Investors are also pulling back.
By Wolf Richter for WOLF STREET.
Sales of all types of previously owned homes – houses, condos, and co-ops – fell for the eighth month in a row, by 1.5% in September from August, to a seasonally adjusted annual rate of sales of 4.71 million homes, according to the National Association of Realtors. Compared to the peak in October 2020, sales were down 30%.
Beyond the two lockdown months of April and May 2020, this was the lowest rate of sales since March 2014, and since the summer of 2012, indicating to what extent the housing market is frozen. Potential buyers refused to even look at prices that sellers want. Sellers refused to cut their aspirational prices to where the buyers might be – though there is a lot more price cutting going now than a year ago. And other potential sellers waited for a Fed pivot that would lead to lower mortgage rates and higher prices before they put their homes on the market – though the opposite is now happening (historic data via YCharts):
These are sales across the US that closed in September, based on deals that were made earlier. So they just about entirely predated Hurricane Ian which made landfall in Florida on September 28.
Compared to a year ago, the seasonally adjusted annual rate of sales was down 23.8%, the fourteenth month in a row of year-over-year declines (historic data via YCharts):
Sales of single-family houses dropped by 0.9% in September from August, and by 23% year-over-year, to a seasonally adjusted annual rate of 4.22 million houses.
Sales of condos and co-ops fell 5.8% in September from August, to 490,000 seasonally adjusted annual rate, down 30% year-over-year.
Sales by region: On a year-over-year basis (yoy), sales plunged in all regions. On a month-over-month (mom) basis, only the West showed no declines in sales from the desperately low levels in August:
- Northeast: -1.6% mom; -18.7% yoy.
- Midwest: -1.7% mom; -19.7% yoy.
- South: -1.9% mom; -23.8% yoy.
- West: 0% mom; -31.3% yoy.
The median price of all types of homes whose sales closed in September dropped for the third month in a row, and is now down 7% from the peak in June.
In terms of seasonality, the 7% decline was the largest for this period since the end of Housing Bust 1, and more than double the 3.2% decline during this period in 2021. The average decline during this period over the prior 10 years was 4.2%. In 2020, prices jumped during this period. In 2019, prices fell 4.9% during that period. And in 2018, prices fell 6.2% during this period, but the housing market was weakening as mortgage rates were heading to 5% amid QT, rate hikes, and swooning stocks.
This monthly decline in prices whittled down the year-over-year price increase to 8.4%, down from the 20% to 25% increases at peak frenzy last year (historic data via YCharts):
Active listings – meaning, total inventory for sale minus the properties with pending sales – rose to 732,000 homes in September, the highest since October 2020, up by 27% year-over-year for the third month in a row, according to data from realtor.com.
Compared to pre-pandemic years, active listings remain low, in a sign that the housing market is sort of frozen, with sellers not interested in selling at prices where the buyers might be; and buyers not interested in buying at prices where the sellers are, and so there is this standoff that shows up in the plunge in sales.
Price reductions have jumped from historic lows, a sign that some sellers are backing off from their aspirational prices and are cutting prices to where the buyers might be.
The number of price reductions jumped by 75% year-over-year from the mania-lows of the pandemic and is back in the range where it was before the pandemic:
Investors or second home buyers purchased 15% of the homes in September, down from a share of 16% in August, and down from the 17%-22% range in the spring and winter, according to NAR data.
“All-cash” buyers, which include many investors and second home buyers, declined to a share of 22% of total sales, down from a share of 24% in August, and down from a share of 25% to 26% earlier this year.
This declining share of sales to investors, amid plunging overall sales, shows that investors are losing interest in this market at these prices.
Holy-moly mortgage rates. After the fantasy-Fed-pivot-drop from 6% in mid-June to 5% by mid-August, mortgage rates are now at around 7%.
The daily measure of the average 30-year-fixed mortgage rate jumped to 7.37% today, according to Mortgage News Daily.
Freddie Mac’s weekly measure of the average 30-year fixed mortgage rate, released today, based on mortgage rates early this week, rose to 6.94%, over twice the rate a year ago.
But a 7% mortgage rate, as huge as it may be when applied to today’s crazy home prices, is still low, given that CPI inflation is over 8%. But it’s catching up:
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Canada is a different Twilight zone.
There are bidding wars for apartments at Jane & Finch which were listed for C$1900 a month.
A decade ago, Jane & Finch was a low income community.
Every low income community in Toronto is being replaced with downtown rental rates. It’s dire.
Wolf, how about a home affordability chart? One that shows Median House Prices and calculates EMI based on Average Mortgage rate for a 30 year mortgage with 0% down.
That one should be going to the moon? Is anyone paying attention to it?
“Investors or second home buyers purchased 15% of the homes in September, down from a share of 16% in August, and down from the 17%-22% range in the spring and winter, according to NAR data.”
What’s the all time high % of purchases made by investors?
Wondering when/whether they will begin to unload properties
Great analysis as always. I would like to add:
Lawrence Yun is again babbling about the fact that there is a shortage of housing and that should keep prices high (25% of homes had a bidding war according to him). I believe this is the last effort to mislead the delusional sellers which will worsen the situation.
With 75% of homes bought with a mortgage, people either qualify or don’t, and right now most don’t quality with high home prices and high interest rates.
So if they don’t qualify the bank won’t given them more money because a “housing shortage” will increase home values and change the bank’s appraisal.
I heard a marketplace item on NPR the other day, (I know, I know, save the invective — their dulcet murmurs & French horn interludes sometimes ease my nerves on short drives through long traffic), where the featured analyst was rounding off the burrs on the current state of inflation and the near-future of the housing market, citing “historically low inventory” as one the key drivers which would prevent a real fall in prices.
Correct, there can be demand for housing, but without people being to able to purchase the homes, it is not a housing shortage, but the demand is pseudo-demand and the shortage is a pseudo-shortage. Moreover, the costs of insuring and maintaining the home seem to be headed higher.
Agree the sellers won’t be able to sell at current prices and those who are able, won’t sell, and places may just stay on the market as inflation lowers the inflation adjusted selling price.
Plus, the other 30% of people with cash would be insane to buy a house at these levels. NOBODY with a brain is buying.
As a Broker for 47 years, Lawrence Yun could not predict his way out of a paper bag. Totally missed 2008-2012. And it looks like he is just a cheerleader for NAR this time even though it’s going to be worse than 2008+ and hundreds of experts are calling for a major recession.
I just find it odd that CARs has given up and already fully admitting 8.8% decline in prices in 2023. Somehow this news has not travelled up to NARs.
Lots of red here….likely a LOT more on the way.
Here in southern CA we are in a Mexican standoff. Sellers vs Buyers. Prices are still stupid high (40% over 2019 prices) and some morons are still buying and closing. This is further inflating the sellers confidence that prices will stay high. I really hope we do get a correction soon.
That’d be called a blow-off top in the stock market. As demand wanes, prices float upward on declining sales volume for a little while. Then when the last
idiotsbuyers have been milked of their money, the crash happens.A person I know in LA has a landlord that bought within the last two years. Due to a medical emergency they have asked to pay rent a month late, but the landlord has said he doesn’t have the funds to float a month of rent. Unreal.
And think, we’re not even in a recession yet and there’s still lots of money out there.
Ha ha. Exactly what I tell people, this moment in time feels a lot like 1979/1980. Bought my first home at 12% interest. We have inflation, just wait for STAGflation.
Since there is now no official definition for a recession, at least one the common serf could see, we will never be in a recession until there is politically advantage to call for one…
I feel very badly for the folks who bought their primary residence at the top of this market I’m not talking about giant hedge funds like BlackRock, I’m talking every day Americans. I truly fear many of them will get wiped out by this.
And yet, the fact is this: housing is insanely over priced, and it has to come to down, or there will be millions of folks who will NEVER be able to buy. My own all too modest home, tucked away in an unfashionable district deep inside the Bible belt, has more than doubled in just 8 years. And that’s here, in a quiet little side stream in the Deep South. Don’t get me wrong, I’d 1000% much rather this, than be underwater. But I’ve never seen my house as an ATM; its my home after all. If I could have my wish, some appreciation in value, sure, but not so much its cutting off the oxygen to some other family. That will never end well.
I sold my home 1.5 years ago. Way too high a Price so I feel a little bad for the couple, but not that bad. Stashed the $ in the bank (I know not making much) where it is very secure. Moved into an apt. for the 1st time in my life. You never realize how much a home costs you til you sell. No lawn service, no garbage pick-up, no watering, no repairs, not heating/cooling 3,000 sq ft of home, etc… Oh yeah, insane real estate taxes.
Next stop AZ when prices return closer to normal.
Actually, people who have bought their primary home in last 2 years with fixed 30 year rate of 3% or so are absolutely fine.
Why ? ==> because they have bought it for shelter, not for investment and if value goes down, should not matter as long as they are able to pay mortgages.
Investors who bought in last 2 years, second homes etc are the ones would fell the pinch and would be more than eager to exit the market.
It is very interesting to even think that you have buyers out there :-).
Few of my friends are buying their second/third home in San Diego in coming weeks.
Large pension funds like the Ontario Teachers Pension fund buy up entire towns in the USA for profit.
Quite amazing, given that Canada lauds itself as a socialist country with Liberal values.
The folks who purchased, in the last few years, at the top, with some mortgages 8x income and foolishly jumped on the greater fool property ladder insanity ZIRP cheap/easy money 3% down use my Uber job to boost my income statement bidding war no inspection bandwagon deserve everything coming to them…
Stupid should hurt. Fools will learn no other way…
Realtors in my market are still experiencing bidding wars on *some* properties that are appropriately priced and in good locations. Obviously things are much cooler relative to last year where any property, regardless of the location, was swamped with buyers. Also, 22% of buyers remain all-cash, meaning just over 1 in 5 buyers have no exposure to interest rates. Unless the remarkably resilient jobs market takes a swift, violent swan dive, many homeowners will avoid selling and stay put as their existing mortgages are likely at rock-bottom rates. The housing market may be correcting on a regional basis, but until large quantities of homeowners are forced to sell, I’m hard pressed to see a major correction in prices in the near term. I’d also wager we see a modest correction in the 10-year yield/30-year fixed rates by the end of the year which might take some pressure off of rates. If not, more and more buyers will go with ARMs in lieu of conventional.
” I’d also wager we see a modest correction in the 10-year yield/30-year fixed rates by the end of the year which might take some pressure off of rates. If not, more and more buyers will go with ARMs in lieu of conventional.”
Not with job losses accelerating and inflation raging in other areas (see Wolf’s articles on services inflation) which are reducing purchasing power.
Many big companies are laying off big, and the stock options are crashing (look at Facebook). This will be similar to 2010 when despite aggressive rate cuts and QE home prices continued to plummet due to job losses and uncertainty over employment, except this time the Fed’s hands are tied (Exhibit A is what just happened in England).
Realtors still peddling the ‘bidding wars’ nonsense? People may not want to sell due to low mortgage rates, but their houses won’t ‘worth’ what they paid for. Dilemma dilemma
“I’d also wager we see a modest correction in the 10-year yield/30-year fixed rates by the end of the year which might take some pressure off of rates.”
With QT and no reason for the Fed to stop raising rates, I’ll take the other side of this wager. In fact I am taking the other side as I sit in mostly short-term t-bills, but would like to go longer-term if rates were closer to or a little over inflation. I think rates are still correcting, but to the upside. I agree with you the jobs market has been remarkably resilient, but that works against your belief rates will correct downward and is one of the reasons I think rates will continue to climb. I’m open to changing my mind as circumstances change and admit anything can happen over a couple months. I guess that’s what makes a market.
many home owners would not put their homes for sale but home prices are defined on the margins. So few home sold for less in a neighborhood bring the comps of all homes.
Josh, valuations are based on transactions, not the pipe dreams of people who think that not being “forced to sell” can somehow prevent transactions from occurring at lower prices, which is precisely what’s happening. This silly argument is very common right now. I guess this is a part of the denial phase.
JoshWx,
So if I think I can get $2 million for my home, hopefully, and I put it on the market at $500k to stir up a bidding war, then there’s going to be a bidding war, and I might sell it to the winner for $1.5 million, with “1 Million Over Asking after a Massive Bidding War,” in the headlines all over the news… Sounds funny? This is done a lot. RE is kind of funny.
I doubt many institutional buyers are actually paying cash. They are borrowing commercially. The appeal of real estate is substantially driven by leverage.
I don’t know whether these buyers are exposed to rising rates.
22% do lump sum cash purchase??? Yikes. Is that Canada?
I wouldn’t say that all-cash buyers have no exposure to interest rates. Institutional or private investors are likely enough to already have or take up new debt and interest rates will still affect their loans. Think of corporate debt issuance (bonds). If some of them are servicing variable rate debt, or making losses on stocks as bond yields continue to climb, then downcycles could push more investment properties into the mix.
This data gives me some hope, but, here, in a second-tier New England city that has absorbed many WFH folks fleeing expensive first-tier cities, I’m seeing price drops here and there, but nothing significant. Houses still move at significantly higher prices than they did last year, especially at the sub $300,000 range. I think it will take job losses for this to change.
I didn’t buy last year when rates were low, thinking I didn’t want to be trapped and underwater. Plus, all the houses in my price range seemed awful. But now it seems like prices won’t ever be as low as they were even last year, plus interest rates have gone up. So now I fear I’ll forever be trapped as a renter, even though I make a decent salary and have a decent down payment. I’m guessing this is a paradigm shift, the final squeezing of the middle class.
Or perhaps I’m being too internet-brained, expecting things to change in months and not years… Only time will tell.
Are there any second tier New England cities, price wise, other then a few small ones in northern Maine? Bangor was a very sleepy market until the pandemic hit and I would have put that at the most affordable 30,000+ city in New England. Sub 300k homes that aren’t dumps are just starting to show up again.
“I make a decent salary and have a decent down payment.”
?????????
If you make a “decent salary” and have a “decent down payment” and can’t afford afford a sub $300,0000 home, I think there is something wrong somewhere!!!
I live in NH. The massive influx of out-of-state buyers has driven prices up statewide. We’re actually at a point now where a lot of northern NH towns have higher median list prices than southern NH thanks to all the prolific second, third, fourth home purchases (a lot of Boston $$). Prices are holding well across the southern portion of the state but if you don’t mind living up north, a big correction is inevitable north of the Lakes Region. Dilapidated crapboxes in North Conway area are selling for 450K+.
I am getting personal flyers from Berkshire Hathaway realtors now. I have lived here for 18 years and this has never happened before. I’m wondering if this a sign that sale properties are thin on the ground now.
I’m also getting a lot more Realtor ads than usual.
It’s not so much that there are fewer properties for sale, as it is that actual sales are down and their cash flow is receding. They’re trying to find more business.
The housing market being described as frozen mirrors my local market.
Listings exploded; nearly doubled in quantity a few months back, now essentially nothing new is being listed, nothing is selling, and prices are stuck at nosebleed levels.
Sounds like a denial phase.
Watch out during the acceptance phase……
This is fascinating to watch play out. It’s like the Manhattan commercial market where landlords will hold empty spaces for far longer than seems sane because they will not lower the rent. I hate to say it, but it almost always the right decision.
Commercial rent is a completely different ballgame
Arya Stark,
Wait a minute…. Commercial landlords often CANNOT lower the asking rent beyond a certain point because of the requirements of the loan. Asking rents have to be high enough in theory to service the loan, pay for maintenance, etc., even if the landlord cannot find a tenant willing to accept the rent, and no one is in the unit/office. And when the LLC that holds the property (collateral for the loan) runs out of money, and the landlord doesn’t want to throw more money at it, the landlord hands the office tower to the lenders and says, hey, this is your baby now, and washes his hands off it:
https://wolfstreet.com/2022/03/22/another-office-tower-goes-bust-blackstone-walks-from-manhattan-tower-it-bought-for-605-million-cmbs-holders-to-eat-remaining-losses/
And the lenders then sell the office tower in a foreclosure sale at a HUGE loss:
https://wolfstreet.com/2022/02/17/whats-a-vacant-office-tower-worth-foreclosure-sales-show-how-values-of-1980s-office-towers-in-houston-have-collapsed-dishing-out-huge-losses-for-cmbs/
Inflation is at eight percent, but the Treasury yields are approaching five percent and the Landlord class is panicking, especially in Canada where they charge a few grand a month to rent a makeshift furnace room with bizarre stipulations.
Everyone and their mother became a rent-seeker thanks to the FED’s easy money policies and the largest credit bubble in the history of mankind. There is a large number of people who have no business being landlords, not having anywhere near the resources needed to weather any sort of financial storm. Their financial clocks are about to get cleaned.
There can be no real asset devaluation without job losses. Why would the percentage of the market renting out their “illegal hotels until big tech disrupted the market”, i mean homestay rentals, purchased with all cash, want to put them on the market at a loss if high flying upper income earners are still renting them? When 6 figure jobs with no real benefit to society dissapear and there are no longer any CNA job openings, and when the rest of people’s retirement income, tied to a super inflated market collapses, then the affordable sales will happen.
If there cant be real estate devaluation with job losses then what explains this price decrease and low volumes ? The job market is still pretty hot, unemployment rate all time low.
The way I see it is : It is a question of affordability. A town may be selling homes for $500K, where the employment rate is say 100%, but people are earning measly $40K/year. Despite this 100% employment rate, the homes won’t be sold for $500K because people, although employed, are not able to afford.
The same is happening right now. Prices too high, mortgage rates too high.. making homes un affordable.
A lot of jobs depend on home sales. Not just mortgage brokers, appraisers, RE agents. Also furniture and appliance businesses, painters, movers, carpets, all those things that often get changed when a home changes hands. And of course the MBS finance industry. Many of these people will be unemployed or earning less.
There’s also going to be a big downturn in construction, with the same kinds of income loss issues.
Lots of people will be forced to sell.
Digger says: “There can be no real asset devaluation without job losses.” As opposed to job gains? The labor market has held up well considering the deflation going on in the financial markets. Inflation is a supply side problem. So fix the supply issues. Keep the jobs. A national job guarantee would also mitigate inflation.
People are still dying. The first forced sales are the kids unable to do anything with moms house.
Probate leads the market lower.
Off Topic but I had to toss it in: SNAP just went “crackle” and “pop”.
Investors who add milk to their shares and might at least end up with a bowl of cereal…
Check out META taken down by SNAP again, it seems.
No real surprises in the home sales data given the recent rapid rise in the interest rates over the past 6 months and delusional sellers still clinging to artificially high home prices.
What home sellers don’t understand is the rapid rise in home prices from let’s say mid to late 2020 through mid to late 2021 was nothing more than a classic capital market “blow off top”. In the stock market, the blow off top occurs very quickly, first accelerating higher at a dizzying speed and then drops just as fast.
In the housing market, the final blow off top (of rapid price increases) took about 12 to 18 months, most likely ending maybe in early 2022. The drop in prices will come and have already started but the problem is, home sellers don’t want to accept that the last 20% increase in their home prices was all make believe (or maybe they simply don’t understand basic math). Just made up, out of thin air, courtesy of yours truly, The FED.
Any smart home seller will look to aggressively price their home and exit as they abide by the old saying “those that sell first, sell best”. For the others holding onto a pipe dream, once the real impact of interest rates roll through combined with job stagnation or losses, and then layering in “comps” from recent sales that will begin to push valuations lower, well all’s I can say is good luck.
Wasn’t there a scene in The Big Short where the renters (paying rent) did not know that the owner-landlord was not making the mortgage payment.
Got a “cold call” pamphlet in my mailbox yesterday for a brand new housing complex with extra fancy modernist luxury condos out in a modestly distant exurb from my current city. I am not sure how these developers are hoping to sell those especially given how the housing market is going as outlined in this Wolfstreet article. Its kind of hard to sell “All the cost of being downtown while in a distant hard to commute from exurb with no attractions. Plus, ‘all’ the zero-lot condo space with no greenery of downtown in an area that people only move out to for the purposes of having large houses with significant acreage (and often even horses.) Yes, we are the worst of all worlds!”
While it may have been clueless for them to build this space to begin with, there is a sign they are aware they are now in trouble. Namely: I am not on the market for buying anything and am showing no signs of being so, and yet these developers sent me a gigantic glossy magazine-sized and magazine-thick promotional pamphlet filled with large full colored pictures all on expensive thick and glossy stock. They seem to need someone, anyone, to start taking these off their hands ASAP and don’t care that they are cold calling with what might be $5 or even $10+ promotional pamphlets that were probably once reserved exclusively for people giving strong signs of interest specifically in their development.
Lets see how many more of these I get from other developers over the next year.
The Federal Reserve is still hiking rates and have no reason to stop, but the true believers still come out on every real estate article preaching how prices won’t go down and the Fed must pivot. They will have to continue hiking rates until those people go away, but the Fed has no credibility and it will take a long time to convince.
I see this incompetent administration over reacting to the spike in mortgage rates and signing an executive order freezing interest rates on new mortgages. They are probably already working on it. They will cite price gauging by mortgage companies just like they have done with the energy industry. Once mortgages hit 8% its game over for the real estate industry. The credit markets will freeze up and there will be no sales or listings. Those sales that are forced to occur will be 20% to 30% below current levels.
Wolf’s charts are so much more interesting than any drama on Netflix.
The articles and comments keep me up late reading and get me out of bed early waiting for the next plot twist. Thank you!
In summary:
1) House prices have dropped 7% from June 2022 levels but are still up 35% (They have to fall 26%) from Jan 2020 pre-pandemic prices.
2) Active listings are up 133% compared to the pandemic lows in 2021 but still 22% lower than Jan 2020 levels.
3) Mortgage rates are up from pandemic lows of 2.5% in 2021 to 7%. Mortgage rates are up from the Jan 2020 4% rates.
In order to restore the more stable 2020 pre-pandemic housing market, prices must drop, active listings must increase, and mortgage rates must fall.
I am staying tuned for the next exciting episode.
“In order to restore the more stable 2020 pre-pandemic housing market, prices must drop, active listings must increase, and mortgage rates must fall.”
Affordability is key. Unless lending standards just go completely out the window, prices will drop simply due to lack of affordability. Active listings don’t really matter yet, otherwise why would prices already be down now if active listings are still below normal levels?
Also, I think you meant to type “mortgage rates must rise” for prices to drop. That is correct, and a further rise from here will obviously worsen affordability. I see no way death-pledge rates stay under historical norms of 9% with the Fed lollygagging on rate raises and employment being so stubborn.
And just wait for higher rates to kill all the zombies. They’ll start laying off all those hopeful-buyers-in-waiting, just like the last crash. Then you’ll have both an influx of active listings AND nobody to sell them to.
“In order to restore the more stable 2020 pre-pandemic housing market, prices must drop, active listings must increase, and mortgage rates must fall.”
The 2020 housing market was still based upon a fake economy of QE and USG deficit spending. It wasn’t even close to normal.
If the 1981-2020 bond bull market is over which it almost certainly is now, mortgage rates aren’t going to return anywhere near pre-2020 levels.
“Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory,” Yun (NAR chief economist) said in a statement.
The lack of inventory is the problem that has to be rectified before the market can move downward in proper proportion to the higher home prices and interest rates. When there is a pre-pandemic level of inventory, we would see some movement. GFC levels of inventory, even better.
Yun’s statement is anecdotal, dressed up as average, and is therefore propaganda. If there were this kind of demand, prices would jump. But they fell. That’s what the numbers say.
Wolf – if you were to make an educated guess, how many months/years will it take for the housing market to find the bottom of this bubble?
Depends on the rich,they get nervous ,bad things happen they already pulled 25%.If retail investors keep buying dip it won’t end until retail is broke .By the way rich are also buying properties in foreign countries. Can’t stick around fort mayhem
Last time it took about five years to hit bottom. The Fed threw trillions of dollars at it starting in 2008, and then it bottomed out in 2011. Now we’ve got lots of inflation, and the Fed is doing the opposite.
‘Lack of inventory’ is indeed interesting. Instead of measuring in absolutes, months of supply may be more accurate. Regardless, I could argue that there is no escaping from the devaluation coming from high rates. Assume a scenario where rates are into double digits, record number of sellers exit the market, sales plunge and inventory is low. What happens? Someone on the block dies, their estate sells the house at market price and brings down the valuations for the entire neighborhood.
Housing always works on the margins. For most people the value of their house went up without ever listing it on the market. It goes down the same way. Even with low inventory, the reversion to mean doesn’t stop.
Agreed. The rate of decline doesn’t matter as much as the final destination.
As I’ve been saying from the beginning, people are still paying to live near SocalJim!!!!
The Freddie Mac rate of 6.94% that you refer to in the article includes 0.90 points to buy down the rate, which is the only reason it remains below 7.0%. Freddie Mac quotes rates that often include points – unlike the MBS rate quote of 7.37%.
Not that far away, a sale closed for about 90% of the initial listing price after being on the market for two months. This is close to the 7% decline in the median price of existing homes.
My next door neighbor’s house just went up for sale at a 7% discount from Zillow’s estimate. Coincidence or maybe they are aware of the statistic.
A few years down the line, may be time to buy real estate again… get ready now. I’ll be too old to play, most likely. But I’m going to prep my granddaughter. The housing shortage in America continues…
Probate Probate Probate.
The logjam will break every time a pair of siblings can’t pay the back taxes on mom’s house when she passes.
Probate always ends the impasse.
Not always. Here in So California, LOTS of millennials and even some gen-Xers live with their boomer parents in multi-generational households. The kids will happily assume the parent’s house that was purchased for much less a while ago. One sibling may not be able to afford a house, but maybe they could afford to buy out other siblings. I’ve seen this happen a couple times to gen-Xers I know in recent years. Paid-off houses can easily be put up as hands-off rentals handled by property management and the rental income gets split by the kids.
Sure, there will be houses that hit the market when the owners get too old or kick the bucket, but certainly not all of them. Houses can stay in the family too. Don’t forget, we millennials are a bigger generation than the boomers. We’re starved for places to nest and SFH construction has been really anemic for a solid 10 out of the last 12-14 years.
Question: in what essentials, if any, is our real estate bubble unlike the Japanese debacle?
IE: is the optimism so widespread among realtors that we’re not heading to the same slaughterhouse warranted?
There is nothing similar between the Japanese real estate market and the USA real estate market other than the words “real estate”.
I live in Bellevue east of Seattle where real estate prices have been skyrocketing for years. New massive condo developments in construction all over the city. Today I looked at condos available for rent in downtown on Zillow and stopped counting at 575. Asking rents staying high. At some point the landlords will have to blink and then everyone will want a rent reduction.
A 7% reduction in prices when the normal seasonal reduction is about 5% is statistical noise. The real estate crash so many are anticipating might be coming… but it’s still not here yet.
I agree and share the sentiment. The directionality of data looks down. Not sure if the prices would actually go down in any meaningful way. When I say meaningful I want 30-40% or more to go back to 2019 levels which was quite high anyway to begin with.
We don’t need high unemployment for the prices to go down. We just need mortgage rates to keep climbing higher .
All the government and federal reserve needs to do is ensure mass layoffs never happen, then people will always be able to pay their mortgages and the price of they paid for the house won’t matter.
Wannabe oligarchs attempt to use lobbying and other means to influence politicians in Washington D.C. and the Federal Reserve officials in order to enrich themselves. For example, triggering housing crises and buying foreclosures in bulk for discounted prices. Fortunately, the USA middle class has a long track record of effectively overcoming the interests of oligarchs and preventing mass layoffs and housing crises.
Therefore everything is fine, nothing to worry about. Just get mortgages and buy as much house as you can qualify for.
We are simply working our way back to a normal market again. Inventory, prices, time to sell, reductions etc are all still out of whack.
These wall street & fed induced straight line booms and busts benefit no one. Slow moving, boring housing markets are always the healthiest ones.
Mortgage apps off around 60% yoy. Sales off about 25% yoy. Cash buyers about 22%. Those numbers do not seem to jive. Does the 22% represent a large increase from a year ago?
Jdog,
The mortgage app figure you cite is total mortgage applications, which equal the sum of: purchase mortgage applications (to buy a home) + refinance applications (to refinance an existing mortgage).
Purchase mortgage applications have been down between 23% and 37% yoy over the past six weeks. But this reflects what homes sales will look like in October and November. Mortgage apps in August, which would relate to closed sales in September (which this article discusses) were -18% to -24% weekly, right in the range of September closed sales. What current mortgage apps are showing is that October and November home sales are going to be extra shitty.
Refinance mortgage applications have collapsed by about 90% yoy
This has the details and charts:
https://wolfstreet.com/2022/10/05/housing-bubble-woes-mortgage-demand-plunges-rates-near-7-spread-between-mortgage-rate-10-year-treasury-yield-blows-out-most-since-dec-2008-and-1986/
We just got our first appraisal case after being stiffed for 2 weeks. At this rate we may qualify for food stamps. Our income will not even cover our overhead. The market is dead. No one is buying, selling, refinancing. Listings are non-existent. Real estate agents and brokers are going to be SOL (Sh$t out of luck). Lawrence Yun is going to be pounding sand.