The shareholders sued to get past dividends that were seized by the US Treasury during the GFC to this day. The entities are merely a ward of the treasury at this point and their should have no value in the market imho.
          The state of the building is an odd observation but perhaps some of the Jan 6th crew got poor google directions.

        • Greg Smith says:

          My understanding is that to promote fairness the Biden administration is in the process of loosening underwriting standards because so many people cannot qualify currently.

        • economicminor says:

          I’ve been told the best remedy for high prices are high prices. Stability is sustainable, rising prices without corresponding rising incomes gets to a point where the existing high prices can no longer be maintained/serviced.. Then the entire pyramidal structure comes tumbling down.. History shows this ALWAYS happens.. So all of you who are in denial will pay the price and learn a valuable lesson. Manias and Bubbles are not sustainable. No way! No How!

        • Gian says:

          A recession will usher in another apocalypse, no income, little or no equity and Armageddon ensues.

      • Phoneix_Ikki says:

        Oh but remember Wolf, this time is different right? The fundamental is strong and there’s no subprime, interest rates is low, I can go on and on and on…

        and in this new normal, pigs do fly 360..

        • Old School says:

          Unless this time is different we are in for a good bubble pop. Hundred year trend is stocks return about 6% over inflation and housing 1% above inflation.

          Look at a stock chart or a housing chart. Fed has blown the grandaddy of financial asset bubbles.

      • Phoenix says:

        Thanks for giving me hope lol. And of course, my situation could be much worse.

        • Phoenix Rising says:

          Looking like it’s time to change my screen name ;-)

        • Andy the Car says:

          Nothing melts up forever. And the backside of the melt is always one hot skid down into the fondue pot. When this is all over, and the experts are picking through the remains, they’ll find something or someone else to blame it on than 2008, but it the end result of this insanity will be the same.

      • Wisdom Seeker says:

        Amen. Last time my house “earned” more than I did, was within a few months of the bubble peak (in late 2005 in my area).

        BTW, the Case-Shiller numbers are laggy. Zillow and local comps say my house is “up” 30% year over year.

        That’s insane and unsustainable … unless Congress and the Fed keep printing out more money to give to their cronies via nice-sounding “stimulus” bills, which get spent into the hands of the crony-corporate titans who then buy “investment properties” to rent to the rest of us…

      • Resjudicata says:

        Ok but when? Is it in the next six months or three years from now. That makes a big difference.

        • tom20 says:

          Supply vs demand. When? When supply hits the market.
          In my area…..not even close to “normal” inventory.

          If its like flyover country…good luck.
          Out here wealth is built by owning assets.
          Large number of buyers & $$$ sitting on the sidelines
          waiting to buy “deals” & turn rentals.

        • Wolf Richter says:

          Well, last time it took four or five years to play out before hitting bottom. In Japan, it took over 30 years to play out before hitting bottom. Spikes cannot and do not go on forever, that’s all we know.

        • MCH says:


          What is the situation with the Japanese economy? isn’t it more or less still just going along?

        • Wolf Richter says:

          Yes, seems like it. The Olympics are big mess. Vaccination rates are minuscule. People are getting infected. But trains are crowded. Everyone is wearing masks, and that helps keep infections from blowing up.

          Hahahaha, and the Bank of Japan has been tapering its asset purchases down down to very little. That hasn’t been getting a lot of attention on this site. So maybe I should unleash an article about it.

        • economicminor says:

          My guess is when the Stimmy runs out..
          Then there will be lots of inventory building up and buyers will have run out of fuel.

          The infrastructure bill will take at least a year to put any money into the system, that is after and if it is passed… So don’t count on it to keep adding stimulus.

      • ru82 says:

        Good charts. In several charts we saw a complete price reversal in prices during HB1.

        HB1 was created by a lot of sub prime borrowers. This time most everyone buying a home can afford the payments because of low interest rates. What would the chart look like if interest rates never dropped below HB1 5%ish range. HB2 probably would not be as high as it is?

        I guess what I am saying are those graphs probably should be normalized versus interest rates to get a better understanding of trough to peak?

      • Turtle says:

        It was nasty in Phoenix and Las Vegas last time. Worse I think than in California itself.

        I imagine something similar will happen and also in places like Boise and Reno too. People are starting to make these increases all about inflation but forget that housing prices were far above the mean trend line before the money printing machine geared up. Housing actually showed signs of stalling before COVID provided the Miraculous Boost.

        @Phoenix Nobody knows what will happen but it seems to me reality always kicks in and that up is not always the way housing goes, especially in HCOL areas and places like the desert cities just outside of California that get pumped up by the exiles.

        But who knows. Nobody does. There’s always Texas. ;)

        • 3D Modeler says:

          Turtle, housing values will be in a world of hurt in places the Phoenix valley if “heat domes” like the one currently scorching the Pacific Northwest become a much more frequent occurrence. It won’t take much temp increase to make Phoenix a lot less desirable place to live than it ostensibly is today. I’ve lived here since 2007, and know what 120+ deg temps feel like. Not good on any sustained basis…regardless of AC. Just another unknown to throw in the mix.

        • Agooo says:

          Yet Fed buys 40 billion dollars worth of MBS. Why? What are they trying to do?

        • One boat says:

          It’s hot but nothing nothing lasts forever

      • Randy says:

        Those charts are not a crystal ball. Its not the same scenario this time. Last time they were selling houses for zero down to people who didnt have the income revenue to pay for them. This time its the criminal counterfeiting agency known as the Fed causing it. The working stiff is not buying houses, its the well to do income earners and investment corporations buying them up. There are now plenty of backdrops(BlackRock and other investment firms) in place to keep prices from fallling. Prices are rising because the purchasing power of the monopoly money is being strippped away. Its not just housing going up its everything because fiat currency is going back to its true value of zero. Definition of a dollar is 1 ounce of silver not a digit in a computer or monopoly money. 50 years of cutting all ties to the gold standard is August 15th. Prices will not go down on anything. All fiat eventually goes back to its true value of zero. And its way overdue. The Fed is destroying fiat on purpose. Currency reset coming. Fedcoin coming soon. The country is now just a criminal organization run by the uber wealthy and controlled by bought and payed for puppet politicians.

    • Marco says:

      I’m sorry but Federal Reserve Members should be sent to prison for their large part in this Economic and Social calamity

    • SOL says:

      You’re not alone. I’m 41, bought my first house in 2005. Was backwards til 2015, paid $400 at closing to get out. I’ve been waiting for prices to drop since 2015. Lmfao, stick a fork in all of us.

      • Turtle says:

        It goes to show that nobody knows what will happen. It cannot be timed and region matters too. I bought in 2007 in TX and was never underwater because the drop was only about 12% and by now the value has gone 2X purchase price.

        I too was expecting a drop in SoCal probably starting five years ago and it never happened. Then, this. I never imagined the pandemic would trigger inflation and a massive increase in home values on top of near-record highs. My plan to move back to my CA is on hold or possibly off the table indefinitely.

        It really is best not to try and time housing but to buy when totally comfortable and only if you love the home and are absolutely sure to stay for a very long time (10 or 15 years, at least). That’s a hard thing for most people to do today in many places. All the best to you.

        Thanks COVID and Jerome, you scallywags.

        • Gian says:

          Someone knows, who benefitted from the last crash? The Feinstein’s, Pelosi’s, et. al., are master manipulators and when the time is right, will orchestrate yet another massive transfer of wealth. Our economy is controlled by these people (aka, ba$tard$), not the other way around, it’s all by design. Did you see any of them go broke, or did they all become wealthier?

      • NBay says:

        Hey, that’s about the same age when I bought my first home! (1973) A Ford bread van. Lived in it for 4 years and then sold it for $300 more when I moved in with a girl. Of course I took Janna’s advice and turned the inside into a palace, and left the outside looking sorta dumpy. Which allowed me to often park on the street (I moved around maybe 10-15 times), paid around $20/mo to whoever was the main man of the shared rental house, (plus a couple of married or shacked couples), and even at work for a while, till I discovered calling in sick was problematic, and usually got to run a power cord and use the shower and toilet sometimes, but sparingly. The rest of the time I used the ones at work. #1 was easy, my little sink with water pump fixture and 5 gal tank drained into the street or lawn.
        You can get pretty clean with a wet towel, too. Still do. But I wasted all the saved money on skydiving, as I didn’t know anything about investing. But I did know the value of altitude very well.

    • roddy6667 says:

      Time is on your side. Live beneath your means and save, save, save. When the reversion to the mean arrives (it always does), buy a home cash or with a large down payment.

      • 3D Modeler says:

        I agree with your advice. But just know that as a saver, the Fed has you in their sights. (Cash) savers are Public Enemy #1 to the Fed. They seem to equate savers with deflation, and deflation with failure.

      • Ethan in NoVA says:

        My savings are losing value too fast.

        Already feel like I need a new job with a huge pay bump to keep up with the inflation (housing costs.)

    • Peanut Gallery says:

      How about you move to a LCOL area of the US? Why do you ‘have’ to live where you live?

      • Cem says:

        As someone in a similar position, my work won’t allow it.

        Sucks that I doubled my income in the last year too.

        If I had done it 24mo. Earlier I’d be in a very nice house now..

        • roddy6667 says:

          That is called the Golden Chain. An employee stays at a job that he really doesn’t like because he makes good money. He puts all his other life choices on hold because of that. Take a sheet of paper. Write down all the reasons to remain at the job in one column, and all the reasons to leave in the other column. Pin it up on a wall where you see it many times a day. There is more to life than a paycheck.

      • Abomb says:

        Most LCOL areas are LCOL for a reason….boring to be frank.

        But even if I wanted to my wife and love our jobs.

        • Trailer Trash says:

          They are low cost because rich f’ers haven’t showed up yet with truckloads of cash to drive real estate prices to the moon.

          Rich f’ers have recently discovered my corner of the world and are driving prices way beyond what any of our young people here will ever be able to afford. The net result is even faster out-migration of people who know how to grow food, cut wood, and fix stuff.

          The new residents will be in for a rude awakening when they find there is no one left who can fix their plumbing, maintain cars, or even clean their toilets.

          Dear Leaders don’t care about rural areas, but they might change their tune when they find out that food and toilet paper don’t grow themselves. Might be a bit late by then.

        • Ethan in NoVA says:

          “They are low cost because rich f’ers haven’t showed up yet with truckloads of cash to drive real estate prices to the moon. ”

          That makes the poor people rich, because their assets are worth a ton now.

          My friend bought a crappy house he ended up hating in Atlanta, just sold it. $140K in the pocket for 2-3 years of owning a house. Beats my rate of savings. *shrug*

        • Tamarind says:

          @Ethan in NoVA
          That sounds nice but I wonder if your friend really came out ahead as much as those numbers indicate. He probably had wicked awful high property taxes as his home appreciated plus increased repair, maintenance and insurance costs, not to mention closing costs. And now on top of that, he has to find a home somewhere else that’s going to be sold at a crazy inflated home price. This is what I’ve been hearing from talking to homeowners throughout the United States, Canada and Australia, even the ones with huge appreciations in home price value are unhappy. On paper they might have done well, but in reality there were lots of extra costs going with that appreciation, and since they’re now looking for a new home themselves, they’re at best breaking even financially even with having sold their homes at an (apparent) profit.

    • NotDeadYet says:

      Go have kids, Phoenix. You will find they will be your greatest asset and motivator… as well as your greatest joy. If we waited for the perfect economy to have kids, this would be a lonely planet.

    • MCH says:

      Well, at some point, it all looked massive. Perspective, in the valley, mid 2000s, houses were at $800K level, if you’re earning lets say $80 to $90K annually, and may be had 20% down, $160K, facing a 5% plus interest rate. It seems pretty insurmountable at that time too.

      I guess the difference now is that both the pay and the house cost had doubled or tripled. Now, you have to figure out what’s reasonable. If it’s not a SFH, may be you’re stuck in a condo or a TH for a while, and have to work you way in.

      It sucks, but it sucked back then too. Now though, everyone clearly recognize that there will be a time when the party is over. Mid 2000s, most people didn’t see that coming.

    • nodecentrepublicansleft says:

      It’s funny when somebody in their early 30’s declared the “country is done”. You’ve been an adult for a decade and half and you think you know what the future holds? I doubt it.

      Like Wolf said…look at the charts. You can see what happens next.

      Nothing is “done”. The opportunities are coming for the patient people.

      And if you don’t have kids, who cares? Try this experiment, ask about 100 people why they had children. You’ll get 2 good answers if you’re lucky and 98 answers that will make you think “Nobody seems have a good answer to this question.”

      Most people get married and have kids because they were programmed by society (or their families, churches, etc.) to do so. Ask them “Why” and most are stumped. They don’t know why they did it…..

      • MCH says:

        I think you need to step in the man’s shoes to understand his views.

        Early 30s means that he was in early 20s to teens when the recession happened, and that can be very formative when you’re young.

        I have no idea how old you are, but think about it, for the people who grew up in the 80s to 90s, the world transitioned from dangerous to getting better. That was the general feeling. The 70s were harder, but people saw things improving toward the second half of it.

        Now, people like Phoenix look at the time frames in which they are growing up, and one can say without any argument that things are getting worse. So, the “country is done” comment is understandable.

        Thanks to the media with its steady cadence of bad news, this is now a racist country with a bunch of ignorant people who will get you sick because they won’t follow the rules and is on the way to the bottom since China is eating our lunch with the help of our corporation.

        That’s the general narrative today, and the news has been getting steadily worse since Bush Jr, how would you expect people to react when they see their futures being a dark hellscape (according to the media), and getting a steady diet of this over the last twenty years.

        That said, the message you have is still very reasonable, there are opportunities coming. Potentially very big ones. The only uncertainty is timing.

    • Depth Charge says:

      Take a look at this post by Phoenix to see what the FED and politicians are doing to the young. It’s CRIMINAL. And these guys just won’t stop. They are hell-bent on destroying everything in the name of GREED.

    • Raging Texan says:

      Phoenix kids really don’t care where you live or what you live in or if their school is fancy or not or what you drive or how big their allowance is or how often they go on vacation. Education has now been liberated you can get a great education for your kids online cheap if your local school is bad. Kids just want attention from their parents that is all they really need. I am raising lots of kids without owning a house it’s great fun. I used to own a house it was a major downer done with that. My kids also told me they like me better now without being a homeowner.

    • Tamarind says:

      Totally hear you, and I agree that the insane US housing prices and housing bubble are probably one of the top factors in the downward-spiraling US birth rate and “baby bust” the American media is trembling about. As I wrote above, I’ve been meeting more and more American expats who’ve been moving elsewhere in the world, and the single most common reason I hear for the move is that it’s much easier to start and raise a family overseas. A lot of that is probably more affordable housing and saner home prices. Even most of Europe now has much more affordable housing than the US, with good enough jobs (and WFH) for American expats who go there.

  4. Nemo 300 BLK says:

    What’s the current draw to Portland and Seattle, considering all the lawlessness going on?

    • Anthony A. says:

      The weather.

    • LongtimeListener says:

      Watch less TV and get out more?

      • Pea Sea says:

        But “out” is scary! The TV man say so!

        • Janna says:

          My town kind of is scary. At about 200k residents, we already have 39 murders this year. That number is probably higher, but our PD tends to classify some as death investigations, at least initially.

        • Anthony A. says:

          In our town, suicides are kept quiet and never make the town rag. A local sheriff I am good friends with tells me it’s more common than you think.

        • Swamp Creature says:

          During the early 1990’s the crime rate here in the DC Swamp was so high that the public officials went to great lengths to keep their numbers down. There were over 400 murders per year in a small geographic area. One of their tricks was to dump the dead bodies just over the border of DC into the adjacent counties in Maryland, Montgomery and PG counties so they didn’t count in the homicide totals. It worked. The mayor at the time, Mayor Berry, a coccane addict bragged about how he lowered the crime rate in DC and he got re-elected by a landslide.

    • Joe says:

      What lawlessness?

      • Andy the Car says:

        I’m with Joe. I have friends in the NW. They aren’t complaining of lawlessness. They’re complaining about the heat. Gotta realize that the news can sometimes overplay situations to scare people, not to mention sway their views.

        For instance, I survived the 1994 Northridge Earthquake while living in the Valley. Tons of damage, yes, but consider that of the millions who lived there at the time, just 52 people died in the quake. Not to minimize their losses in any way, but your odds of perishing in the event were low.

        • Keith says:

          I have family in Bellevue, and they do say crime is a problem in Seattle. They avoid it. Also told me that Bellevue is positioning itself as the anti-Seattle, pro business and law and order.

        • Andy the Car says:

          @Keith, Not surprising. I would pretty much expect that of Bellevue. And Mercer Island, as well.

        • 91B20 1stCav (AUS) says:

          Andy-i heartily concur-whatever the leaning of a journalistic outlet, “…if it bleeds, it leads…” has always overwhelmingly been its prime directive (apologies, Wolf, as your stellar reporting illustrates the path to a slow death from a thousand cuts while most seem to only process a couple of big ones before rejecting a truly-objective ‘rest of the world’ analysis as too much to deal with…).

          may we all find a better day.

        • MFG says:

          Emergency dept physicians are noticing the uptick in violence…stab wounds, gunshot injuries, etc…

        • NBay says:

          Yeah, we should have listened to us hippies and then Carter’s final plea to dispense with the mindless growth and consumerism.
          But then how is anyone gonna get richer or have better “lifestyles” and all that important stuff?

    • OrcasEatSharks says:

      Seattle is awesome. You’re surrounded by 3 national parks, with views of the sea and snow-capped mountains pretty much everywhere in the city. It’s the fastest growing major city in the US in 2020. I’m not surprised at all Seattle home prices are rocketing and will likely continue for another decade.

      Naysayers are largely people who have never been here or think the ultimate in quality of life is living in an OSB 4000 sqft tract housing on top of each other in the middle of flat nowhere with the nearest store being a Subway and Wendy’s.

      • LongtimeListener says:

        Its not the sea, its Puget Sound.. Okay, okay some people call it the Salish Sea, but you did not say that.

        • OrcasEatSharks says:

          Puget Sound is part of the Salish Sea, ergo it is a sea. It has tides, smells like ocean and is super deep.

      • Swamp Creature says:

        I lived there for for 5 months and it was the worst 5 months of my life. I had an apartment on Capitol Hill. Nice view of the Space Needle. Part of the problem was the place was in a depression when I was there. Boeing had just laid off nearly their entire workforce. The other problem was the Univ of Washington where I was in graduate school. They were such snobs and looked down on the military Vets. I got out of there as soon as I could and came here to the Swamp where I’ve been ever since.

      • Andy the Car says:

        Seattle is okay in the summer. Not so much in the winter when the rain feels endless and nothing ever dries out. I lived there for five years. Driving home to L.A. when an older relative needed help was a shock. Sunshine instead of gloom. After all that time, I’d forgotten.

    • nodecentrepublicansleft says:

      There is no lawlessness except in the boardrooms of major corporations and banks and govt offices in NY, LA, DC and all the state capitals.

      People keep asking buffoonish questions like “Why would anybody want to live in San Fran, Chicago, Portland, Seattle or ___________?”

      The answer is obvious…because they are great and wonderful cities for a wide variety of reasons. If you’ve ever visited any of these places, you’d never ask such an inane question.

      I guess it’s the Fox “News” effect where people think what those multi-millionaire professional liar “regular guys” Trust-Fund Tucker and $40M/year Sean tell their mindless hoard has an actual basis in reality.

      Try seeing some of this great country (and the world) and thinking for yourself. Or, continue to humiliate yourself on the internet.

      • Young says:

        You should take an elevator from the platform level to the street level at BART stations in SF, without mask.

        If you survive the urine smell, come back and make another FoxNews comment.

        I used to go to SF at least twice a month ( two hours round trip by BART ) for the thirty-plus years to do shopping, eating etc. Until that elevator ride two and a half years ago.

      • MFG says:

        Up until a few years pre-pandemic, I used to go to SF several weekends per year and regularly took BART to and from SFO, to attend the SFB. Early one Sunday am, a group of guys on the platform were intimidating riders, no police in sight. That was my last trip to SF.
        (oh, and the street we parked our rental car on to go to the WMOH had gotten really dicey).

    • Depth Charge says:

      Pure, 100% real estate speculation. Nothing more.

    • Rumpled Bemused says:

      Every major city has protests, and every major city has dangerous neighborhoods, drug addicts and a homeless population. The right wing news media would have you believe that Portland is in flames and people are fleeing which is nonsense. It’s just more divisive bullshit brought to you by people who profit from divisive bullshit. If they had a different target audience they would be doing daily stories about violence in Dallas and Miami.

    • economicminor says:

      Portland is a very big small city. Yes there are some issues with protests and crime but there are hundreds of neighborhoods with lots of small businesses, coffee shops, small ethnic restaurants and unique businesses. It is a city where the Corporatization of America has been held back. Lots of parks, lots to do, lots of quiet neighborhoods. People in Portland love the outdoors, Seattle too. The Pacific NW is their back yard and play ground. As a city, Portland is a pretty nice place. I have spent quite a bit of time there as my daughter and her husband and our two grand kids live there. So many plants of all kinds. Walking down almost any residential street in the older parts of the city is like walking thru an Arboretum.

      • Sailorgirl says:

        I agree economicminor. Those 20 and 30 somethings are moving west. For economic opportunity and the great outdoors. My oldest and her childhood best friends all moved to Denver after the Great Recession. Her trainer is from HS. My niece and her husband moved out there from TN. Her best friend followed changed careers learned to code and followed her now fiancé to Portland. My youngest moved to Seattle last October. Lost her job in the travel industry but with the extra Covid Cash and some help from us took a job in aerospace. Yes it is very expensive but the great outdoors is free after an initial investment. One of her HS best friends after finishing his residency has taken a fellowship in Seattle and starts in a few weeks.,My very best friends in South Florida all have children in Denver. We are thinking that maybe we need to get a shared condo because the grandkids are coming. This educated generation is all inclusive and are taking their talents and money west after living a lifetime in the south. They will demand and address climate change. Generation Y and Z are now more than 50% of the population. It may take a few elections but they will bury the old white men in the Republican Party.,

    • Lynn says:

      Microsoft and larger ethnic Chinese communities. Which spurs big money speculation.

  5. Seneca’s Cliff says:

    I am pretty sure this will end in tears.

    • JustTruth says:

      Agreed. Everything reverts to the mean, even government driven unstable markets like housing. We are currently in a government subsidized parabolic home price blow-off top. It will end. Key is not to be a bag holder when it does.

  6. Artem says:

    Miami real estate is castles made on sand.

    • Paulo says:

      Yeah, the condo shakeout (and I use that term respectfully) has just started.

      I was reading a news report that a condo owner of the recently collapsed building had just signed up for a monthly repair assessment a day or two before….of $583/monthly!!! On top of strata fees (what we call them here). Plus, a mortgage payment, etc.

      I also saw an inspection report on a similar building that was also 40 years old. The spalling was so bad in structural members the concrete crumbled away from the rebar. The rebar, itself, was rusting away to shards. It looked like frayed cable.

      Surely this will make people reconsider buying a high rise property going forward.

      To think people used to worry about nails and screws popping out of drywall, or cheap carpet.

      • Petunia says:

        The fees for maintenance and the assessments don’t include the insurance, which depending on value, could be another $10K-$20K a year. And the hassle of obtaining insurance in Florida in the first place. Insurance companies there are always bailing out after every major disaster.

        There’s no way Miami can be affordable for the average person after this disaster. I think people will be walking away or mailing in the keys.

        • Anthony A. says:

          Wait until the next hurricane hits. My wife was there during Andrew years ago (we were not married then) and won’t even consider going near the place if we were to leave Texas.

        • Swamp Creature says:

          “Insurance companies there are always bailing out after every major disaster.”

          I have a correction:

          Insurance companies don’t bail after the disaster. The bail in the middle of the disaster. They call wind damage flood damage so that it is not covered. Read the fine print. They don’t want to pay jack. They are mostly corrupt criminal enterprises, glorified protection rackets.

        • Anthony A. says:

          Agree with SC here. Insurance companies are not in business to pay claims. They are in business to collect premiums and make profits.

        • Robert Hughes says:

          Since I believe you used to live there is there an area of Florida the you consider still livable and desirable.?

        • Petunia says:


          If I had a lot of money I would own a place in Palm Beach or Jupiter. But generally, after living there for many years, I would only vacation there regularly in season. As you age the hassle of dealing with hurricanes every year is tiring and if you don’t have a lot of money, too expensive.

          I don’t hate it by any means, for me in my situation, it’s just not worth it.

      • Swamp Creature says:

        After hurricane Andrew hit South Fla in 1992, homeowners had their insurance cancelled and had to go to shiester ins companies that charged more than their mortgage payments. I found this out while I was down there on business one year after the hurricane. All the high rise condo buildings in Miami on the water are going to have the same thing happen to them. The owners will be unable to insure these units, unable to sell these units, and be unable to live in them. I see a lot of them going into foreclosure, and the buildings being demolished. The owners will be s$it out of luck.

        • Swamp Creature says:

          Ins companies have turned into private equity funds. The insurance is a just a front operation to draw lemmings into their investment portfolio orbit. I’ve filed about 8 claims in my lifetime with my insurance company. They’ve made a killing on me. They’ve managed to screw up every claim I processed and they are one of the better ins companies. Now they won’t even do any work. They want you to do all the work with their mobiles apps and other bull s$it.

        • David Hall says:

          Florida upgraded the building code after Hurricane Andrew. South Florida is subtropical. They grow mangos, avocados and bananas. Coastal flood zone home mortgages require flood insurance. The Federal Flood Insurance Program is running a massive deficit. When they raised flood insurance prices, special interest groups lobbied to lower them again. Huge deficit.

        • 91B20 1stCav (AUS) says:

          Swamp-reminds me of a wise elder who told me in the ’60’s that most insurance companies can never resist gambling/playing the lottery, BADLY, in the stock market as they felt their losses could always be weaseled out of, if not legally and/or by rate increases…

          may we all find a better day.

      • Ron says:

        Salt in air from ocean corrodes everything

      • stan65 says:

        Paulo, the repair bill for the one that collapsed was estimated at $12-15MM and I believe it was debated and disputed for the last 2-3 years.

        I also saw some pics of disintegrating concrete and rebar. Under the pool. Scary what chlorinated water does to concrete and rebar within – thanks to the waterproofing which seems to have failed on the entire building.

        I also saw a pic of a disintegrating column – spalled concrete, black, disintegrating, exposed rebar. There was a car next to it, so the column was in the basement.

        Maybe that was the trigger? A car slamming into a most heavily loaded column which has lost 1/2 of its strength. 2am. What as way to finish off a night on the piss.

        • NBay says:

          Nice scenario. The revelers in that car were likely too drunk to have known a thing…..or ever be blamed.

    • LongtimeListener says:

      Falls into the sea, eventually…

      • Swamp Creature says:



        The ground under these high rise condo buildings is dropping 2 millimeters every year. When this fact becomes common knowledge it will be game over. Look for the government to blame this all on climate change.

        • VintageVNvet says:

          Most of the ”waterfront” condo’s these days are built upon some sort of deep foundation, either pilings ”driven to refusal” with a certain weight of hammer, or drilled piers that are filled with concrete and rebar, both of which bear on solid rock, sometimes down as much as 80-100 feet.
          Last new condo estimated, ( 2017 ) the concrete structure from top of pilings to roof was $30MM,,, and the pilings were likely another $5MM, but done under another contract.
          The older buildings in FL, of which we estimated structural repairs to many, were not made nearly as well as the new ones, and the entire world of coatings and caulkings has advanced tremendously the last 20-30 years.
          Most of these old buildings ”should” be torn down and replaced, and they will be eventually, sooner in the case of those that have not or do not get soon the kind of expensive repairs and structural rehabilitation that the one that fell required and did not get in a timely manner.
          Anecdotally: At one of the condos we repaired, the original selling price in the 80s had been about $65K per unit, and the cost of the rehab in the oughts was about $300K. Lot of dismay, but the option was tear it down and start over for about $600K at that time.

        • Swamp Creature says:

          This already happened. The Energy Sec blamed it all on Climate change and global warming.

        • Andy the Car says:

          Actually, I took a look at the report about the 2mm subsidence. Tragically, the 2mm is only in one tiny spot on the eastern side of that barrier island. The rest of the eastern edge where all the condos are located is still solid bedrock. Want to guess where that one tine spot was located?

          Not to diminish the crap condo building standards that defined Florida in the 80s, as well as the wrecked condition of other highrises on that stretch—AND the condo association that stalled, rolled the dice and lost—but it looks like Champlain South had a little help from Mother Nature.

        • Person X says:

          Well yeah…that’s because a big part of it does have to do with climate change or related issues. Most of the world understands this other than the 30% of the U.S. that only listens to Fox entertainment and denies reality…you know, facts n stuff.

      • NoPrep says:

        Love that one LongtimeListener..but Paulo isn’t listening to Hendrix. We are probably a little out of place on this website. But I do like and learn what is what from people out there who are doing unique work nobody else is doing..hence Wolf Richter.

      • NotDeadYet says:

        Castles made of sand tend to do that.

  7. David Hall says:

    The price of a home has been rising faster than wages. This evidence supports the theory of a housing bubble.

    May privately owned housing starts increased nearly 50% compared to the year before (Census/HUD report).

    • jrmcdowell says:

      Wages don’t tell the whole story. Housing has been turned into a speculative asset class where a voracious army of investors are bidding up prices in a frenetic attempt to get out of cash that is being relentlessly pummeled by ultra-low interest rates.

      • SOL says:

        Maybe when the assets begin to lose value there will be a rush of homes hitting the market

        • jrmcdowell says:

          They need to get some of this investment speculation out of the market so that regular first-time homebuyers can compete.

  8. Minutes says:

    Best bubble ever! We did it

  9. gametv says:

    This is such a fraud economy right now.

    Used auto sales are booming because people stopped using public transportation and needed a car. But as people start to venture back into public spaces and public transport, this will quickly end. With many out of work and without stimulus, the market for autos is about six months from plummeting to new lows.

    Of course home prices shot up. The combination of stimulus and record low mortgage rates and forcing people to stay home so they couldnt go out and spend their money created massive upward pressure on home prices. But will it last? Wait for more inventory to build, wait for higher interest rates and for investors to become net sellers of properties. Wait for the foreclosure moratoriums to end and forebearance to end. It all hits in the coming six months and the housing market goes back down rapidly. And those people that bought? Upside down on their mortgage with no equity and falling prices means many will just foreclose. Adding more pressure.

    So the Fed in all its stupidity has blown a massive bubble to what end? The downside of bubbles are always more damaging to the economy than the upside was beneficial. There is far too much malinvestment on the upside, so that money just gets wasted and doesnt find its way into solid future investments.

    When does the downside hit? Real simple. Once the Fed runs through the money in the Treasury and is forced to sell Treasuries at a pace of $250 billion per month above what is happening now. Instead of selling zero Treasuries and buying another $150 billion, the equation flips to a net of $100 billion needed from the markets. That might hold up for a month, as supply catches up to demand, and then overwhelms the demand and interest rates pressure starts unfolding. Look at what happened in late 2018 as the Fed tried to reduce the balance sheet. The stock market will also respond to this drain, since money is fungible and with higher interest rates taking risk in stocks will become less attractive.

    And with inflation running hot, the Fed simply cant just turn on more monetary support. They will be backed into a corner. The Fed in all their brilliance created the perfect trap for themselves. So both stocks and bonds fall simultaneously, the same as what happened in the first COVID market collapse. But this time there is no way the Fed can continue this monetary whack-a-mole. The hot inflation prevents massive action. Or the Fed tries to do it, and the market views it as massive risk and simply sells until the Fed relents. At some point, the Fed needs to learn its lesson – stop distorting markets for short term gain.

    Just stop digging us further into this hole!

    • Gattopardo says:

      “Wait for more inventory to build, wait for higher interest rates and for investors to become net sellers of properties.”

      That may take a long, long time. RE investors are pulling far higher yields renting out property than they’re going to earn from any fixed income sources (including junk bonds, even leveraged junk bond funds like some closed-end funds). And that’s before the very favorable tax treatment from depreciation, etc. It would take a pretty hard shake-up to dislodge that money — something like a big fall in rents, higher financing costs (assuming many are floating rate), etc.

      Agreed on all else. Fed, stop screwing with markets and trying to “fix” everything by kicking cans!

    • Confused says:

      Boston Fed President Eric Rosengren said we can’t afford another cycle of boom and bust in the housing market. It’s too bad that he didn’t offer this warning before the housing boom started again. Though the Fed isn’t totally to blame for the latest bubble, those geniuses clearly deserve a lot of it.

      • MyLadyHumps says:

        The Fed is totally to blame for the latest housing bubble. Complete culpability – 100%.

        With prices at nose bleed levels and continuing to soar out of control the Fed is:
        1) Continuing to create $40,000,000,000/month and dumping it into the housing market.
        2) Continuing to hold interest rates for the investor class at artificially low rates to allow them to speculate with no skin in the game.
        3) Continue to debase the currency and make people desperate to own any hard asset at any price.

        Unbelievably reckless and arrogant.

        • Depth Charge says:

          Exactly. The FED has the pedal to the metal and won’t stop. They’re like an angry drunk.

    • Augustus Frost says:

      It’s going to crash “eventually” but agree with the above post that all parts of government will fight it. This bubble is worse than the first one, look at the charts of the cities that did not participate in the first one, like Dallas and Denver.

      This moratorium will end, but I won’t be surprised if another one is arbitrarily implemented just because of the business cycle.

      If enough mortgages refinance to near 3%, I can also see the government deciding to finance the carrying costs when the housing market or economy start tanking. $1T mortgages @3% is only $2.5B per month and less if means tested. It can be added to loan and re-amortized, just as I have heard for this moratorium.

      Any interference is possible, until the credit markets revolt or the USD starts crashing versus FX.

      • Peanut Gallery says:

        Technically this housing bubble is not worse than HB1, as DTIs were much higher then?

        • Old School says:

          The truth will not be known until bubble pops. I am sure there will be a few surprises.

        • Depth Charge says:

          Completely untrue. DTI is worse, and house prices to incomes are worse. I posted a link from years ago highlighting how subprime loans were back, just like last time. This thing was way out of line 3 years ago. In fact, in 2014, the housing market started buckling, but Barry and his boy Mel Watt announced their intentions to blow another bubble.

    • TimTN says:

      I think this too, but at same time the government will come up with some new program to prolong the pain. People getting kicked out of their houses is not a good look when you’re running for election.

  10. Heinz says:

    The Fed is still squinting hard straining to find a housing bubble… but it will find them in the worst way.

    Their frothy delicious bubble will be followed by severe heartburn and gas pains across the country.

  11. Prue Grubstreet says:

    I was in the housing market here in my dumpy, second-tier New England city. From February to May, it was insane — oh, the dumps I saw go for $20,000 – $50,000 over asking. (My neighbor bought two years ago for $300,000 and just sold for $525,000.) I decided to rent another year.

    But I’m still watching the MLS listings, and these past two weeks I’ve seen the first price drops. I had come to think those were a thing of the past, that the madness wouldn’t end. But they are coming more frequently now. And my landlord decided to get in on the action. Put his dumpy rental up for sale last week. It’s in one of the hottest neighborhoods, but it’s a dump, and you can tell that from the photos. Still, he thought he could get top dollar, as others had just a couple months ago for their dumps. Lo and behold, not one person came to the showing. Now he’s panicking, and is praying to the RE gods he can still sell at top dollar. I’m not sure if he can or cannot, but something in the market seems to be changing…

    • Trucker guy says:

      Yep the libertarian survivalist shacks here in rural north Idaho are sitting on the market for more than 45 minutes. They were selling like hotcakes and still sort of are but I’ve seen a couple of them have to lower their insane asking price and a few have been on the market a couple weeks.

      Here’s hoping we’re hearing the final clicks of the roller coaster topping out before it plummets back to earth. Those who kept a calm hand will be paid back in full.

      Or maybe “It’s different this time!” After all the MSM runs dopey articles titled, “Are we headed for another housing bubble?” 20 times a day.

      • Peanut Gallery says:

        Are you not willing to buy in Central Spokane area? Houses can be had for 300s. Not nice neighborhoods but still.

        • Depth Charge says:

          Spokane used to be littered with $85,000 houses.

        • Trucker guy says:

          If the area is known as a neighborhood I don’t want to be anywhere near it. I’d rather not live in Washington anyways and be forced to live under state wide gun control because Seattle said so. I’m not republican or worse yet, libertarian, but I’m not on board with Seattle’s politics and their omnipotent control of Washington state. /Political rant

          I’d much rather be up in the woods than a subdivision. I only drive into work once a week so I can get pretty far out. There is cheaper stuff farther out but these are properties that were sitting on the market for 6-12 months 6 years ago for 50-120k. No way in hell will I ever be willing to toss out 350-500k for these hovels. Most of them don’t even have power or a hope to get it in 10 years.

          There’s meat to LA, Seattle, Phoenix, Austin, Boston etc. Those markets are able to bear the weight of insane housing costs. These rural dumps with nothing to offer except a pat on the back from neighbors for taking your tractor and grading the roads because the county can’t buy a motorgrader won’t be able to bear these insane price increases. People are just panicking now. The type of home I’m buying will see a price bust, there’s no way it can’t. These hot new up and coming cities are going to get hit pretty hard I think. But boy howdy, if you spent 500k for 5 acres of land in boundary county with a trailer without power or water? Yeesh. Call me heartless but I’m willing to say you get what you deserve for making major financial decisions out of emotions.

      • Cem says:

        “ Those who kept a calm hand will be paid back in full.”

        I really really hope so.

    • Geoff says:

      Same here in San Diego. I’m starting to see price drops and numerous properties coming back in the market. I think we are topping. The next round of data will show this I’m guessing.

      • Wolf Richter says:


        If this turns out to be the case, it won’t show up in the Case-Shiller data for another four months, at least. That’s how far CS is behind. I think the CS data is the most reliable RE data there is, but it’s just so far behind.

        • Depth Charge says:

          Stats are always backward looking (I’m not telling you this, I’m agreeing with you). My boots on the ground observation says that the frenzy in new and used car and truck sales is over with. In a few months time, I believe the data will support this.

  12. Cas127 says:

    Those 320 index numbers indicate that CA home prices have increased 3.2 times since 2000.

    Can anybody name a single positive real world economic metric that has increased 3.2 times in the last 20 yrs? That might support/justify this absurd home price inflation?

    This is almost entirely about Fed-destroyed interest rates, creating fictional “affordability” that will evaporate the second the Fed is forced to stop money printing/interest rate destruction.

    • Wisdom Seeker says:

      I was going to answer “Federal Reserve Egos”, but then when I tried to divide infinity/infinity I got “NaN” instead of 3.2…

      Honestly though, Congress is equally to blame, since they are legally in charge of the Fed.

      In the end, though, it’s all of us. We got the government we deserved, for voting in all the scumbags and/or for tolerating election systems vulnerable to fraud. Shame on everyone for thinking high house prices are good when they aren’t!

      • OSP says:

        No one is “in charge” of the Fed…legally or otherwise.

        • Wisdom Seeker says:

          I believe you are wrong. The Federal Reserve exists solely because of an Act of Congress, and Congress has routine, legally mandated annual hearings to implement its oversight responsibility. This is no different than for any other part of the government which exists because of legislative choices.

      • Felix_47 says:

        So true. Campaign finance reform is the only solution and every administration makes the situation worse. And some of our most liberal interest groups are solidly against reform. The Congressional Black Caucus has consistently and publicly opposed reform and that was one of their concerns with a potential Sanders presidency and played into his end in South Carolina. Their argument has been that they need Super Pacs to level the economic playing field with legislators from white districts. And we do see the big money center banks and monopoly corporations, health firms and defense firms donating big time to these liberal causes. It is money well spent. Look at the new Alzheimer’s drug. Basically a total ripoff but Biogen lobbied with the argument that Blacks and Latinos have a higher incidence of Alzheimers. And understandably that gave the legislators cover and why not; considering what we spend on defense. Until blanket federal campaign financing happens which allows minority legislators to get the same election money as white legislators and the amount is limited we might as well stick a fork in it. BTW Federal financing is how the system works here in Germany. And violations do occur and lead to significant consequences when they come out unlike the US where there are essentially no violations. The Super Pac is a wonderful thing if you are a lobbyist lawyer. So Americans are rightly betting on sustained big time inflation. Wisdon of crowds perhaps?

        • Depth Charge says:

          “…Campaign finance reform is the only solution…”

          Good luck with that. The only people who can make that happen are the ones benefiting from the corrupt system. Think they’re going to vote against their own financial interests? Pffft.

          Just take a look at the last housing bubble and meltdown. The first thing they did to “fix” it was to bring in “experts” like Jamie Dimon, etc., to help come up with a plan. These are the very people who caused it in the first place. It’s “the usual suspects,” ALWAYS.

    • Tony says:

      Bitcoin was worse than that for sure! LOL!

    • MyLadyHumps says:

      Gold is up over 6 times since 2000

      Remember, Ronald Reagan “proved that deficits don’t matter”. So said president Cheney/Bush. How’s that policy working out for you all?

      Reckless behavior has consequences (eventually)

      • Cas127 says:

        To pretend that Republicans (theoretical conservatives) are the primary party of endless deficit spending is just absurd.

        There have been plenty of Republican hypocrites, but perpetual deficit spending (courting currency ruin) is absolutely central to the Left’s world view.

        In practice, it is less about ideology.

        Habitual deficits are the sneaky, snakey way that individual politicians (of both parties) can safeguard their political careers (through never ending spending) while telling future generations (non voters) to go f*ck themselves.

        It is simply sociopathic behavior by a sociopathic political class that has ruled in DC for 50 to 70 yrs.

        • VintageVNvet says:

          Totally agree c10!
          The entire class of recent paid political puppets should be taken to the nearest lightpost, etc., ad infinitum,,, etc.
          Other than that, there is NO doubt at all that the oligarchy, having thought they had paid enough for the millions of dead folks and wounded following their need for ”boots on the ground” support from the masses to save their assets,,, simply cut off the very unusual ( hi story of 1000snds of year ) anamoly that went on in USA from WW2 to approximately the ’70s.
          Since then, been another story all together, as well documented by Wolf, and supported by extensive anecdotal reports on WS, et alia.
          IMHO, her and history support clearly that, sooner and later, all such oligarchy die,,, just like the rest of our species, SO FAR!

        • NBay says:

          We tried a sociopath from the “business class” and it only made things worse.
          Your beef is structural…things like Citizens United and all the laws that have been lobbied in on behalf of those with the money to pay for it.

          It’s simple class warfare, fought completely unilaterally, as it always has been throughout history, that you should have your beef with. Open your eyes….and brain.

    • Old School says:

      Fed might get deep sixed if they screw up the financial system so that all asset values go back to what they were 20 years ago. Then people could see more clearly they are mostly an impediment to the real economy.

      A lot of illusion in the wealth affect, but just going down the wealth affect road tells you they are phonies.

  13. MonkeyBusiness says:

    I am with SocalJim on this one and no I am not joking. I think house prices will either remain stable or go higher. Even if they were to go down, they won’t crash.

    The Fed’s going cray, cray, and pretty soon everyone will get the memo.

    • Paulo says:

      I think it depends on your location. Some places will always be sought after and will maintain their value. Other locations not so much. Crazy bubbles always deflate, maybe not burst, but they do deflate just like a hot air balloon.

  14. Trefoil says:

    My house is up 45% since last fall according to Zillow. I live out in the Sierra Foothills on the way to Tahoe. Lots of SF WFH refugees coming in with the righteous bucks. I cannot argue with the Fed on this one, I think they’re doing a great job, keep fighting the good fight Jay!

  15. Phoneix_Ikki says:

    These charts and most of the data out there completely support the notion that we are in another gigantic bubble again, yet you still find some “interesting” counter narrative that we’re not in one. Taking heads like Lawrence Yun and RE agents will tell repeat this over and over again, to which I understand but even certain non-RE circle academia are stating so, just wonder what’s your take on this Wolf? Kevin Erdmann was just on Wealthion stating we’re not in a bubble and price will just level out. Curious mind wants to know if you agree with any of his assessment and if his points are even worth considering in regards to supply? One quick search on him though, kind of makes me dubious about his narrative given his stance on the previous bubble..

    “Take Kevin Erdmann,

    A former investor is set to try in the weeks ahead to convince Congress, regulators, and academia that they have fundamentally misunderstood the causes of the financial crisis.

    Kevin Erdmann, now a visiting fellow with the libertarian Mercatus Institute set to meet with lawmakers and staffers, argues that the housing bubble and its collapse weren’t caused by Wall Street predation or the government — and in fact, that there might not have been a bubble at all.

    Instead, in a book out this week, Shut Out, Erdmann concludes that restrictive land use regulations in big, coastal cities cut off the supply of housing and pushed up prices, creating a historic outmigration. Prices only collapsed when the federal government, in a panicked response, tightened mortgage credit.

    “The housing bust was not caused by too much money, too many mortgages, or too many homes,” Erdmann writes. “It was caused by not enough.” “

    • boikin says:

      I think that was true when the bubble started but then is spread to flyover lands were they could build houses, but people did not realize that while they can not create new land in SF or NYC, it sure was possible in 99% of the country.

      I am not sure if things are different this time but there is one thing that is definitely true. Back in 05-07 time frame my friend installed computer and telephone systems for new business and 90% of his business was realtor and title insurance business setting up shop. He was like the guy selling selling gold miners equipment during california gold rush. He still is in the same business but this time around no one is opening up shop looking for gold. This leads me to believe the mentality is different this time around(even if the results are the same.)

      • Petunia says:

        Becoming a mortgage broker was in then, now it’s being a real estate agent. I think when they do the forensics on the next blowup, they will find many RE agents simply trading houses back and forth. You don’t need a real mortgage to this, so no real money needs to change hands, it can all be paper traded back and forth. I think they will find a lot of the fraud took place like this.

        I want to feel bad for the ultimate bag holders, but I just can’t. If it looks like a fraud, and feels like a fraud, it will land up being fraud.
        These RE investor/agents are all bragging they have cashed out and are waiting for the upcoming downturn to do it all again. They expect to clean up when the moratoriums end, buying straight from the banks.

        • Robert Hughes says:

          Follow up from prev.
          Recent ex pat from Cali, not sure where next. Know Ore, Wa very well and out of running, as is Tex, Ariz.
          Is, are there possibles in Fla, or south for smaller quiet, quality, lifestyle that you might suggest? Thanks always appreciate your comment on all subjects.

        • boikin says:

          anywhere in florida is pretty nice once you leave the coasts or the I-4 corridor. Florida is not one state it is about 10 states combined into 1. If I were moving to state and had some money and didn’t care about living in part of the country still ran on the good old boy network I would move to the panhandle other wise anywhere between I-4 and I-10 is pretty good choice, you don’t really get hurricanes so your insurance is considerably cheaper. You get a bit of a winter season, though you do have deal with it raining 30 minutes almost every day in the summer.

        • fajensen says:

          But, you eventually need a mortgage to cash out on the scam.

          In Denmark some people were buying up derelict houses in bulk, for maybe 30000 DKK, or even 1 DKK at the auction, then had a fake company “renovating” them up to standard, then do a cash sale to one of their mates’s shell companies.

          Now the recorded market value is maybe 500 kDKK or even 1000 kDKK. Then they borrowed against the property and used some of the money to buy up the next batch.

          The preferred bust-out-the-joint funding was via privately held debt bonds on the property, “pantebrev” – mortgage deeds, perhaps. Because there is less chance of someone Heavy coming their way when the thing defaults.

          This all worked because in many cases, hot markit and all, the inspectors did not actually show up at the address. Instead they wrote the inspection reports based on the data available for the house (which is quite a lot).

          The main fallout from all this, is that one cannot get a mortgage for a house costing less than about 600 kDKK, those homes are cash-buys only, doesn’t matter that many are actually very nice.

          And that “pantebreve” are d.e.a.d. as an investment or financing possibility, and REIT’s smells of all that death!

        • Petunia says:


          I don’t know the panhandle well enough to recommend it or the gulf. But there is a place you might be interested in looking into it’s Bay St. Louis, MS.

          It’s a pretty little town on the gulf, not too touristy, and only an hour out of New Orleans. You get the slow lifestyle, it’s still affordable, and it’s a reasonable drive to crazy town for fun, plus only an hour away from an international airport too.

    • 91B20 1stCav (AUS) says:

      Phoenix-when the true cost of providing rapidly-declining freshwater resources to an overburgeoned Western U.S. population hits home, bubble or not will become academic (unless something akin to fusion-powered desal becomes available-‘maybe in another 30 years’ as my childhood friend who spent his whole career at LLL used to joke after his first decade there…).

      may we all find a better day.

      • NBay says:

        Had a similar friend, never thought fusion would work but enjoyed the toys and salary and trips to the South Pacific.

        BTW, LLL is now the National Ignition Facility. Turns out all those banks of lasers (more improvements have been added) generate a LOT of power density.

        PERFECT for testing new and better ways to set off H-bombs.Tthe “fusion power” bunch is still pissing money away on those toroid
        “Sun on Earth Boxes”.

        It’s international, but better H-bombs is national, like the name says.

        • 91B20 1stCav (AUS) says:

          NBay-they didn’t call it the ‘Shiva’ Laser Project without reason…

          may we all find a better day.

  16. Fed gov Kaplan said he was worried about the housing bubble. He is not a voting member but 2008 is not going to happen again. The Fed is going to bail out housing first last and always, it represents the bulk of personal wealth. I am sure they are trying to figure out how to market that MBS into a retail form so that the mortgage owners will be buying their own paper in their pension funds, and 401K. The bankers sit back and collect their fees and the mortgage business is a closed system. I mean closed in the sense they keep adding money and raising property values, ad infinitum.

    • Wolf Richter says:

      Nothing is going to repeat. It will be different every single time.

    • RightNYer says:

      The Fed has no ability to bail out anything at this point without causing more inflation.

      Want to see pitchforks and social unrest? Cause prices of everyday things to go up another 30%.

    • Educated but Poor Millennial says:

      Any sounce that showes they are working to get the MBS into the 401K? I am interested to know.

  17. SaltyGolden says:

    What could go wrong.

  18. Seneca's cliff says:

    I get the that the fed is dumping money in to this asset bubble, and inventory is low, and people are clamoring for a house, but where is the average joe getting the income and downpayment money to pay these prices. Wages have not really moved, more people are unemployed, and unless I am missing something you can’t use stimmies and unemployment to qualify for a mortgage. Is there some kind of stealth mortgage programs where people are getting 100 year loans, are qualifying with 60% mortgage to income ratios, or are the Ninja loans back. There is something that does not smell right about this.

    • Flounder says:

      Check out Ribbon and FlyHomes. Many companies like that, I’ve found several others but forget the names right now. For 2-3% of the purchase price of the home, they will put in a cash offer on your behalf. You then rent the home from them for a few months until you qualify for a mortgage to buy it back off them.

      Using these services, buyers with peanuts in the bank (3% down for conventional, plus these companies fees) so only 5-6% of the total purchase price in cash can APPEAR to be well-qualified cash buyers when submitting offers.

      I have no information on how widespread the use of these “fake” cash offer companies are.

      • RightNYer says:

        Interesting. I would think that the recording fees and transfer taxes would make this model untenable, but I guess that’s location specific.

    • JWB says:

      Hi Seneca,

      Here on the Monterey Peninsula, it’s typically cash money for purchases: for so many people who now have so much more money than they used to pre-covid mumbo jumbo, why not sink it into some gorgeous hard asset dirt in an amazing climate that is peaceful, full of natural beauty, has decent restaurants, and wait for it, when you can WFPJ’s, (unless you’re the realtor; we tend to wear actual clothing when with clients versus sleepwear).

      As long as the freakshow continues, and as long as geographic regions like here are literally prevented from new construction by sea, bay, and mountains, it seems prices here will continue to rise. Other than the thing we don’t know about or see yet.

    • Prue Grubstreet says:

      Well, when I applied for a mortgage on my $72,000/yr salary (pre-tax), I got approved for $450,000. I said I only wanted $300,000 tops, but the loan officer said I could do upwards of 40 percent of my salary. She offered to show me how to cut back on spending (and I’m already a very thrifty person) even further to make it work (I’m guessing this would involve subsisting on a diet of lentils and rice exclusively). I also said I wanted to put 20 percent down, but she said that was silly — why not five percent? And this was a reputable mortgage company. So, yes, they are being very generous with people who have good credit and savings. But what happens when the next recession arrives and jobs are lost? On her plan, my savings would be decimated and I’d be SOL.

      • Petunia says:

        In Australia, the banks were handing out vouchers for food banks, to customers who were late payers, to help them save money for the payments.

        This mortgage lender may do the same, if the time comes when you can’t pay. Just doing god’s work.

    • Depth Charge says:

      “…where is the average joe getting the income and downpayment money to pay these prices.”

      From subprime loans. They’ve been back since 2014.

    • Cas127 says:

      “Is there some kind of stealth mortgage programs where people are getting 100 year loans”

      Transactional volumes are still nowhere near the multi year highs of Bubble 1.

      In CA, post bubble 1, the “recovery” from 2010 thru 2020 occurred at transaction volumes about 60% of that during the peak bubble years of 2004-6.

      Even now, during the pandemic “boom”, transactional volumes are only maybe 75% of Boom 1.

      People (some people) learn.

      • Tom S. says:

        No, volumes are down do to shortage in available quality housing.

        It’s higher prices on lower volume.

  19. SOL says:

    Since I’ve been in Bend I’ve watched prices lag Portland, and grow at a rate to overtake Portland median. 6 years. 6 years of saving and watching each dollar become worth less and less. Effing hamster wheel.

    You have charts for remote/natural areas like mine? I’m sure the growth just over the past year is sickening. I’m nauseous daily just from thinking about it.

    • Trucker guy says:

      Bend isn’t exactly a rural or remote place. It’s not a major city but it’s a go to place that certain groups of people want to be like certain towns in Western Colorado or Northern CA. Which to be fair, Bend is basically just North Northern CA. You can always move. Oregon is beautiful but the people generally aren’t, I wouldn’t want to live there that’s for sure. I’ve had a cashier call the cops on me for not wearing a mask when I’ve already been vaccinated.

      An angry crowd over there.

    • Andy the Car says:

      We aren’t rural, but ABQ has always been considered affordable compared with the rest of the country. We’re a poor state with a dismal job market and wages that anyone living on the coasts would find laughable. So here’s the latest from the ABQ Journal.

      “In May, the median price for a single-family detached home in metro Albuquerque reached $290,000 – a market record and a staggering 26.1% increase from a year prior, according to the Greater Albuquerque Association of Realtors.

      • Depth Charge says:

        When house prices, irrespective of local incomes, shoot the moon like they have in all areas, it’s the system that is to blame.

    • Cas127 says:

      “You have charts for remote/natural areas like mine?”

      That is the hardest data to find in aggregate form.

      You might want to go to a public listing site like, sort houses in your area in ascending price order, and then get the median prices. Pricing by Sq ft might help adjust for dissimilar houses.

      If you do this weekly/monthly, you can generate something along the lines of the big metro data.

      • VintageVNvet says:

        IMHO, after living in flyover for most of the last 50 years or so, most decently priced rural housing never going to be on the internet these days,, maybe another decade or so IF the rural expansion of broadband actually happens.
        Might take a few months or longer to work your way into the ”red neck” relay network,,, that that is only if you are able and willing to be pretty damn honest about what you are capable of adding to the local small time, frequently barter only economy.
        Otherwise, expect to pay top dollar for everything, including ”help” to work the place…

        • 91B20 1stCav (AUS) says:

          VVNv-astute observation…it still took ten years in my rural area, however, before i was considered an ‘okay local’ (but still a ‘new guy’) vs. an ‘FNG’… (there IS always the process of proving one’s worth to one’s neighbors, and vice-versa, if genuinely planning to hang around…).

          may we all find a better day.

  20. cybersandiego says:

    Can you superimpose your data by changing from Dollars to gold bullion ounces? I tend to think, that will show us a complete different story.

    • Wolf Richter says:

      Sure, I could overlay with lumber, steel, bitcoin, TSLA, AMZN, S&P 500, etc. All it would show is how one asset does in comparison to another. For example, gold is up 560% since 2000, AMZN is up 5,300%. So what? No one has to live in either of them. But people have to have a home of some sort (rent or own).

      • MyLadyHumps says:

        1) people do not need to live in a house or apartment. They will go on living without these things.

        2) people who live in houses or apartments don’t have to live in the US. There are other markets. Despite what people say the world is in fact enormous.

        List of people who need to live where they work in 2021 – farmers

        • One of Wolf’s recent OECD bubble chart showed that the US is not very expensive relative to other OECD countries. Although it ranked #7 overall, it had the lowest price-income ratio among the top 15.

          Given that the US itself is enormous and has so much variety to choose from, why bother going abroad? We’ve got tropical states, arctic states, rich cities, poor cities. What can another country offer that the US doesn’t already have?

          If people

  21. The FIRE sector (Finance, Insurance, Real-Estate) is hot.
    That’s what happens when the only source of profits are rents.

  22. Rcohn says:

    What is more expensive , housing or those 200 large stocks with no earnings ?

    • Augustus Frost says:

      False equivalence

      No one needs a bubble stock. Everyone needs a place to live, even if they do not own it.

      • MyLadyHumps says:

        I lived in a vehicle for five years while saving most of my income to pay cash for a house in Spain with plenty of money left over. The house purchase qualified me for Spanish permanent residency. The people here are rational and don’t hate one another. Contentment is priceless.

        Spending good money to buy a house in a country with a low standard of living, like the US, is wage slavery.

        • Actually your story isn’t so different from mine, except I lived in a Co-Op studio apartment that was purchased for $7300 (about the price of a car) and saved until I had enough to buy houses for cash in Las Vegas. They were cheap 9 years ago. Not anymore, but the property tax increases here are capped.

        • Depth Charge says:

          There are still plenty of ways to live cheaply in the US, it just doesn’t involve expensive houses and rentals in expensive locales.

      • Lynn says:

        I know of about 15 – 30 people who are working and living in the bushes or their cars or tents on someone’s property in my very small town. The numbers keep going up. There’s a short documentary on working homeless encampments in Portland somewhere you might find interesting.

  23. Myra Sepulveda says:

    I don’t think this is a bubble at all!
    This is just the beginning of the housing boom.
    What caused the crash on 2008 it doesn’t exist anymore. Right now is a great time to buy real estate since you will be paying 15%-20% more next year and the following year more.

    • RightNYer says:

      You sarcastic or delusional?

    • Robert says:

      So long as the Fed keeps pumping in money and the dollar keeps dropping, sadly you may be right.

      But if mid to long term bond yields surge you will be wrong. Apparently the markets believe the Fed is all powerful and can keep the bond market under control.

      It is a very sad time for anyone in their 20s looking to own a home. They will be the ‘homeless generation’ and likely end up living ten to a room in flop houses. Read “Conditions of the working class in England” by Friedrich Engels, to see what the future will be like.

    • Swamp Creature says:

      You must be listening to that Lawrence Yun clown from the NAR.

    • ru82 says:

      I think you might be right. Housing in the U.S., when you factor in the midwest, is still cheaper than almost all the other G7 countries.

      I went to globalpropertyguide website and it listed housing trends. Rising housing prices is a global thing and not jut hear.

      Adjusted for inflation housing is still -6.7% less than Housing Bubble 1 according to the charts at Doug Shorts web site.

      • RightNYer says:

        I mean, do the other G7 countries have over 3 million square miles to play with? Not really a reasonable comparison.

        • Orangecats! says:

          I was about to post this very point.

          I can get a nice, and i mean nice, amazingly cheap house in a small midwestern town. Trouble is my family and job is in California, with remote work not an option. Even so, do I want to see my kids on a screen for the rest of my life? Might as well move to Spain for the novelty.

        • Lynn says:

          Also what is the ratio comparison per capita of public housing? Is that factored in?

      • Swamp Creature says:

        When you factor in purchase and sales and closing costs, RE commissions, maintenance and adjust for inflation, dollar devaluation and then factor in the interest rate effect most people haven’t made squat on their homes. They like to brag about their price appreciation but they haven’t made jack. When interest rates normalize you’ll see a drop in sales prices worse than in 2007/2008. END OF STORY.

    • Old School says:

      Could be true. If rates stay low which seems to be Fed policy the house prices could go up for longer than we think. It’s not a good thing as more damage is being done. Going to be interesting when rising rents hit standard inflation measures.

    • Depth Charge says:

      REALTOR: Subprime loans have been around since 2014. Try to keep up.

    • Lisa says:

      I see someone thinks they are psychic

  24. Dudu says:

    I used to say the real estate market will crash… not anymore after government handed money left and right. Gov. Of California just said they will pay all the unpaid rent from Covid leftover money.

    Also, there’s a talk of extending the mortgage to 40 years to lessen the monthly payments.

    This bubble will never crash. Government is too deeply involved, and if it crashes somebody needs to get the blame.

    Welcome to modern slavery or late stage capitalism.
    What’s next, 50 year mortgage… don’t laught.

    • Dudu says:

      I forgot to add:
      Think time is different than 2008 because back then the economy and economy policies were run by people.

      Now all the policies are driven by algorithm and AI. Fed doesn’t decide what is the next step, the AI brain suggests what is the next step. Is not a straight line or path. I’s like a chess game, every move is calculated.

      The only way the market will crash is if the policies are intentional made by humans.

    • Nathan Dumbrowski says:

      It is official the government is allowing 40 year mortgage. If i read it correctly they are qualified to be included in the MBS pool. Wolf will be able to confirm. If correct
      $500k Mortgage @ 3%
      30 year monthly @ $2,108
      40 year monthly @ $1,790

      Think of the reach that extends to buyers

  25. Swamp Creature says:

    Even crap is selling here in Swampland. We just did a condo apartment in a nice area which had a leaky water heater which flooded 5 floors of the condo building causing $10,000 worth of damage. The deal went through anyway and the seller has to pay the damages and sue the contractor who installed the defective unit.

    If this kind of s$it can sell then anything can.

    • Nathan Dumbrowski says:

      Insurance can be a PITA when it comes to leaky water heaters. They will need evidence that the monthly maintenance was performed on the unit and exactly what part failed. Just went through that in my condo

      • Swamp Creature says:

        It was a brand new unit. Probably made in China

      • Paulo says:

        What maintenance is required on a WH? I’ve never heard of anything beyond if it starts leaking, turn off the supply valve and replace. I’ve had 20 year old WH. Suppliers recommend a swap at 5 years. I put a tray under mine and keep an eye out for any water on the floor, when I think of it.

        For home owners, a good idea is turn off your water before going on vacation or away for the weekend. Then, if you have a leak anywhere, it stops. A friend of mine went away one winter. A line in an outside wall froze and burst. Water ran for two weeks in house. They got to live in a motel for 6 months while it was rehabbed and renovated.

        Plus, insurance companies now require a regular ‘neighbour’ check if you are away for more than a few days.

        • Anthony A. says:

          Paulo: “Plus, insurance companies now require a regular ‘neighbour’ check if you are away for more than a few days”

          How do they enforce this? And a random check is not going to be preventive as it is only a point in time. Does the policy say that the neighbor must be “qualified”?

          Water heater maintenance includes periodic flushing to remove internal scale and crud buildup and changeout of the sacrificial anode to extend life.

        • VintageVNvet says:

          U guys in LaLa land P and AA,,, where ya been?
          Only ”tankless” WHs worth any consideration,,, as long as they have ”temp in vs temp out” controls built in to accommodate and help solar WH system, anywhere, including BC coast.
          Installed a tankless 5 years ago and saw $energy down by 1/4 the next month/year per elco, so far…

        • 91B20 1stCav (AUS) says:

          Paulo-wondering re: water heaters if some of this is a case of those with traditional tank units vs. those who have the newer, ‘instant-on’ type installed. A friend of mine went through three of the ‘instants’ over twelve years. (Perhaps only an illustration of what many contemporary folks are willing to pay for ‘convenience’…).

          may we all find a better day.

  26. LM says:

    You need to post the WTF peak for people with zero resilience reacting to them pandemic by freaking out and frothy-ing the froth. The market defies common sense despite those telling up that up goes up forever and explaining it away with a bunch of mumbo-jumbo—it does, until people with no common sense exhaust themselves.

  27. breamrod says:

    you’re right it’s the crash of the dollars purchasing power. Hold on to anything real!

  28. boikin says:

    It is so strange to see these articles, as someone trying to sell their house right now in a less desirable metro in desirable state(with that said at least a 1/3 of potential buyers were out of state, specifically NY). I wish I could see crazy spikes is prices like this. Houses have gone up in value over the past year maybe 10% but had been relatively flat the previous 5 years. you can still find a house for under 300k(ours is around that) and for under 400k you can probably get a new house, though your commute could suck, in the area.

    With that said I having been keeping an eye on what competition my house has and this has been the season to try and dump you junk houses or time to genetrify before the city can stop you. It would appear some older what use to be less desirable neighborhoods are cashing out.

    I had wanted to wait to list since we are still living in house, but she was like I don’t trust things in 6 months, get it out there now. I should mention our realtor is in her 80’s or maybe her 90’s. I choose her because I figure it was more about the job then money at this point. I guess this we shall see.

  29. historicus says:

    Your thoughts
    a few observations

    “Larry Fink, CEO of Blackrock, controls trillions of dollars’ worth of shares of public companies.
    He apparently is a very liberal guy. He pushes his politics on companies and threatens to vote against them unless they do as he says.
    The other improper influence are the two proxy companies that supposedly assess policies and boards of public companies, and then they tell institutional investors how to vote, which they do follow over 90% of the time. They are also very liberal. So, we have a three
    or four people with left leaning politics controlling the proxy votes of most public companies.”

    Add in the fact that Blackrock is partnered with the Fed, somehow, advises the NY Fed, and is “in the Fed tent”. Now that is a concentration of power. Maybe Jay Powell could speak to it some day.

    • historicus says:

      Clarification…the “observations” provided are not mine, but I find them insightful.

      • Petunia says:

        And what this bunch shares isn’t liberalism.

      • nodecentrepublicansleft says:

        Well whose “observations” are they?

        It’s odd your touting these brilliant “observations” but forgot to tell us who they came from! Albert Einstein, Jr. perhaps?

        Boogie, boogie, boogie, I’m terrified of a liberal “businessman” jerk in a world full of fake “conservative” businessman jerks.

        Those “observations” or whatever they are…are useless.

        • historicus says:

          Do you read the NY Times?
          Ever run into “unnamed sources”?
          I guess this touched a nerve, huh?

  30. Swamp Creature says:

    If this housing bubble is as bad as this data illustrates, why is the Fed continuing to subsidize home prices by buying 40 billion in MBSs every month. When is this insanity going to end??

    • Phoneix_Ikki says:

      because else are you going to keep the bubble inflated as long as possible? Count on people’s “rational” behavior to the rescue? LOL

    • Depth Charge says:

      Because the FED is actively trying to blow the biggest housing bubble they possibly can.

    • Robert says:

      ” When is this insanity going to end??”

      With a Trump win in the next election.

      • Wolf Richter says:


        That’s nuts. Trump started it. The fasted biggest QE ever happened under Trump. This drive-by political garbage really gets to me.

        The Fed will end MBS purchases in 2022. That’s now moving to the top of the list.

  31. Bet says:

    Here in Clallam county on the Olympic peninsula, housing prices are being cut
    A house under 450k can go quickly. I wondered why the hot buying tailed off from last fall and winter ( the flee sales ) then I saw that there is only 48 houses for sale and 90 percent of them are plus 550 k
    Many sellers are greedy and asking top dollar and no updating. They sit. Anything with a bit of acreage and move in ready still goes with in two to three weeks
    Unfortunately local pasture land is being bought by subdivision developers ( huge sad). Our house according to Zillow has increased about 70 percent in four years.
    But if I sell, where would I go? Love the NW

    • MFG says:

      “local pasture land is being bought by subdivision developers”

      very, very sad, and happening all over.

      • Paulo says:

        Unless there is a law against it like the BC agricultural land reserve legislation. Vancouver developers were bulldozing farmland in the early 70s. It was stopped dead. Now, developers build up the sides of the mountains and farm land remains. What is done on farm land is also tightly controlled.

      • 91B20 1stCav (AUS) says:

        Bet/MFG-the story of most U.S. suburban development post-WWII.

        may we all find a better day.

    • Depth Charge says:

      “But if I sell, where would I go? Love the NW”

      Why would you sell? Were you a speculator too?

  32. Pilot says:

    I came on here during the Covid crash and said by high tech stocks…. I also said houses will double in price. Everyone laughed. Maybe i need to start my own website…. So easy for some to see the future and so hard for others.

    • Pilot says:

      Spelt “buy” wrong. I am not perfect!

      • nodecentrepublicansleft says:

        Don’t stop sharing your genius prognostications, Pilot!

        Come on….tell us what happens next!!

        Please indulge us w/your wisdom!

        I don’t care if you spelt werds rong.

    • SOL says:

      So what’s next? I’ve got some dollars wasting away in a savings account designed for a house down payment that I’ll never use.

      • Old School says:

        Unless it’s different this time you can buy almost anything after a crash and make money on it. You can buy almost anything at the peak and lose money on it as well.

    • Depth Charge says:

      Linky, please.

  33. Jim S says:

    Out in the East End of Long Island (Hamptons/Montauk), the cost to build is approx. $900 s/f excluding the land. Most of the folks out there wont feel the bubble as much as the average person but this market is not sustainable.

  34. Nickl says:

    I thought there was an ‘exodus’ of people leaving California especially the cities…. Seems like the COMPLETE opposite.

    By the way rents are soaring as well above pre pandemic levels practically everywhere especially NYC and San Francisco. . Again AI thought there was a so called Exodus of people leaving these two cities

    • Wolf Richter says:


      “rents are soaring as well above pre pandemic levels practically everywhere especially NYC and San Francisco”

      Been reading ZH headlines again???

      Here are your “soaring” asking rents in San Francisco, San Jose, and New York City which I just happened to have. Make sure you read this article because it explains it:

      • Memento mori says:

        Wolf , you are wrong on rents.
        I don’t know how data is collected for your charts but there is absolutely no rentals available in Southern California that I monitor. Rents have jumped easy 10 to 20% since January, check Zillow rental history on any available apartment.
        I got one unit available for rent that I advertised 20% higher and got more than 100 applicants, absolutely insane, people overbidding the rental price, it ended at 35% higher, one year lease. Just give it some time, rents will explode beyond your wildest imagination.
        People are being lied about the true state of inflation out there.

        • Wolf Richter says:

          Memento mori,

          I don’t think I posted a chart about rents in your bailiwick. I posted charts for the Bay Area (2) and New York City (1). Sounds like you are Inland Empire, just guessing from what you describe, which would be similar to inland counties in the Bay Area: soaring rents and tight inventories, though that has started to loosen up.

          Check out the article I linked. It discusses the relationship between expensive coastal markets where people have left and the inland markets that people have fled to.

        • Educated but Poor Millennial says:

          Post Covid, Rents droped in Glendale , Los Angeles area, and I saw asking prices for rents are dropping too, each month.

  35. fred flintstone says:

    Message to the crowd……this is not a big bubble. It is an over priced market which could see some moderate correction.
    It is still relatively tough to get a mortgage. Down payments are required for most transactions. Credit quality is not being diluted much.
    Builders are under supplying homes. Very few spec homes are being built.
    Investors are purchasing homes as investments with the intention of renting them because other investment opportunities are not as attractive.
    Demand is sky high due to millennials finally forming families and boomers retaining their homes with no intention of down sizing.
    The cost of living for other things is increasing substantially.
    With a .5 month or less supply of homes in lots of markets the market could absorb tremendous supply before sellers are under pressure.
    Some Americans unable to buy will need to get used to the European model of family living in an apartment. A real cut to our standard of living.
    Its the start of paying the price for our national over spending. Things begin to get out of reach for some.
    Prices will abate when rates tighten but to expect bargains… will have a long long wait.

    • RightNYer says:

      Ahh, yes, the housing shortage is because Millennials are forming families line. Here’s a hint. Millennials’ family situation is no different now than it was 2 years ago. And older people ARE moving out because of property taxes in many places. I’ve seen it with my own eyes.

      • Nickl says:

        The only way millennials are buying a home (if they can) is if parents have given them the down payment.. Most even have said this

        • Wolf Richter says:


          Millennials have entered their peak earnings and buying phase. The older ones are in their 40s. Many of them own companies or have great jobs. This idea that they need their parents for everything is an outdated over-generalization. That said, there are many millennials, just like there are many boomers and many others, who cannot afford to buy a house in the city where they work and want to live. That’s a price issue, not a generational issue.

        • Resjudicata says:

          I’m right on the edge of being a millennial. 41yo. My wife and I own our own business. I hear her in the background talking to a client right now while our 3 kids watch tv upstairs. My parents are poor as owl sh*t. We bought a mansion last year shortly after COVID hit.

    • Nickl says:

      I have heard the line about Millennials have been ‘finally forming households” for the past five plus years.. In this market where are millennials getting the down payment when they have five and six figures of student loan debt alone

      • Resjudicata says:

        I’m right on the edge of being a millennial. 41yo. My wife and I paid off over $250k student loans in the first 6 years of employment.

        • Andy the Car says:

          I realize that this forum skews to the wealthier side, but not every household can manage to pay off $41K per year in student loans. I mean, congratulations and so forth, but in my state, the median household income is not much more than that at $49K. We’re not all burger flippers, either.

        • Phoenix says:

          You’re GenX. Regardless, that’s only one piece of anecdata. Also, congrats on being some sort of physician. That’s not a normal student loan situation

    • Nickl says:

      Down payment of how much 3%?,20%? The person selling their home still needs to buy a home and pay these prices

      • Resjudicata says:

        We put down around 35% on this purchase and hold considerable reserves to run our household and business.

    • Old School says:

      Government and Fed did too much to fill the gap and you are seeing it in nearly everything.

      Cash and near cash accounts in USA have $3.5 trillion sitting there at 0%. Margin debt at all time high. 20% zombie companies still hanging around. Fed’s going to have a tough time keeping all the plates spinning for next few months.

      Unless you believe Fed’s policies have no bad consequences, we are in for a world of hurt at some point.

  36. MiTurn says:

    All real estate is local. My nephew in Chicago is having a tough time selling his house, as he needs to move go Seattle for a new job.

    He can’t even get what he paid for it four years ago.

    Why? Because it’s in Chicago. Would you move to Chicago?

    Wolf, I’d love a chart, if you have the time.

    • Wolf Richter says:

      OK, here we go houses and condos in the Chicago metro (note: this is far bigger than the city of Chicago), on the same scale as the charts above:

    • Nickl says:

      Seems lots of people are since prices are up by double digit percentages
      Sort of like the ‘exodus from NYC and California’ line that you hear over and over on talk radio. .
      In NYC and Chicago crime is concentrated in a very small area of the city but population isn’t falling at least by any significant amount

    • Dudu says:

      Because of high property taxes are eating the appreciation, money comes from the sane bucket.
      Where else can you buy a house for $500k and pay $12,000 ~ $14,000 in property taxes?

      Say thanks to IL politicians.

      • Eugene says:

        In Crown heights,a brick house,3000sq f,1910.It has property taxes and insurance 14000$ a year.It can double wirhin 3-5 years most likely.

    • historicus says:

      3% real estate taxes per year…
      that’s why

      • Old School says:

        At 3% property taxes you are going to give the city/county the value of the house in around 20 years. Not worth it.

    • Lisa says:

      Chicago property tax Rae highest in Country second to NJ. We have crime and a sales tax of 10.25%. Why would we live here? Family, and my husbands a teacher and if he goes anywhere else he starts at the bottom. That’s why

  37. marie says:

    It’s not a bubble.
    The same craziness has been going on in Europe for 20 years.
    It’s the insanely low (and falling) mortgage rates.
    It’s actually very normal.

    • TheFalcon says:

      Uh, well, what about the European real estate bubble that burst in the last cycle and resulted in the demolition of values in Ireland (-50%), Spain (-40%), Greece (-40%), Netherlands (-25%) and the UK (-20%).

      • Weenier says:

        I left NA and now live in Europe. I am in the process of buying a house. 0.8% fixed rate 10 year mortgage. Single family home fully renovated and ready to live in is under 130000e my combined income for 2019 and 2020 was 132000e before taxes plus 20% extra into my pension non taxable by law. My partner also works with a similar salary, he/she/it is European. I really want to return home, but for less salary and a higher cost of living it’s a tough decision. I seriously don’t like living here but with 30 vacation days and a shorter work week I’m managing, but I’m at a point where I might move back no matter the cost of housing or job prospects. I fail to see the housing bubble in Europe, I actually think I will lost money on my house purchase as the value will most likely drop.

        • Phoenix says:

          What do you do for work where the salaries are so much better in Europe than NA? I’d love to move to Europe but, at least in tech, the pay is substantially better in the US

    • Dazed And Confused says:

      It’s not so easy to compare housing prices across jurisdictions because the laws, taxes and holding costs are so different.

      For example in the UK, there are no property taxes (council tax is paid by the occupier so is not an additional cost of owning over renting).

      In some US cities, annual property taxes can be 2.5-3% of the property value and rival mortgage payments. Insurance and upkeep is also more expensive because American houses are bigger and the weather is more extreme (less of the US property value is in the land and more in the structure compared to UK). The upshot of this is that US monthly housing payments and therefore US house prices are less sensitive to changes in mortgage rates than UK prices.

      Another major difference is that in the UK most homeowners have an ARM whereas in the US most homeowners who don’t own outright have a 30y fixed rate mortgage. This also makes UK house prices more sensitive to interest rate changes than US house prices.

      There are many other factors too like tax deductibility of mortgage interest and property taxes that vary hugely by jurisdiction.

  38. RockHard says:

    On the other hand, the Denver Post yesterday posted a more “boots on the ground” article that suggested maybe the seller’s market is taking a breather.

    When you can’t buy a habitable single-family home for under a half million, maybe you run out of buyers at some point.

    • OrcasEatSharks says:

      As a Seattle buyer, hold my beer. Try habitable single family home for under one million.

    • ru82 says:

      True. There are only so many people that can afford SFH over 1/2 million.

      The ones who cannot will be stuck in apartments or smaller condos.

      I am guessing nobody is building a new home under 1/2 million in Denver. I did a quick search and it seems that a 3 bd starter homes range from $525k to $650k and 4bd homes are $650k to $750k.

      The new normal for SFH.

  39. kitten lopez says:


    it’s like i’m having multiple babies in a taxi cab so please bear with me yet again, Wolf, this is related (i read the article before anyone had commented yet), and related to my Secret Kitten return posts on sunday:

    so i read this article and had absolutely anything left to say about the subject anymore at all. think the entire crying FAMILY of the PNWguy in seattle; 6 month old child, included.

    i’ve tipped over into the land of speechless awe vertigo and “you’re kidding me.” / nothing new.

    BUT what is new is that i came up with a new idea inspired by Wolf’s compliment to me about my writing still being relevant. i danced around that compliment until… well, i STILL am. and this is what i’m going for in the New Times. the kind of love where we don’t all gang up on PNWguy’s entire family—6 month old infant included—and bash their heads in because they’re white and want a place to live. white people don’t even get capitalized in america anymore. i’m too lazy for proper punctuation anymore. and i’m with Petunia on language being living and evolving, and everything i write is a scream now so i only do ALL CAPS when i do my paper zines.

    which is where i’m going. i had nothing to do paper zines ON. when i was 8 years old i’d draw tiny porn magazines, inspired by the fact that in the 70s, we used to go to other people’s houses all the time for dinner and conversations and back in the 70s, when we whined and pulled on our parents’ shoulders, they’d say things like, “go play and solve it among yourselves; this is adult time.”

    and i’d go off and find the host’s porn. i always found other people’s porn. once i found a player guy’s stash of his girlfriends during sex. in the seventies that was… WHO’S GONNA DEVELOP THE FILM AND WILL YOU GO TO JAIL?

    it’s not like now where you find your mother’s porn on her phone because no one’s got any boundaries anymore (happened to me with a woman with no boundaries; i sent videos with “i wanna do 2:32 to you!” until her eldest daughter casually FOUND it and had a nervous breakdown.

    kids these days. not nearly interesting enough to look for their porn anywhere anytime.

    so back to ME because we’re coming up on leo time and i become especially insufferable for 25% of the calendar year covering my birthday, which is a holiday (august is a holiday). because now that Wolf and James are my only friends, i know they’ll each keep me from doing anything in public that’ll land me on the sex offender registration. you think getting an apartment is difficult NOW? ha!

    anyhow, in my last screed on here on sunday (if you don’t remember it wasn’t for you), i made a promise and one part is analogue.

    so Wolf said i’ve got some smears of talent left in the ole’ peanut jar as they say (they don’t), and i’m gonna make a paper ZINE of my writings and cartoons.

    i know i had this idea before but it’s actually going to be a cornerstone of my bigger idea of how to try and fight back against ecommerce winning and make life fun again.

    so instead of praying for someone to step up and start an interesting men’s magazine with interesting articles, i’m going to become the pornographer that i am and revert back to my 8 year old self who handed my mom homemade porn magazines drawn in ballpoint on scrap paper, instead of handing her one of those paper plate coupon holders sewed together with yarn and “Mon” misspelled in elbow macraroni.

    and since i’ll be doing the zines via the U.S. Mail (i love the post office with a love one cannot mention or i’ll end up on that registry), they will be like the art love letters i send to my beloveds.

    i’ll wear reflective bicycle gear with my business name on it and have a bike bag that can make you put your phone down, as Erykah Badu sings.

    so i’ll step up my hip hop/salsa Emperor Norton routine (he is a legendary man from San Francisco history who went around in full on military regalia, epaulettes and all, proclaiming himself Emperor. he is my North Star as this 5X leo).

    James and i will go around on our bicycles with him playing the trumpet and i’ll dance, we’ll have magical outfits on, and then leave before anyone thinks to FILM us. / it’s about vertigo at this point.

    i’ll try and get things going so when the next Wolf Meet happens, i’ve already seeded our return to Real Life and maybe we can come up with some more concrete ideas besides telling me that the future will happen with or without me.

    i AM the future, Papi. can’t you tell?

    it’s Leo Time. and i’m not talking about now til October (Virgoes never appreciate their month so we’ll use it to recover for Libra time). Libras read my mind and have a canny ability to keep me from popping off too fast like Wile E. Coyote, as i fling myself into the sun with this giant rubber band.

    Icarus is so 2019.

    Stay tuned. / if anyone can make you put your phone down, it shall be me!

    Petunia knows now i really was born in Manhattan. i cannot be bothered to beg you for your attention and pitch anything i’ve got. it’s so… unsightly.

    what does this have to do with inflation and housing? i can’t cry like PNW guy and his wife and child anymore about the absurd senselessness of it all; i’m all dried up and it’s not because i’m coming up on 54 (soy milk is AMAZING for that by the way, mujeres).

    this is the other side of languishing in one’s parents’ basement. when you’ve got nothing to LOSE, a hail mary pass into starting my own analogue world because no one else will join me.

    analogue. we artists are The Pretty Ones now. we are why people gentrify ANYTHING. we need to get the shoe on the right foot, people. any other cliches i can throw at you to inspire? cliches shouldn’t inspire. they deaden and exhaust.

    stab the sofa to find your extra change. (my version of burning ships.)


    (p.s. Wolf i think i’m done with the writing so now that you foisted responsibility back onto me for my own posts, please don’t take it away. i just HAD to share because i’m on mad fire and finally after a decade have breakthroughs on how to put it ALL together)

    p.p.s. oh yeah, my debut product is a gym bag of gym bags. i’ll have one on my back bike rack with lettering to be my own billboard whenever i ride around town.

    p.p.p.s. yes, i’ll be point to a website initially (not analogue), but life is a hybrid and i’m working towards being local and via U.S. mail dispatches/online for most basic of info. still working this out. i just got hit by lightning right before i wrote this.

    p.p.p.p.s. yes, my inspiration is all just me returning to the 1990s before everything totally sucked. if you took a core sample or looked at tree rings you’d see it but you KNOW it. even PNWguy’s 6 month old baby is crying with them because even his baby KNOWS it.

    look at those numbers above. a hail mary pass is more fun.


    • Resjudicata says:

      No ones gonna read all that

      • kitten lopez says:

        the right ones will, do, and always have. i don’t care about the rest. you/they are vague outlines not to bump into.

        • aqius says:

          a fellow Leo (Aug 4) also year of the tiger (chinese calendar) is so glad I am not the only creative eccentric w/passion on this blog

          * btw: read in full
          enjoyed every word
          never stop

      • Wolf Richter says:

        Resjudicata: “No ones gonna read all that”

        I read it.

      • LeClerc says:


        Welcome to Wolfstreet!

        There’s a shortage of smug, entitled millennials here.

        Mostly it’s cranky, know-it-all boomers, with expertise in many fields, who take the time to post thoughtful comments.

        But it’s really all about you!

        Finally, someone whose comments everyone will read!

        • kitten lopez says:

          (if i’d been drinking anything it would’ve spewed out my nose when i burst out giggling, i didn’t expect this)
          thank you and good morning, dear Le Clerc.

        • Phoenix says:

          resjudicata is a GenXer and he lives in a mansion. geez, get it right lol

      • HowNow says:

        So did I.

        • kitten lopez says:

          thank you, HowNow.
          good morning and thank you for having my back, as well.
          with much affection to you three.
          i’m not used to this kinda protection here in this newer san francisco, so thank you from my toes.

          (i mean it)

        • Anthony A. says:

          I read it all too. I always read what Kitten posts as she has some good “on the street” insights and observations.

      • Swamp Creature says:

        At least there are paragraphs.

      • Eugene says:

        This guy has high functioning autism for sure.

    • 91B20 1stCav (AUS) says:

      Kitten-“…artists….are the why people gentrify ANYTHING…”. Bless you for your steady urban pioneer/spearpoint self. All good fortune to you on the path ahead.

      may we all find a better day.

  40. RightNYer says:

    There’s the crux of it. The civil unrest will happen regardless. Creating inflation does not avoid it, it just delays it a little bit.

    • Nickl says:

      I am still waiting for this civil unrest predicted but I have to admit the civil unrest will be sort of fun to watch

  41. Jack says:

    The days of interest rates going up or down are over. It’s either qe or not qe. If qe, then by how much is the only question. Wages will never keep up with the inflation that has arrived and will persist into eternity. The socioeconomic consequences of all of this are going to be disastrous. People will be on the streets like never before. Fed and the govt have put themselves in a corner. No way out. Govt has to borrow cheap and fed printing is the only way. Any rate rise at this point or any point in the future will be catastrophic. buy any physical asset you can . There is no other choice

    • Jim Spatzenfeld says:

      You’re right, buy any physical asset you can, and preferably with other people’s money because by the time you pay back the value of every dollar borrowed is worth only pennies, haha.

      • Old School says:

        Might not work out that way. Things are very unstable in fiat when rates get to zero. Might break in either direction.

      • Eugene says:

        Ha ,ha.Easier said than done.Gold will get back to 1400 by 2023,silver to 20$.Deflation is at the gates of Rome.A new spike in PM from 2023 to 2029,gold 3500$,silver 100$.9 year Hurst cycles,2011,2020,2029 tops.Bitcoin will be 1000000$ by 2030.So better get a bitcoin,Never tell Nobody(especially a wife and kids) and get your own keys.

  42. TheFalcon says:

    SoCal RE prices kept climbing ever upward in the second half of the ’80’s, to peak around ’90. I lived through it. Explanations? “Everyone is starting to realize the amazing lifestyle here!”, “the weather is perfect!”, “everyone wants to live here!”, “it’s been undervalued for years!” “they aren’t building any more land!”, “we’ve entered a new paradigm!”, “values will match then exceed SF soon!”. On and on.

    What happened? A recession and 5 year slide in prices. 15% on average. Anyone who bought with 20% down (or less) in the vicinity of apex pricing was underwater. Downpayment/equity evaporated. Job losses. Wage freezes. Foreclosures. Sellers “not going to give it away!”, chasing the market down.

    On the buy side, many people were too spooked to pull the trigger. Unsure of job security. Not wanting to buy and catch a falling knife. Let’s wait another year, maybe two, what’s the rush, prices are falling!

    And it was all caused by…..NINJA LOANS! LOL. Sorry but there a many many ways to knock a spiking market down and neither you nor I know what it’s going to be this time. In ’07-’12, another 5 year slide, but steeper, WHEEEEEEEEEE!!!!! How could values plummet 40, 50, 60 percent? In SoCal? Where were all the people that were going to jump in a prop prices up if there was even the slightest dip?

    Whether it’s RE, stocks, commodities, tulips, whatever – to ignore or rationalize away the dominant power of the fallible human being market psychology is to miss the element of every market mover that is always the same, the thing that is part of every screaming rocket ride up and subsequent free fall down.

    1. Optimism – I think this is good opportunity
    2. Belief – okay I’m in, I’m a Believer!
    3. Thrill – wow look at these gains!
    4. Unbridled Euphoria – this is UNBELIEVABLE, I’m rich!
    5. Supreme Overconfidence – I am an INVESTING GENIUS!
    6. Misguided Optimism – this is just a pause in ever-increasing values
    7. Anxiety – wait, is this a pause or something else….
    8. Denial – no, values cannot be coming down this much, this is not real
    9. Panic – whaaaaaaaaaaaaaaaaaaat is happening!!!!!!!!!???????
    10. Capitulation – OMG it’s over
    11. Anger – WTF happened, who is to blame, someone must pay!
    12. Depression – I was rich and now I’m not, I am not a financial genius
    after all

    Enjoy the ride.

    • 91B20 1stCav (AUS) says:

      Falcon-a good analysis of ‘the business cycle’? (…saw this in the moto-biz late ’60’s-early ’80’s when hanging out a ‘motorcycle’ shingle, with true expertise or not, was a license to print $. Until it wasn’t, of course…).

      • NBay says:

        HONDA 50…..step thru, CB 110, and trail models. Saw first one at “sidewalk dealer”, in ’61 but way too young.

        Whole bike world went NUTS after that…at 15 1/2 I wanted a Tohatsu (faster) but old man (who drove me down to S Rosa, Angelo Rossi) didn’t like skinny tires, (fight with mother was bad enough, all she ever saw of bikes was one hill climb) so he fronted me $100 to get a Ducati Bronco 125.
        Off and owning/riding till ’06….except borrowed a few since.

  43. Tony says:

    If we called Housing bubble, then what should we call Bitcoin? Everything around us has become speculative, hasn’t it? Being extremely rational sometimes prevents us from getting bold to ride with the wave and grabbing the once in a life time opportunity. Bear in mind, “No guts, No Glory”.

    • Ron says:

      Bitcoin will get hacked coins disappear in a puff of smoke common sense really people are dumb USA control s it pay attention

    • Eugene says:

      Tony,very true.Bitcoin is a new,a fair consept of money .And it will be the best way out when ALL fiat ponzi collapses.

  44. NotDeadYet says:

    Wolf, I have been reading your articles and the associated reader comments for the purpose of trying to get a fix on what is happening in this world and this economy.
    I think what I am seeing is a mix of things… one would be the falling value of the dollar. Another thing would be a housing bubble fed by low interest rates and that human mania to buy what is (seemingly) rising in price. And I can’t help but think that the euphoria of a post pandemic world may have something to do with it
    I believe the stock market is being driven by similar forces.
    I’m not sure how to make money during this time. I know in my bones it is not the time to buy real estate. And the stock market is Vegas.
    I have reduced costs thru bundling services and refinancing mortgages, all of which allow me to keep more of my cash flow. By doing this, I feel like I am making money.
    I believe it is time to build reserves.

    • Jim Spatzenfeld says:

      Building reserves during times of hyper inflation? Just don’t save cash, cash devalues faster than any bubble!

      • Douglas Stout says:

        Buffet is no dummy. Berkshire has more real assets than any other company and more cash than anybody too I think.

        Barbell strategy isn’t a bad one. Once poop hits the fan and you go to buy food or gas or you need to pay rent or house payment or utility bill, it’s going to be cash. Government had to hand it out like candy during Covid because people didn’t have enough.

      • Eugene says:

        It will be high,1970s inflation,but not hyperinflation.USD is a reserve currency for the next 20 years at least.Then bitcoin will be a standard,never a chinese, non trusted currency.

  45. DougP says:

    Cheap interest is driving the boom.

    30 year loan of 500k @ 2.75% is 235k interest paid.
    30 year loan of 400k @ 5.00% is 373k interest paid.

    Which would you choose?

    Low interest rates definitely beat lower home prices.

    We get price or terms and for now buyers are getting terms but it will shift as it always seems to do.

    • Nathan Dumbrowski says:

      Ginnie Mae is set to introduce a new 40-year mortgage term for its issuers on the heels of administrative shake ups at the top of the housing industry.

      • Wolf Richter says:

        Nathan Dumbrowski,

        My understanding is that these mortgages of up to 40 years will only be available for modified mortgages, such as those coming out of forbearance, to bring down the payments. This is not available for mortgages to fund the purchase of a home.

        • Petunia says:

          We knew a guy in Miami who got a modification the last time around. I believe he got an extension to 40 yr amortization and they added all the late payments and fees to the principal. When we talked about it, a year or two later, he was underwater and felt it wasn’t worth all the trouble he went through to get it.

    • Random guy 62 says:


      It was the interest rates that fast tracked our casual search and expanded our budget. Never thought I would sign a 30-year mortgage, but at 2.5% I couldn’t say no to the wife and the property. Helps to live in flyover country too.

      I think there is some monkey-see-monkey-do going on too. People are watching their friends, family, and neighbors move and it just adds more fuel to the fire.

      • Can't Say No says:

        Bingo again.

        “I couldn’t say no to the wife…”

      • Depth Charge says:

        “I think there is some monkey-see-monkey-do going on too. People are watching their friends, family, and neighbors move and it just adds more fuel to the fire.”


    • nodecentrepublicansleft says:

      Buying a home for cash outright, not dealing with a scummy bank and paying $0 in interest beats everything else by a country mile.

    • historicus says:

      The Fed is promoting 30yr mortgages at currently 2% below inflation…
      and everyone wants some of that money…
      But why would the Fed essentially lend money 2% below the inflation rate? Who else would?

  46. Dazed And Confused says:

    According to Credit Donkey, average 30 year mortgage rate in 2000 was 8%.

    In 2021 it is 3%.

    100 in 2000 dollars is 159 in 2021 dollars according to the BLS inflation calculator.

    Now the monthly payment for principal, interest and taxes on 80% of 159 @ 8% is the same as:

    that for the following for 3%:

    229 assuming 2.5% property tax – which is average for Dallas metro
    253 assuming 1% property tax – which is average for Vegas, Boston and Tampa metros
    264 assuming 0.5% property tax – which is average for Denver metro

    These seem to be very close to your figures for Dallas, Vegas, Boston, Tampa and Denver which suggested that the monthly payments are very close to identical to what they were in 2000 when adjusted for inflation.

    This analysis suggests not really a bubble in these 5 metros assuming that all were fairly valued in 2000.

    • Mark 2 says:

      Excellent comment. 239% price inflation since 2000 is misleading since most houses are bought with mortgages. So if the mortgages have dropped from 8 to 3% it’s not really 239% inflation.

    • SnakeEater says:

      That’s because the “housing” bubble isn’t the real bubble. It’s just an effect or symptom of the real bubble, like a cough is to a cold. The real bubble is in bond prices, which is why the interest rates are this low. What does that monthly payment look like with a reversion to mean interest rates?

      • Dazed And Confused says:

        It is interesting to project future prices based on constant inflation-adjusted monthly PIT payments under various inflation and mortgage rate scenarios.

        For example in Dallas metro (2.5% property tax), assuming 2.5% inflation per year for next 5 years and 4.2% 30 year mortgage rate (average from 2009-2019 (GFC to pandemic onset)) in 2026, then

        2026 price would need to be 239 in Dallas under this scenario i.e. slight increase in nominal prices from current levels (<1% per year)

        • Dazed And Confused says:

          If mortgage rate in 2026 is assumed to be 5.27% (average from 2000-2018) and 2.5% inflation for next 5 years, then

          2026 price would need to be 220 in Dallas (2.5% property tax) in order for inflation-adjusted monthly PIT payments to be same as they were in 2000.

          This would be a slight drop (<1% per year) in nominal prices from 2021 levels.

    • historicus says:

      30yr mortgages in 1999 and 2006 were 6%.
      Now 3%.
      The mortgage rates are what is out of whack…
      for in the years mentioned, the inflation rate was circa today’s rate…
      the 3% is too low by historical norms.
      For the rate to “normalize” would roll the real estate market over….
      but the Fed and its partners “advising ” them seem not to normalize anything.

      • Dazed And Confused says:

        Current headline CPI is 5%.
        Hopefully it will dip soon and revert to a more normal range.

        But if it were to stay at 5% per year for next 5 years while 30y mortgage rates rise to 6% in 2026.

        Then in Dallas (2.5% property tax rate), a 2026 price of 235 would give same real monthly PIT payment as in 2000.

        This would be a slight increase in nominal prices (<1% per year) from 2021 levels.

  47. EcuadorExpat says:

    Historically, the price of a typical home is 3x the average household income in the area in which it is located, using average or “typical” interest rates. If prices are above or below that, somebody (maybe everyone) is gaming the system, and someone is going to lose on every house in one way or another.

    Right now with near zero interest rates it is the retiree/pensioner who is losing. Just another reason Jim Sinclair calls the American retiree the most endangered species on earth.

    My wife’s daughter just bought a house in Sarasota with Zillow indicating that the price has doubled in the last 6 years. Anybody out there (needing a 4 bedroom) have your income go up that much?

    • Random guy 62 says:

      Yeah the way I see all these central bank and fed gov interventions is that the country is wrestling with the core CONCEPT of retirement (and unemployment too). By that I mean the idea that a large part of a population can live comfortable lives off the production of others based on pensions, savings, and government transfer payments. I don’t mean that in a negative way. I hope to have a long and happy retirement, but don’t count on it going exactly to plan after watching the past decade.

      Getting paid by others to access my saved income requires a certain level of monetary scarcity. Without that scarcity, my saved income isn’t worth much. Hence declining interest rates. “Eh I don’t need your money for my project. I can get it cheaper down the street”.

      Scarcity of capital was a real factor for centuries but it’s becoming less of a factor now that we have solved so many production issues. A tractor used to be a marvelous piece of capital to free up labor input used to grow food. Now they are so common, we use them spread mulch around the petunias. The western world is nearly a post-scarcity society.

      The problem is that too many people are counting on that passive income to get by in an environment where capital is cheap. It’s beginning to look awkward.

      I think the fed is mostly along for the ride, projecting an aura of control while they are crapping their pants behind closed doors.

      • BatHelix says:

        I think this is a great assessment and when I hear these figures that the average 55 yr old has like $17 or whatever saved for retirement I truly wonder why this is not a more pressing issue. I guess because no one has the answer and everyone just wants the charade to continue but it seems pretty obvious that the pension system is going to go under …and not many people even have them anymore. How are all of these people with even a few hundred grand in their 401K going to retire!? There are so many people making a decent salary and saving like $500/yr for retirement. I just don’t know what they think they are going to do….I hear things like “I’m never going to be able to retire”…said jokingly like something will save them but they have no idea what.

        • random guy 62 says:

          Thank you.

          To further that… we run a medium sized employer and see all the details on what our employees save. It’s pitifully small. So many 401k loans and cash-outs! A minority even take the 5% match!

          Employees always think they get to retire on their terms, but that is very often not the case. At least half those who make it to retirement here are so burned out and/or skills-deficient that they’re being “dragged across the finish line” out of the kindness of our hearts.

          When times get lean, they get laid off first. If times are good, we hang on to them, to our own detriment (we are competing with companies that aren’t so kind). It’s just math. Others start bumping into serious health issues with the same result: early retirement.

          Folks who think they are going to be welcome in the workplace as long as they want are in for a rude awakening. I don’t mean that as silly generational warfare. It’s just reality as I see it.

          We all have prime years – the number of which varies from person to person and job to job. Our system is built to view people in terms of revenue and expense and companies need the best bang for their buck.

      • Eugene says:

        True,most likely FED knows what they did.But a few have the courage ….

  48. Jim Spatzenfeld says:

    Nobody mentions the reason why prices got so high: new home construction came to a halt for like 15 years after 2007 and now we’re short a few million homes. US population grew from 301 million to 331 million during that time. A bursting bubble would make things only worse. The only way to bring down prices is by building millions of homes ASAP but we just don’t have the contractor workforce to do that. So please expect prices to stay elevated for the long run.

    • Wolf Richter says:

      Jim Spatzenfeld,

      There has been a HUGE multifamily construction boom (apartments and condos) in urban centers over the past 10 years. This was a big change in how Americans wanted to live. So Covid kinda messed that up.

      There is no shortage of housing. There is a very large number of vacant homes that people hold for investment. There is a very large number of vacation rentals that used to be homes. Vacancy rates in the big cities are enormous.

      California, where you see the biggest housing bubbles, lost 182,000 people in 2020, first population decline in recorded history, but added 100,000 homes, for 270,000 people at the average household size.

      There is no shortage of homes. It’s just that homes aren’t used as homes but as a financialized asset class.

      • Artem says:

        Airbnb drives prices in touristy locations.

      • ru82 says:

        True. There is no shortage of total housing units (SFH, condos, apartments, etc). I have seen countless mega multifamily apartment units built the past 8 years and very little SFHs. But, there is a shortage of specific SFH for sale right now because as I will describe next.

        In my area, the millennials wanted to move downtown and the downtown area condo prices appreciated tremendously the past 10 years to 12 years. But with covid and wanting to start families they are looking to move to the suburbs.

        This is what wall street knows too and they have been buying up SFH in the good school districts. Now both groups are competing for a limited supply of homes that I am not sure how this demand will be filled. The large number of vacation rentals, AIRBNB, and 2nd homes sitting empty are typically not in areas where families want to raise their kids. Thus, there is a huge shortage of starter homes in good school districts. Maybe I should say shortage of reasonably priced starter homes in good school districts?

  49. hernando says:

    I’m getting 600 dollars a month starting this month from the fed? Biden? Harris? I don’t know. But, for some reason, being able to have children has allowed me to earn 300 dollars per child for … ever?

    I can make 16 dollars per hour flipping hamburgers at McDonalds. I’m pretty sure we are all screwed. Take shelter.

    Gas is at 5 a gallon – 3.99 at Costco… And Gavi has just extended the rent moratorium… The Delta strain has scared liberal types all over the world…

    I’m thinking that the best way to live is as John Galt and not participate in the insanity.

    • Wolf Richter says:

      “I’m getting 600 dollars a month starting this month from the fed?”

      The previously existing child care tax credit has been expanded. That’s all this is.

      • Swamp Creature says:

        This is called MMT through the back door

      • Concerned Texan says:

        Wolf ,
        Like what you do.
        Can you do a write up on Texas home prices. Everyone knows about California boom and bust cycles.
        But the scale of price increases in TX real estate appears unprecedented. Granted I was not around during 80s but looks like a generation or two has not seen a recession in Texas.

        • Wolf Richter says:

          Concerned Texan,

          I was around when M Bank collapsed, where I had an account, following the Texas housing bust and the oil bust in the 1980s, which was brutal for Texas. I think M Bank was the largest bank in Texas, and it was the second largest bank failure that the FDIC covered. But the Texas economy has changed a lot since then. Oil isn’t nearly as crucial to the economy as it was then.

          I should do a special edition to cover the Texas housing market, given how huge it is — or better yet, the Dallas and Houston housing markets. But I don’t have good data for Texas, except for the Case-Shiller index for Dallas, which you can see in the article above.

        • Dazed And Confused says:

          I was able to locate historical Dallas metro median rent price history from US Census Bureau ACS.

          It only ran from 2005-2019 but showed rent inflation at 62.6% over this time period.

          By comparison Case-Shiller shows Dallas house price inflation at 57.8% over the same time period.

          Now you might think that 2005 was near the peak of the last housing bubble but Dallas did not participate in that – in fact house prices in Dallas barely kept pace with inflation from 2000-2005 – it’s also clear from Wolf’s chart.

          So Dallas house price inflation from 2005-2019 i.e. just prior to onset of pandemic seems to be in line with Dallas rent price inflation which seems to contradict the bubble narrative.

          Since 2019, Dallas house prices are up 17.5% and so seem to have shot a little ahead of rent inflation (unless rents increased by 14% over the same period – rental data is not available yet from ACS).

    • John Galt says:

      Well I’ve been commenting on here for a while now, so, that’s kinda out the window.

  50. Miatadon says:

    Capitalism is killing us. It’s not just real estate bubbles. It’s never-ending wars. It’s aggressive exploitation of the environment, pumping out more and more CO2 resulting in a failing climate system and species die–off.

  51. Jack says:

    America is FUCKED.

    But if this hyperbole of stupid narrative that the current government of this country is not arrested soon, that word that I loath to repeat yet again will be an under statement.

  52. Mojer says:

    The simple rule that explains when the cost of money is low house prices go up and when the cost of money goes up house prices fall, this was the rule for an obvious accounting fact, but since the world’s central banks follow the pattern of Japan of almost 0% interest the situation has become serious, and we must make a forced comparison of Japan with the salaries of the US that have not followed the soaring real estate increase so it can be assumed that it cannot continue to inflate the speculative bubble if wages do not adjust, the zero or almost zero cost of money alone cannot justify the continuous rapid and non-gradual increase in prices, as all speculations of rapid rise follows a rapid collapse, the canary in the well and now the Coronavirus that precipitated this rapid rise speculation in a short time, within a year at the most we will have come to an end.

    • Nathan Dumbrowski says:

      Agreed. Something has got to give. This path seems to be without a destination. In life I get that it is the journey not the destination. But financially isn’t such a fairy tale.

      When will the Fed back off? Can they back out of all the systems they have intervened in?

      • Depth Charge says:

        “Agreed. Something has got to give. This path seems to be without a destination.”

        But there is a destination. It’s called “the wealth effect” which is why they are blowing the bubbles. The FED has nothing else.

    • I disagree with that somewhat. The cost of money is important, but the utility value of money is also important. The sheer repetition of money printing relegates collateral value to zero. This is why the stock market wasn’t bothered by the new rate hike dot plots. When Fed announced that change yields dropped because investors know they can collateralize bond holdings, without borrowing on margin (at higher rates) to buy stocks. Its financial hedonics, if you can’t afford beef you buy chicken. Margin rates are too high, use PLOC, or HELOC or REFI or whatever is cheaper. The risk is you are putting up real collateral. Relative needed a business loan to buy materials to fulfill an order, but the bank wanted 20%, so he did a home equity loan at 3%, and then the market collapsed and his business, and it domino-ed all the way down. So margin debt should remain high, that’s a good sign because the underpinnings of that debt are manageable. Raising the cost of money incrementally at the Fed in this instance will probably increase home prices. This is not a zero sum system. If the Fed raises rates to counter wage inflation they will get a big shock.

  53. historicus says:

    There would be no bubble if the Fed stood to their duties of “promoting stable prices”.
    Those who bet, and rely on the Fed shirking their duties are winning.
    IF….IF… the Fed had been diligent and operated per their mandates/agreements/instructions….
    short rates would be north of 3%….and the 30 yr likely north of 4.5%….at least.
    Some seemed to be fearless…..all knowing….preadvised that the Fed would not stand to their duties. Curious.

    • David Hall says:

      The Fed can not clear lots, add roads, water, sewer, electric and cable. They can not build houses for $100 – $200/sq. ft. People sitting on their sofas collecting enhanced unemployment will not build houses. The Fed is not allowed to balance the budget. It has been decades since Clinton balanced the Federal budget. The Fed does not have the tools to give you cheaper houses.

      • Heinz says:

        “The Fed is not allowed to balance the budget.”

        A Fed Chair Jay Jay Poo would say: “Not my job”.

        That is Congress’ job– they control the purse strings, and in theory they control the Fed and could stop all this nonsense if they wanted to.

  54. RedRaider says:

    John Williams’ Shadowstats site shows the 80s version of CPI showing inflation approximately 13%. Deducting this value from the Case-Shiller Home Price Index leaves 1.2%. I wonder if people are just selling their homes at an inflation adjusted value.

    I couldn’t blame them if they are. So is this a bubble or not? No bubble…no crash.

    • Heinz says:

      “I couldn’t blame them if they are. So is this a bubble or not?”

      Indeed, and answer depends on who you ask.

      The housing bulls (property owners, real estate professionals, quasi-gubmint GSEs, and investors/speculators) say the glass is full and almost runneth over with happiness.

      The rest of us see the glass for what it is– half full and draining fast in terms of affordability and sustainability.

      We played a similar (but not identical) game with housing back in mid-2000s and and it had an interesting outcome, didn’t it?

      • Dazed And Confused says:

        Monthly housing payments are as affordable now as they were in 2000 and much more affordable than they were at the peak of the housing bubble in 2006.

        Current nominal house prices look sustainable given the likely future trajectory of inflation and mortgage rates.

        However current house price appreciation appears to be totally unsustainable from current levels unless something very unexpected happens to inflation, interest rates or both OR another housing bubble is inflated from here.

  55. Disgusted In Mount Pleasant says:

    Possibly a Wolf topic? If not, does anyone know of any analysis out there somewhere that looks at property taxes on a national basis together with other taxes as well as possible reasons for the differences?
    Property taxes always seem to be a big deal in these discussions and it puzzles me.
    I can certainly understand when it’s Chicago or Connecticut for example but we’ve lived in various places in the SE since the ’80s and they’ve just never been a factor to consider. Currently in Mount Pleasant, SC – paid $676 in 2015 would get $900+ if we sold today – taxes are $3,100 and might go down slightly this year because of sales tax collections.
    Mount Pleasant isn’t a poster-child for good financial management, anymore than any city these days, so I don’t think that’s the issue but regardless of what’s going on here I’m curious about the huge discrepancies around the country. Maybe it is all just mass transit and public-sector pensions but that seems too simple.

    • historicus says:

      The Public Pensions are RIDICULOUS in Illinois.

      six figure retirements for gym teachers….after 20 years and the spike at the end…
      3% auto bump annually, which doubles in 25 years the pension…and greatly increases on its way to that doubling.

      • Dudu says:

        That’s why is 3% property taxes, ridiculous to pay $12,000 ~ $14,000 yr for a $500,000 house

      • Heinz says:

        Of course those outrageous pension systems are unsustainable– even a brain dead Illinois politician gets it.

        All that’s left now is to play the guessing game– will this insolvent Ponzi scheme fold entirely on its own (e.g. layoffs, public service cuts, pension benefit cuts, higher taxes– those are already baked into this stinking cake) or will Illinois also get funding injections from Uncle Sam to help manage their bankruptcy and stave off total disaster. Or both.

        You have probably already guessed the likely outcome. In this economy of absurd make-believe the authorities will move heaven and earth to protect bad actor morons from consequences of their moral hazard poor decisions and financial ineptitude

      • ru82 says:

        I have a relative who was a teacher in a medium sized city outside of Chicago and has a $92k a year pension. She retired around maybe around the age of 58?

        • BatHelix says:

          Absolutely absurd what we are paying out in pensions to gov’t workers and many of the salaries. I know it’s not everywhere and I’m not saying they’re not needed and do good work because they do …. but there is no reason cops and firefighters should be making $250K/yr. I’d argue not over $70-100K, maybe the chief $150…but they get like $700K in some cases, troopers making $400K. Then the pensions based off this is just nuts! There’s really no reason any gov’t employee should be getting more than say $30-40K/yr in retirement. You’re supposed to save and have your house paid off and working for the gov’t isn’t supposed to make you rich, we pay for it and it’s a big reason we can’t get the things we need right now. We’re supposed to be a capitalistic system where you need to take risk and work hard to get rich remember!?!?

        • Mark 2 says:

          Teacher here. 92K is an outlier, not the norm. After 32 years, I will get about $3800 a month. You should also know we do NOT get Social Security (and any SS we earned prior to becoming teachers is cut by 60%). Also, we contribute 10.25% of our checks toward our pension. When I worked in private industry, I believe SS deduction was 6%. Also, our pay kind of sucks considering most of us have Master’s degrees so the pension is one of the draws that offsets that.

          Not trying to start a fight. Just want to throw in some facts/perspective.

        • random guy 62 says:

          My sister-in-law works for a University in IL. She was hired the last year before they slashed benefits to something nearer to sanity.

          She contributes 7% of pay to a pension fund, and can retire with something like 70-80% pay after 30 years on the job. She will be 52 when she hits that point, and her family tends to live well past 85… Tell me how the math works on this again? What fantasy rate of return does that pension fund manager have to get to make this work?

          She is smart and ambitious, so she has been courted by private employers but still chooses to stay because of the absolute gravy train that awaits in just 15 more years.

          Some friends working for the state too. They are all bored, but the pensions are pure gold so they stick with it.

          IMO, pensions were a novel concept that turned out to be horribly misguided. You can’t offload that much burden from non-working people to working people. Governments have yet to get the memo.

      • DawnsEarlyLight says:

        It appears they are actually trying to keep up with REAL inflation, and making it apparent how RIDICULOUS and futile it really is!

      • Paulo says:

        quick search:

        They receive lifetime pensions equal to 2.2 percent of their final average salaries multiplied by completed years of service, capped at 75 percent of their final average salaries. Final average salary is calculated over teachers’ 4 consecutive highest-compensated years of service during their final 10 service years.


        sion: The average annual pension for a retired Illinois teacher in fiscal year 2019 was $58,860.

        • ru82 says:

          That is pretty good pension. Nice

          I am guessing the average $58k also takes in to account people who did not teach many years….like 10 years so they probably only get $15k to $20k and bring the average down.

          Anyway….the average in my state is about $20k for teachers

          I am not saying they get too much….I just think everyone else should be paid more from their social security. Why do state and government workers get such good pensions as the citizens are their boss.

      • Lisa says:

        Excuse me Historicus but your assumption that PE teachers make 100k a year in a pension in Chicago is false. My husband is a CPS PE teacher and will not collect that much in a pension. Maybe30k. And understand teachers have to live within the high taxed and expensive city of Chicago and cannot move elsewhere. They do not pay into social security and paid toward pension. The pension isn’t the problem is the way the City government mismanaged and invested the money. City officials are the problem. Don’t blame teachers. They don’t make much despite what you think. They should be paid well. You shld see what kind of environment my husband works in. He doesn’t get a free summer and has no paycheck. People assume teachers are rich because they make 70k after many years of teaching? It’s insulting. My husband had to work a second job over the summer so no, he isn’t making what you think.

        • Lisa says:

          My PE teacher husband also doesn’t get bonuses or a matched 401k. We can make public works pay and function as well as private companies but mismanaged and stolen money is always the problem here in IL.

    • Petunia says:

      Taxes were high in Palm Beach County, FL and they collected more than they needed when I was there. They used the surpluses to raise the salaries of already well paid county employees. And they also created excessively large contingency funds to retain high bond ratings. Never gave a thought to lowering taxes or refunding the money.

      • wkevinw says:

        State and Local government is the largest growth in government (~only growth) for about 20 years now. I am not sure what they are doing with the money. The federal govt is actually almost the same size vs gdp (ignoring pandemic spending) as it has been for decades.

        I guess all the employee pay, benefits and pensions is where it goes. I don’t know how Medicaid and other similar “federally” mandated programs are paid for. It’s easy for the federal government to put unfunded mandates on the states and localities. Then their taxes go up instead of the IRS having to collect.

        I know a few cities and counties in CA have gone bankrupt in the past 20 years, but not sure about other places.

  56. Counterparty says:

    “My wife’s daughter just bought a house in Sarasota with Zillow indicating that the price has doubled in the last 6 years. Anybody out there (needing a 4 bedroom) have your income go up that much?”

    Uh, I guess your wife’s daughter did? Is this a rhetorical question? Is she gaming the system?

  57. wkevinw says:

    Real Estate is all local as they say. Each urban area has a scarcity of valuable land that is unique.

    It’s an interesting economic study. The country is not densely populated, so in theory there is plenty of land to build on. But, the economic activity associated with the urban centers is the key valuation variable.

    Most urban areas have pent up demand due to these market forces. In addition, there is the fact that housing is not as affordable as it was before ~2000. Right now housing is about 30% higher compared to real income vs ~1960-2000. That’s significant. There isn’t enough RE inventory and there isn’t enough purchasing power, really, so loan amounts rise, younger buyers are saddled with big debts, etc. Willingness to pay vs. ability to pay are two different things.

    An interesting note is that ~1945- 1960 had similar price/income ratios as now- quite high. As usual, we have been through this before.

    • Dazed And Confused says:

      Real house prices are higher but housing payments are still in the affordable range relative to real incomes because real mortgage rates are so much lower.

      Am not sure if it’s a coincidence but 1945-1960 was the previous era of financial repression prior to the current one. It was used to burn off the huge WW2 debt accumulation which was similar in scale (as a % of GDP) to current US debt.

  58. Swamp Creature says:

    Looks like one place where the housing bubble will take a big hit is Miami beach. How would you like to be living on the 10th floor of one of those old 1980’s eras condos now, or have a timeshare in one of those buildings. Especially just when the hurricane season is ramping up. I guarantee you’ll see residents trying to sell and get out of dodge in droves. They won’t find many buyers even if they drop the price. They may just hand the keys back to the lender and tell them “Its all yours”.

  59. Swamp Creature says:

    Let me add, did you know that if Hurricane Andrew in 1992 had hit just 30 miles north of where it did hit the shore it would have cause a direct hit on Miami Beach. The estimated damage would have been 150 billion and would include massive loss of life. Andrew had tornados imbedded in the storm and leveled everything in its path. I was down there and saw the devastation 1st hand.

  60. LouisDeLaSmart says:

    There is a major push in Europe to create critical or near critical situation causing a standoff, just short of a full blown conflict on multiple locations. Somebody is trying to establish a new idealogical separation on the lines of east-west, and is pushing all the buttons…What does this have to do with the economy? Based on the severity (desperate and slopy) of the moves it seems we are not too far from the edge of the clif.

  61. Dazed And Confused says:

    From 2000-2021

    CPI is 59% (BLS)
    National Home Price Inflation is 149% (Case-Shiller National Price Index)
    Rental Inflation is 91% (BLS – all urban rents primary residence nationwide)

    In 2000, 30y mortgage rate averaged 8%.
    In 2021, it averages 3%.
    Nationwide average property tax rate is 1.1%.

    Monthly Housing Payments (PIT) inflation from 2000-2021 is 57%.
    This is lower than CPI and much lower than rental inflation.
    This suggests that current house prices are justified by fundamentals and not the result of a bubble.

    The only metros where housing payment (PIT) exceeds rental inflation are San Fran (97%), Seattle, San Diego and LA (114%).

    It’s possible that rental inflation has been higher in some or all of these 4 metros than the national average – I’ve not been able to locate historical data to confirm or refute this.

    • Mark 2 says:

      Exactly. Now if/when interest rates go up significantly, that’s going to cause damage, but since 2/3 of Americans are homeowners, my hunch is EVERYTHING possible is going to be done to protect them at the expense of everyone else.

      People have been calling the bubble since 2014. Trouble is housing has gone up in many areas 55% since then. So while many people have stayed renters comforting themselves with their charts, the opportunity has passed them by. Now they have to pray for an enormous crash just to get back to 2014 levels. In the meantime, they keep forking over rent and keeping their money in a zero % bank account with inflation running at 5%.

      EVERYTHING is over valued – stocks, bonds, housing. There is nowhere to put your money, but, overpriced as it is, housing is still the best bet right now. You can collect rent from day one and have a tangible asset.

    • Dazed And Confused says:

      For comparison – the National US Housing Bubble that peaked in July 2006:

      From Jan 2000 to July 2006:

      CPI was 20.5%
      Rental Inflation was 24.5%
      House Price Inflation was 84.6%
      House Payment Inflation (Monthly PIT) was 63.4%

      (30y mortgage rates fell from 8% to 6.76% during this time, average property tax rate nationwide was 1.1%)

      The comparison with between today (Q2 2021) and the peak of the last housing bubble (July 2006) is stark:

      Today, housing payment inflation (since 2000) is lower than CPI and much lower than rent inflation.

      Peak of last housing bubble, housing payment inflation was 3 times CPI and more than double rental inflation.

      So today’s “bubble” doesn’t look anything like the one that peaked 15 years ago. It might become one in a couple of years if current trends continue but doesn’t look like one right now.

  62. Dazed And Confused says:

    Looking forward, 3 scenarios seem plausible for the next 5 years (2021-2026):

    Hot: 4% annual inflation, 5.5% 30y mortgage
    Cold: 0% annual inflation, 2% 30y mortgage
    Goldilocks: 2% annual inflation, 3.5% 30y mortgage

    These seem plausible because financial repression is likely to reduce huge federal government debt without large direct tax hikes or spending cuts. So real mortgage rates are likely to remain around 1.5% with a nominal floor around 2%.

    If real (inflation-adjusted) monthly housing payments (PIT) are to remain at 2000 levels nationwide (which are almost exactly the same as 2021 levels), then over the next 5 years, nominal house prices will stay approx flat – slightly up or down from 2021 levels:

    Hot: -0.9% per year
    Cold: +2.1% per year
    Goldilocks: +1% per year

    So current house price levels appear sustainable BUT the current rate of house price appreciation seems totally unsustainable given plausible scenarios for next 5 years.

  63. Dazed And Confused says:

    In order for house price appreciation nationwide to continue at annual 15% rate for another 12 months without increasing real monthly housing payments, something very unlikely would need to unfold

    e.g. 5% CPI for next 12 months with 30y mortgage rates dropping to 2.1%

    For another 24 months of the current rate of house price appreciation to continue without increasing real house payments (PIT) would require the highly implausible

    e.g. 5% CPI annually for next 12 months with 30y mortgage rates dropping to 1.2%

    So if we do see house price appreciation continuing at current levels that will probably indicate an actual bubble unsupported by fundamentals.

  64. Swamp Creature says:

    Cashed in some coins at the Coinstar machine at my local supermarket. The price just went up. Was a 11.5% commission. Now 12.5%. That’s a double digit increase. I still paid it. This is what happening with everything. If you need it you’ll buy it no matter the price.

    • VintageVNvet says:

      You are correct when you say, ”If you need it you’ll buy it no matter the price.” SC.
      The real question is, do you really ”need” it, or is the impulse that you need it just one more result of the massive advertising/propaganda of the various and sundry and extensive ”media” storming at almost everyone from every side these days???
      As the most widespread species on earth, possibly tied with roaches, it should be obvious that, able to put up with minimal conditions all over the globe, we actually need very little in comparison to the always growing needs that we are bombarded with daily.

      • Swamp Creature says:


        I was talking about necessities, not frills. Example: pulled up to a gas pump and they were charging $3.39 for regular gasoline. I needed it and I bought it. Had two molars extracted and implant replaced one of the missing tooth. $6K later I got the tooth replaced. Now I can chew on the right side without any problem for the 1st time in a year. If you need something and can afford it people are going to shell the money to get what they want and need, inflation be damned.

    • Lisa says:

      I can’t believe that machines take money to give you money. I can’t stand coinstar. I’ll roll up all my coins and take them to the bank before I let that machine eat my money.

      • Swamp Creature says:

        The Coinstar kicked out a lot of my coins as counterfeit. Had to throw them in the trash. There’s some bad stuff out there.

    • DougP says:

      Hell I’ll take all the coins anyone has for only 8%! Personally I roll mine and take then to my bank and deposit them for free.

      It amazes me how people give up so much for simple convenience.

    • Petunia says:


      If you take a gift card instead of cash you get the full amount of your transaction with no commission taken. I haven’t done this myself, but heard others who do it. The most popular gift card taken is for Amazon. I think the receipt it prints out with a code constitutes the gift card. You can apply the funds to your Amazon account.

  65. Dazed And Confused says:

    Here is a table showing real monthly housing payments from 2000 to 2021 (baselined at 100 for the year 2000):

    Year Real Housing Monthly Payment
    2000 100
    2001 96
    2002 97
    2003 97
    2004 105
    2005 117
    2006 133
    2007 131
    2008 114
    2009 91
    2010 84
    2011 77
    2012 67
    2013 73
    2014 81
    2015 82
    2016 84
    2017 89
    2018 97
    2019 94
    2020 88
    2021 95

    Currently real payments are 29% below the peak of 2006, 41% above the low of 2012 and within 1% of the average over this time period.

    It’s easy to spot the bubble in house payments from 2004-2008 when this table is represented as a graph. There is no discernable pattern outside of these 5 bubble years.

    Monthly housing payment = Principal + Interest + Property Taxes
    assuming 30y conforming mortgage and 1.1% property tax rate (US national average).

    Sources: Case-Shiller National House Price Index (Jan of each year), BLS CPI, Freddie Mac 30y mortgage rate averages

    • Dazed And Confused says:

      Forget to mention one assumption:

      20% deposit so 80%LTV with no PMI

    • Wolf Richter says:

      Too bad that this is bs in terms of reality for any of the markets on this list.

      • Dazed And Confused says:


        Thanks so much for this fantastic thought provoking blog – it’s awesome.

        These specific numbers are for the US National Housing Market as a whole.

        However the conclusions that 2021 real monthly house payments are close to pre-bubble 2000 and far far below the 2006 bubble peak are valid for at least some of the metros on your list – specifically Tampa, Phoenix and Vegas.

        I will post the actual figures for these metros and maybe some others later when I get time.

        Thanks for your reply

    • Wolf Richter says:

      Dazed And Confused,

      I gave this a second look. What you’re doing here is committing the equivalent of statistical fraud.

      You’re adjusting the national house price inflation index (Case-Shiller) with the national consumer price inflation index (CPI) and mortgage rates to argue that payments in these local housing bubbles here haven’t risen in 20 years.

      This is statistical fraud on many levels.

      Using San Francisco as an example, which is one of the markets in this article. It would be even worse for LA and Seattle. Beginning with Jan 2002, which is the beginning of the charts in this article.

      In Jan 2002:
      San Francisco median house price: $487,500;
      Freddie Mac 30-year fixed mortgage index rate: 6.9%
      Payment: $3,210
      CPI adjusted into today’s dollars: $4,879

      In May 2021:
      San Francisco median house price: $1,900,00
      Freddie Mac 30-year fixed mortgage index rate: 2.9%
      Payment: $7,908

      Mortgage payment in May 2021 ($7,908) is 62% higher than the CPI-adjusted payment of Jan 2002 ($4,879)

      This is why you committed statistical fraud :-]

      • Dazed And Confused says:

        It’s possible that I misinterpreted the meaning of an index or made a mistake in my calculations but if so it was not deliberate.

        I’m trying to get to a better understanding not trying to fraudulently mislead anyonr

        So your figures don’t seem to match those in the Case-Shiller San Fran Seasonally Adjusted Index.

        From that, I see Jan 2002 is 126.8 whereas May 2021 is 314.2.
        This is a 148% price increase.

        Your figures for median house prices show an increase of 289% over the same time period.

        I don’t understand why there is a such a huge discrepancy between your figures and Case-Shiller. Maybe it’s city vs. metro or maybe because of methodological differences e.g. median is dependent on mix of houses sold.

        • Wolf Richter says:

          These median house price figures I cited are from the California Association of Realtors. You can download all the median house prices for every county in CA.

          If you adjust for inflation, you need to use dollar prices or dollar payments, and then adjust those dollars for inflation. Using a House price inflation index (CS) that already includes all kinds of adjustments and that is not expressed in dollars, and then adjust this type of inflation index with another inflation index (CPI) is conceptually wrong.

          Where the fraud starts is if you use this national concoction that is conceptually wrong to say that there is no housing bubble in San Francisco, and that the inflation-adjusted mortgage payments are the same as they were 20 years ago.

          If you want to adjust mortgage payments to inflation that is fair, and that is what I have done.

    • Dazed And Confused says:

      Here is a table showing real monthly housing payments for Las Vegas metro from 2000 to 2021 (baselined at 100 for the year 2000):

      Year Real Housing Monthly Payment
      2000 100
      2001 92
      2002 94
      2003 91
      2004 107
      2005 149
      2006 168
      2007 163
      2008 122
      2009 75
      2010 58
      2011 53
      2012 43
      2013 51
      2014 64
      2015 66
      2016 67
      2017 72
      2018 82
      2019 84
      2020 77
      2021 83

      Currently real payments are 50% below the peak of 2006, 92% above the low of 2012 and 6% below the average over this whole time period.

      It’s easy to spot the bubble in house payments from 2004-2008 when this table is represented as a graph. There is no discernable pattern outside of these 5 bubble years.

      Monthly housing payment = Principal + Interest + Property Taxes
      assuming 30y conforming mortgage and 0.5% property tax rate (NV state average).

      Sources: Case-Shiller Las Vegas House Price Index Not Seasonally Adjusted (Jan of each year except 2021 latest), BLS CPI, Freddie Mac 30y mortgage rate averages

      • Wolf Richter says:

        I told you you cannot adjust an index with an index to get a mortgage payment comparison. It’s just conceptually wrong. Use median price, figure the mortgage payment, and then adjust the mortgage payment to inflation. It’s simple. And honest.

        • Dazed And Confused says:

          No matter what dollar price you use for baseline 2000 house price in any given metro area, these tables of figures are identical.

          Please try it if you don’t believe me.

          It is mathematically correct and sound.

      • Dazed And Confused says:

        Here is a table showing real monthly housing payments for Dallas metro from 2000 to 2021 (baselined at 100 for the year 2000):

        Year Real Housing Monthly Payment
        2000 100
        2001 95
        2002 95
        2003 90
        2004 88
        2005 88
        2006 92
        2007 90
        2008 81
        2009 72
        2010 71
        2011 67
        2012 60
        2013 65
        2014 72
        2015 76
        2016 80
        2017 87
        2018 95
        2019 92
        2020 87
        2021 96

        Currently real payments are 4% below the peak of 2000, 59% above the low of 2012 and 15% above the average over this whole time period.

        There is no discernable pattern and no recognizable bubble when this data is graphed.

        Monthly housing payment = Principal + Interest + Property Taxes
        assuming 30y conforming mortgage and 2.5% property tax rate (Dallas metro area average).

        Sources: Case-Shiller Dallas House Price Index Not Seasonally Adjusted (Jan of each year except 2021 latest), BLS CPI, Freddie Mac 30y mortgage rate averages

  66. Peanut Gallery says:

    During the GFC housing bubble burst in 2008, what percent of foreclosed home owners sold due to lose of job / income versus voluntarily walk away and jungle mail because they didn’t want to tread underwater in their homes?

  67. Dazed And Confused says:

    In Jan 2000:
    San Francisco house price: $385,000;
    Freddie Mac 30-year fixed mortgage index rate: 8.2%
    Payment: $2,656
    CPI adjusted into today’s dollars: $4,223

    In May 2021:
    San Francisco house price: $1,224,000 (“House prices have skyrocketed 218% since 2000.” Wolf quote on SF based on Case-Shiller Index)
    Freddie Mac 30-year fixed mortgage index rate: 2.9%
    Payment: $5,198

    In San Fran, mortgage payment in May 2021 ($5,198) is 23% HIGHER than the CPI-adjusted payment of Jan 2000 ($4,223).

    In Jan 2000:
    Las Vegas house price: $150,000;
    Freddie Mac 30-year fixed mortgage index rate: 8.2%
    Payment: $960
    CPI adjusted into today’s dollars: $1,526

    In May 2021:
    Las Vegas house price: $338,000 (Case Shiller LV Index 225 = 125% inflation since 2000)
    Freddie Mac 30-year fixed mortgage index rate: 2.9%
    Payment: $1,266

    In Las Vegas, mortgage payment in May 2021 ($1,266) is 17% LOWER than the CPI-adjusted payment of Jan 2000 ($1,526).

    • Wolf Richter says:

      Nonsense: $1,224,000 is not the median price for a house in San Francisco in May. The median house price is 1.9 million. Get your numbers straight. I’m getting tired of your fake data. Just look up the median prices at the CAR.

      • Dazed And Confused says:

        You said that “House prices have skyrocketed 218% since 2000.”

        So if the figure in May 2021 is 1.9 million, then it must be $597,000 in Jan 2000 because 1.9 million is a 218% increase over 597K.

        If you recalculate the figures using 597K for Jan 2000 and 1.9 million for May 2021, you obtain the exact same figure of 23% higher.

        • Wolf Richter says:

          You’re mixing CS with median prices. That’s statistical fraud. You’re twisting and distorting everything to try to prove your silly point. End of discussion.

        • OrcasEatSharks says:

          Check out the price history for this house: 221 Warren Dr in SF

          Dazed, you’re not far off. Sold for 1.95M in May 2021. Sold for $890K in 2005.

      • Mark 2 says:

        Wolf… You seem to be presuming bad intentions on his part (“Fake, BS, Fraud, silly, end of discussion”). Seems to me he’s making a good faith argument for his point. It’s OK to question his judgment, but his motives, too? His methodology may/may not be right, but I don’t think he’s deliberately trying to hoodwink anyone and I, for one, appreciate the debate.

        He also said he thinks SF is 23% overvalued, which doesn’t seem like the MO of a fraudster.

        • Wolf Richter says:

          Mark 2,

          No, it’s not “good faith.” It’s “bad faith.” He is falsifying numbers, including the median price.

          After I told him that the median price for a house in San Francisco was $1.9 million in May, and I told him where to look it up, he comes out and concocts a median price of $1,224,000 for a house in San Francisco in May, which is a lie, and he knew better because I told him the actual number, and I told him where to look it up.

          And then he used this lie as foundation for an argument. That’s “bad faith.”

          And yes, “he’s deliberately trying to hoodwink” people by using lies dressed up as data.

  68. OrcasEatSharks says:

    Check out the price history for this house: 221 Warren Dr, SF CA

    Dazed, you’re not far off. Sold for 1.95M in May 2021. Sold for $890K in 2005.

  69. Mateo says:

    Hi Wolf

    What about this?

    Ginnie Mae is set to introduce a new 40-year mortgage term for its issuers on the heels of administrative shake ups at the top of the housing industry.
    Only modified loans with terms greater than 361 months and less than or equal to 480 months will be accepted, but there will be no loan amount restriction, Ginnie Mae said. The mortgage-bond giant said it expects the new pool to be available in October.

    • Wolf Richter says:

      I read this as a way to get people out of forbearance by adding the unpaid forborne amount to the end of the mortgage while lowering their payments. That’s how I read this.

  70. SOL says:

    Housing has ruined my life. I can’t even enjoy basic things anymore. Fuck all this

Comments are closed.