The Most Splendid Housing Bubbles in America, November Update: Deflating Everywhere, Fastest in San Francisco & Seattle. Phoenix & Dallas Roll Over Too

In several markets, prices plunged even faster than they’d spiked.

By Wolf Richter for WOLF STREET.

From the peak in May, house prices in the San Francisco Bay Area dropped by 11.6%, in the metros of Seattle by 11.3%, San Diego by 7.9%, Los Angeles by 6.0%, Denver by 5.7%; in the Dallas metro, prices dropped by 4.3% from the peak in June, according to the S&P CoreLogic Case-Shiller Home Price Index for “September,” released today, which consists of the three-month average of closed home sales that were entered into public records in July, August, and September, of deals that were made sometime around June through August – that’s the time frame we’re looking at here.

This is the second month in this downturn that the index, which lags reality on the ground by 4-6 months, is showing month-to-month house price declines in all 20 metros in the index.

The biggest month-to-month drops occurred in:

  • Seattle: -2.9%
  • San Francisco: -2.9%
  • Las Vegas: -2.4%
  • Phoenix: -2.2%
  • Dallas: -2.1%
  • San Diego: -2.1
  • Denver: -2.0%

Month-to-month drops of 2% or more in the Case-Shiller Index (a three-month moving average that smoothens month-to-month volatility) occurred only during Housing Bust 1 and in the current downturn.

In the San Francisco Bay Area, house prices plunged 2.9% in “September” (three month moving average of July, August, and September) from August, and by 11.6% from the peak in May.

Plunging faster than spiking: Over those four months, the index plunged faster (-46 points) than it had spiked in the last four months of the huge spike (+40 points).

These four monthly drops in a row slashed the year-over-year gain to just 2.3%.

The Case Shiller Index for “San Francisco” covers five counties of the nine-county San Francisco Bay Area: San Francisco, part of Silicon Valley, part of the East Bay, and part of the North Bay.

In the Seattle metro, house prices plunged 2.9% in September from August, and by 11.3% from the peak in May.

Over those four months, the index plunged nearly as fast (-47 points) than it had spiked during the last four months of the mind-blowing spike (+49 points).

These four months of drops slashed the year-over-year gain to 6.2%.

In the San Diego metro, house prices dropped 2.1% in September from August, and by 7.9% from the peak in May.

Down not as fast as up: -34 points in four months since peak, +44 points in last four months of the stunning spike.

These four months of drops cut the year-over-year gain to 9.5%.

Los Angeles metro:

  • Month over month: -1.8%.
  • From the peak in May: -6.0%.
  • Year over year: +8.8%.
  • -25 points in four months since peak compared to +38 points in last four months of spike.

For Los Angeles, the current index value of 398 means that home prices shot up by 298% since January 2000, when the index was set at 100. Based on the increase since 2000, Los Angeles and then San Diego used to be the #1 Most Splendid Housing Bubbles in America. Both have now fallen below Miami (+304%), though prices in Miami have now started to drop as well.

The Case-Shiller Index uses the “sales pairs” method, comparing sales in the current month to when the same houses sold previously. The price changes within each sales pair are integrated into the index for the metro, are weighted based on how long ago the prior sale occurred, and adjustments are made for home improvements and other factors (methodology).

Denver metro:

  • Month over month: -2.0%.
  • From the peak in May: -5.7%.
  • Year over year: +9.3%.
  • -19 points in four months since peak, +35 points in last four months of spike.

Phoenix metro:

  • Month over month: -2.2%.
  • From the peak in June: -4.4%.
  • Year over year: +12.6%
  • +15 points in three months since peak, -20 points in last three months of spike.

Portland metro:

  • Month over month: -1.2%.
  • From the peak in May: -4.3%.
  • Year over year: +6.7%.
  • -15 points in four months since peak, +27 points in last four months of spike.

Dallas metro:

  • Month over month: -2.1%.
  • From the peak in June: -4.3%.
  • Year over year: +16.3%
  • -13 points in three months since peak, +20 points in last three months of spike.

Las Vegas metro:

  • Month over month: -2.4%.
  • From the peak in July: -3.7%.
  • Year over year: +12.9%
  • Down faster then up: -11 points in two months since peak, +5 points in last two months of spike.

Washington D.C. metro:

  • Month over month: -0.9%.
  • From the peak in June: -3.1%.
  • Year over year: +6.5%
  • Down faster than up: -10 points in three months since peak, +9 points in last three months of spike.

Boston metro:

  • Month over month: -1.6%.
  • From the peak in June: -3.0%.
  • Year over year: +8.8%
  • -10 points in three months since peak, +16 points in last three months of spike.

Tampa metro: 

  • Month over month: -0.9%.
  • From peak in July: -1.3%
  • Year over year: +23.8%
  • -5 points in two months since peak, +10 points in last two months of spike.

Miami metro:

  • Month over month: -1.0%.
  • From peak in July: -1.2%
  • Year over year: +24.6%
  • -5 points in two months since peak, +14 points in last two months of spike.

In the New York metro:

  • Month over month: -0.7%.
  • From peak in July: -1.3%
  • Year over year: +10.6%
  • -3.6 points in two months since peak, +3 points in last two months of spike.

The New York metro has experienced 173% house price inflation since January 2000, based on the Case-Shiller Index value of 273.

The remaining six cities in the 20-City Case-Shiller Index have experienced less house price inflation and don’t qualify for this line-up of the most splendid housing bubbles. But all of them booked month-to-month declines in September: Chicago (-0.6%), Charlotte (-1.1%), Minneapolis (-1.0%), Atlanta (-0.8), Detroit (-1.2%), and Cleveland (-0.7%).


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  217 comments for “The Most Splendid Housing Bubbles in America, November Update: Deflating Everywhere, Fastest in San Francisco & Seattle. Phoenix & Dallas Roll Over Too

  1. Lune says:

    Wonder if we’ll see a temporary slowdown in these declines in next month’s Case-Schiller numbers due to the slight dip in mortgage rates and the dead cat bounce in the stock market we saw in August…

    (And if we do, how much do you think the media will be all over it blaring that the housing market is back on track (after a slight gully) and everyone should be buying now now now!)

    • Wolf Richter says:


      No, not in the “October” numbers that will come out next month because any slowdown in the decline due to the “slight dip in mortgage rates” in November wouldn’t show up in the Case-Shiller till early next year, due to the lag of the Case-Shiller.

      So November deals might close in December and maybe enter the public records in December at the earliest, to be picked up by the CS at the earliest in the three-month moving average of October, November, and December, which we will get in February.

      The CS is the most reliable index we have, imho, but it lags dreadfully far behind.

      • Lune says:

        Right, but I think there was a dip in the mortgage rate in late August as well, if I recall, and a lot of talking heads saying the pivot is here. But maybe my memory is faulty.

        Although it does delay the numbers, I’m glad they use a 3-month moving average so that it smooths out these fluctuations. Otherwise, we’d be subjected to even more bleating from the national press every time house prices randomly tick up for a week, or mortgage rates randomly tick down.

        • Wolf Richter says:

          Yes, any dip in mortgage rates over the summer is reflected here in today’s numbers. You’re looking at it.

        • Leo says:

          If you were expecting that a tiny dip in mortgage will cause house prices to increase again, now will be the right time to sue your real estate agent for misinformation!

        • joedidee says:

          2% ‘decline’ = buyer getting few repairs now
          our sales memo doesn’t seem to have been read yet
          still have bidding wars
          and occupied homes selling – watching neighbor now pack up after ‘quick’ 45 day sale(deal, inspection to close)
          they got $50k over 2008 price I had and I’m 1,000 SF bigger
          makes mine $500k now – all I see is higher property taxes to pilfer from home owners
          property taxes should be illegal

      • Softtail Rider says:


        At the risk of being branded, barred, and kicked by the wayside I have a couple of questions.

        No where in this article has inflation been noted in the rise of all costs and purchases. Yes it was talked about but not included/explained. A good example is the current spiel about the 2.9 something in sales. Include inflation and this number goes down.

        The graphs are scary with a 20+ timeline. Shorten that time and the gross peak will smooth.

        I know I’m just an old SEMO plow boy but some things stick out like a sore thumb.

        Not complaining, just stirring the pot.

        • Leo says:

          It’s interesting, when corrected for inflation, houses in Seattle and San Francisco may have lost money over last 1 year. Add holding costs like property taxes, hoa, utilities, insurance, maintenance etc and most houses would have lost significant money. Also the data is old and latest numbers will show even bigger losses.

          Looks like the Pivot guys are still waiting.

        • Wolf Richter says:

          You can do the math. At the top end (Los Angeles, San Diego, Miami, San Francisco), house prices have increased at around 300% since the year 2000. CPI since the year 2000 has increased by about 76%

        • joedidee says:

          Wolf said – CPI since the year 2000 has increased by about 76%

          so avg inflation 2000-2020 = 8.5% so 20×8.5% = 170% + 15%x2

          I get 200% inflation during this time period
          you must be using new fang dangled CPI

        • Wolf Richter says:

          “so avg inflation 2000-2020 = 8.5%” = BS LOL

    • 1stTDinvestor says:

      Great data, thank you. But one question. Are the YOY numbers positive because prices were still going up so rapidly in Q4 2021 and Q1 2022?

      • Leo says:

        It’s only because in case shiller there was 8 months of increase followed by only 4 months of decrease.

        Meanwhile, in Seattle WA, the average house price in May was around a million dollars and is losing around $25,000 every month for last 4 months. Easy come, easy go!

        I feel sorry for folks who trusted their real estate agents on “this is a really good time to buy the house”.

        It’s worst than stocks because most folks only put a part of their current savings in stocks. However, while buying a house most people max out their mortgage and commit to putting all their current and future savings of 30 years into buying this house.

        • 1stTDinvestor says:

          Thanks, that’s what I thought but wanted to be sure. The Fed sure kept that punch bowl out waay too long. And as Wolf says, the ultra low interest rates (free money), “turned investors brains to mush!”

  2. Dudu says:

    it looks like the crash is twice as fast as 2008 … makes sense with fast pace of interest rates

    Mid next summer will be carnage

    • Old Ghost says:

      Dudu. There may be carnage.

      But housing and real estate won’t go all the way to zero, unlike crypto, and possibly some of the other hot asset classes (select stocks, NFTs come to mind here).

      • 2banana says:

        Housing and real estate can and has gone negative in the past.

        As in, the holding costs (P/I, taxes, insurance, utilities, maintenance, bringing up to code, etc.) eats you alive.

        And may cause a house to have a negative value – as in no one wants it even if they could have it for free.

        If a stock or crypto goes to zero, it doesn’t you anything to year after year.

        • Leo says:

          That is scary but correct due to the cost to perform mandatory maintenance.

        • Leo says:

          Also it’s worst than stocks because most folks only put a part of their current savings in stocks. However, while buying a house most people max out their mortgage and commit to putting all their current and future savings of 30 years into buying this house.

        • Thunder says:

          As a Builder (retired) the cost to maintain a home is approximately 2-3% per year. Things fail, things wear out and externally Roofs guttering and external paint are continuously rotting in the open. Many just leave it as they cannot afford it and then you get the “Detroit Rot” which lowers everyone’s property.
          In 1992, I, as a Builder, I purchased a fully finished and over spec’d display home off a Bankrupt builder for the cost of a raw block of land across the road. Bank owned it, didn’t want the upkeep and after a tussle sold it for Land value. Patience in the last 30 years will repeat. Land value is rock bottom.

    • MiTurn says:

      But I wonder where it stops and people start buying again, those currently on the sidelines and waiting out this decline (and wisely so).

      Also, what price becomes affordable? I know that recently I paid $3.81 for a gallon of gas and thought I got a good deal, as the local high got up to $4.15 this summer. But then, last year I paid under $3. Same as housing? New normal!

      • Augustus Frost says:

        Not even close to affordable.

        Townhome I have been watching in ATL listed at $425K (maybe worth $400K now?) shows a monthly payment somewhat over $2600 with 20% down. Add in about $1000/month for HOA, property taxes, insurance and utilities and total cost to live in it is about $3600 per month.

        Supposedly (according to CNBC), someone making $107K can afford it but that’s nuts, not unless they can make an outsized down payment much larger than 20%. That’s serfdom.

        The markets profiled by this article are (far) more expensive. ATL is probably slightly higher than the national median.

        • Seen it all before, Bob says:

          Because I am old, $3600/month seems like a lot.

          However, you added:

          “$1000/month for HOA, property taxes, insurance and utilities and total cost to live in it is about $3600 per month.”

          HOA(gym membership), prop taxes, insurance, and utilities make up a HUGE part of my monthly expenses.

          At 107K/year = 9K/month, that leaves you about 4.6K/month after taxes for food, savings, Starbucks, and other fun things.

          I could survive on on that and have a good retirement/savings account.

          How many make 107K in Atlanta?

        • Augustus Frost says:

          Not $107K after tax, before tax.

          Depends somewhat upon someone’s tax math, but I take home about 70% of my gross pay, after contributing enough to meet the 401k match. (I save the rest on my own.)

          If it’s a married couple, maybe take home pay is 75% or slightly more. $9000 x 75% is about $6750. $3600 in housing costs is somewhere around $3400 net of tax, as the tax benefits aren’t meaningful with the change in std deduction.

          That’s about 50% of take home pay. Not my definition of affordable at this income level, unless your other expenses are low/below average, don’t go anywhere, or do anything

          I can (and do) live on less than $3400 per month excluding housing (a lot less) but a lot of families can’t or don’t, excluding their housing. I don’t owe anyone a cent and have good medical coverage.

          Conversely, one of my friends whose household income is presumably “comfortably” above $107K (I’d guess about $130K with both working) apparently can’t afford net housing costs of $3400 per month.

          By my standards and what I know about his situation, he can cut back on other expenses somewhat, but not enough. His housing costs are probably somewhat more than half of $3400.

        • Augustus Frost says:

          Make that 60% for me, not 70%.

          Let’s say it’s 70% for most married couples. That would be $6300 per month or $2900 after housing.

          Not much going into 2023 for a family.

        • bulfinch says:

          Seen it all, Bob — even if one can afford it, it is still a lot, irrespective of age. But then, the goal posts keep moving and perception keeps getting manipulated with each generation.

          Hoping prices cool out here in Austin, but they’re damn’d sticky. Plus, everyone here is loaded/clueless.

        • Leo says:


          You sound like the real estate agents that I see in open houses that have been listed for 3 months, without any price reductions, telling others that Fed will Pivot soon and this house will be a great investment and so you should max out and put all your current and future earnings into it even if it means you live like a poor person from now on!

        • Seen it all before, Bob says:

          Augustus is correct. I may have neglected to add all of the taxes/medical withheld from a paycheck. He is likely closer at a balance of $3400/month for savings, food and entertainment.
          I live modestly. I don’t spend $3400/month so I would be saving most of this.

          However, around here $3600/month for rent that included utilities and a gym membership would be a good deal.
          I don’t know the rent prices in Atlanta. I have a co-worker who spends close to $4K for a 3 bedroom house for rent, utilities and gym.

      • Depth Charge says:

        “But I wonder where it stops and people start buying again, those currently on the sidelines and waiting out this decline (and wisely so).”

        They will be buying all the way down. That’s who sets the comps – “knifecatchers.” Last housing crash, those who rushed in to buy at the first sign of drops ended up getting crucified. Some houses were foreclosed upon two, sometimes three times in a row until prices finally bottomed.

  3. Kunal says:

    Some of the price drop is seasonal and some of it is due to larger proportions of better homes sold. And rest of it is due to minor correction which is expected after any historical bull run. As long as consumers have record cash saved, which they still have (1.5T) and as long as real interest rates remain negative (-5%), there is no reason for real estate to crash. We just had a record Black Friday and Cyber Monday which means consumers are not hurting in any way and are ready to spend. These consumers will not fire sale their real estates knowing very well that in long run real estate only goes up (due to normal inflation).
    Real Estate will crash only when consumers will run out of cash and real interest rates becomes positive. Neither will happen because the moment we get near there, US Govt will start sending stimulus checks again (i.e. buying vote) and Fed will pivot (as usual).

    • Wolf Richter says:


      1. “Some of the price drop is seasonal”– hahahahahaha, whatever. Are you vision impaired and cannot see the charts?

      2. “Some of the price drop is seasonal” — hahahaha, there is very little seasonality in the CS because it’s a three-month moving average, which you could see in the charts if you could see them.

      3. Hahahahha, I still cannot get over your hilarity.

      4. “and some of it is due to larger proportions of better homes sold.” Hahahaha RTGDFA. The article explains the methodology of the CS: “sales pairs,” based on the price difference of the SAME house when it sold previously. The CS is immune to shifts in mix.

      5. “And rest of it is due to minor correction…” you just crack me up

      I couldn’t read your stand-up comedy script any further because I’m ROFL.

      • Depth Charge says:

        Kunal is delusional. It’s concerning, honestly. He has lost all touch with reality.

      • Leo says:

        Kunkle, I bet you are delusional enough to go long on real estate. If you failed to flip you house at Zestimate and your house has been on market for 3 months, you might have a case against Zillow. Do join the class action lawsuit against Zillow to recover losses due to inflated Zestimates that failed to replicate market reality.

    • Lucca says:

      Kunal, are you serious? I can’t believe you are serious or even real. Wolf tells you off all the time and you keep coming back and posting more nonsense.

    • Phoenix_Ikki says:

      Once again, Lawrence Yun would be proud of you…”The force is strong with this one….”

      In this case, the force is that never ending pivot and housing always go up BS…

    • Lune says:

      “it’s just a little gully!”

    • roddy6667 says:

      You must be the guy who writes the talking points for Realtors. Don’t you have a pallet of those bumper stickers that read “Now Is A Great Time To Buy A Home”???

    • QQQBall says:

      Everyone has their opinion. Layoffs are next IMO. Moving is easier after you get fired.

      Crash or so grind down, prices are coming down IMO. In our target market, prices have barely budged and are up 40% to 50% over 2019 and perhaps 30% since 2020. Those are end-of-cycle type moves. Those types of moves do not get reversed in 2 or 3 months. RE pumps ALOT of moving, lots and lots of money, into economies and there is no loan production in the pipelines. This will become apparent in hindsight. Banks are going to cut staff and overhead. Real estate offices, escrow offices, etc., are all gonna contract. This will impact restaurants and such and I would think car sales & leasing if it hasnt already. Portions of CRE industry is already in a depression. In 40 years, it has NEVER been like this, not during Asian Contagion, coming in or out of RTC years, Y2K, NazzQuack bust, etc.

      • Jdog says:

        Housing prices and unemployment are linked in economic downturns.
        When unemployment begins to rise, people begin having to move to get jobs elsewhere, and at that point they have to sell. If they cannot sell, they have to just stop paying, take the hit, and just leave, and go on with their lives, but they have to work and that is bottom line.

  4. Sam says:

    How can I find the same chart for Chicago?

    • Wolf Richter says:

      Chicago really doesn’t belong here, in terms of housing bubbles. All charts here are on the same scale, going up to index value of 420, including Chicago:

      • MiTurn says:


      • Jon says:

        420 is the perfect number, because you need to be smoking something if you buy at that price.

      • Evelyn Wood Head says:

        I live in Northwestern Indiana and it is still a boom town because everybody is fleeing the crazy high Cook County Illinois-County tax rates by moving to this section of Indiana. There are at least 5 new subdivisions currently in the breaking ground stage in Lake and Porter County Indiana. The property taxes in Cook County Illinois are at least 2X to 3X what they are in Lake or Porter County Indiana; which is just over the border from Illinois. These high Cook county taxes, for the most part, go to paying city and county pensions. I have a particular job that allows me to drive all over and meet and see people that makes my job one of the best social experiences available. So with what I see and wonder is who in their right mind would buy the displaced houses in Illinois to allow the current seller to run to Indiana. From the people that I meet from Illinois they are still in hope of selling their home in Illinois even though they are already occupying a new home in Indiana.

        Additionally, what I have noticed is that older homes and flipped homes are now have a much increased time on the market vying towards needing stainless steel chains on the hanging realtor signs from just the carbon steel chains that need to only last a couple of weeks in the just prior market. In the new home market the existing new subdivisions are still erecting new homes and as I stated earlier at least 5 new subdivisions are in the breaking ground stage. The traffic and population in this part of Indiana has exploded.

        The above is just some inferences to toss around in your mind as you are trying to figure out the logic of this crazy economy.

        Thanks for reading it.

        • Mike R says:

          Have fun soon with all the lake effect snow. Northern Indiana gets hammered with it pretty good.

          Western burbs outside of Crook County Illinois is far better place to live. Property taxes are high but you get what you pay for, and in our case, schools are tops in the nation, very low crime and usually in top 10 best cities to live and raise a family. Also our home prices appreciate consistently up but at slower rates than these other absurd metros in the charts. So we don’t have the boom and bust cycles. Unemployment rates remain low and also don’t go boom and bust. And businesses of all sizes do pretty well. Every time I’m tempted to move because of our stinky state politics and taxes, when we look elsewhere across state lines, the bad in other places outweighs the good we have here. The grass is greener where you water it. It’s not cheap here but it keeps out the riff Raff and we don’t have the absurd levels of homelessness like in other places where encampments are everywhere or drug needles or feces are laying on sidewalks. Boom areas like yours always go bust. We saw that same thing happen to the southwest portion of the chicago metro area. Too far out and too far away from too many good things. Got slaughtered during the GFC. This next bust will be far worse than the GFC, and home prices will crater pretty much everywhere but where we are at. Especially in all the new subdivisions being built now, and homes will be underwater on their mortgages. Except no refis or Fed bail outs this next time.

    • Halibut says:

      Illinois/Chicago have very high property taxes along with a declining population and many businesses relocating their headquarters out of state.

      Accordingly, it wasn’t so bubbly in the first place.

      • tom20 says:

        Chicago has certainly excelled in driving folks out.
        Keeps us busy….I just need to work on my Polish.

      • Escierto says:

        Just for giggles I compared the property taxes and insurance on two $400K houses, one in Highland Park, Illinois and one in Alamo Heights, Texas. Illinois – $1100 a month. Texas – $1350 a month. Nobody tops Texas when it comes to skyrocketing taxes and insurance. It’s a hellhole!

        • SnakeEater says:

          No income tax in Texas. Illinois on the other hand is incredibly high.

        • SteveO says:

          Easton Maryland $450k house with 2 acres the property and school taxes in the year 2000-$1200 and in the year 2022- $1700.
          The Chesapeake bay to the west and Atlantic ocean to the east beautiful farms and forests surround Easton Md.

          Folks form NJ look at million dollar house and say property and school taxes at $3500/ month not bad. No that’s $3500 per year.

      • anon says:

        Supposedly … the public schools in Illinois/Chicago/Cook/Collar Counties are very, very good.

        As someone whose children and Sons/Daughters-in-law all went through them … I’m not so sure about that. And neither are they.

        But that is ‘The Claim’ anyway.

        We still live in one of the collar counties because we’re simply too lazy to move. Not to mention the fact that we can’t agree on where to move :-) So we stay put. Pay the exorbitant taxes. Put up with the lousy weather.

        At least the home is debt-free. Lake Michigan water is very nice too.

        And we are close to the grandkiddies.

        • Lisa says:

          The Chicago Public School system is not good at all. The schools in the suburbs are great. My advice to anyone would be to not send your kids to CPS.

  5. JoshWx says:

    Glad I’m not a millenial living in the West Coast. Buy a house now and lose money the moment you get the keys or wait 3-5 years for the housing bubble to burst and hope starter homes actually become affordable. Put all your plans on hold until then. House and Kids by 35? Delay that until 40+. Hell why even bother?

    I’ll consider myself lucky living in the sticks of New England where housing is still *marginally* affordable.

    • Lauren says:

      I just remind myself no one gets to have it all.

    • rojogrande says:

      That’s an important point. These housing bubbles and busts make it very difficult for people who just want to have a family and get on with their lives. Encouraging speculation in housing on a mass scale makes no sense to me, particularly if economic stability is a primary goal. Of course, that’s probably not the goal.

      • Seen it all before, Bob says:

        I wonder if baby birthrates track housing prices?

        If you are starting a family and buy a house during a bust, you are doing well and can afford a larger house with more kids. As long as you have a job….

        If you want to start a family during a housing peak, you may decide to wait or have less kids due to a smaller house.

      • Depth Charge says:

        It only makes sense when you factor in the GREED that has permeated the central bank and CONgress. It is repulsive to the very core.

        There’s a great Twitter account out there from a guy called Darth Powell who doesn’t beat around the bush. He calls out the FED and even references their individual Twitter accounts while Tweeting. Here he is yesterday:

        “Is this what “stable prices” look like to you?


        Just looks like you stole HOMES from young families in order to line the pockets of old people and speculators.”

        I love this guy.

        • cd says:

          worse they sold homes to corporate interests who created first housing bust, who them put the penny on the dollar homes in tranches to create reits and borrowed free money to buy more….

          The foreclosed homes owned by fannie and freddie all should have went to returning military members for same pennies on dollar cost to PE, Hedge and banks. it strengthens neighborhoods and was right thing to do for putting lives on line.

          The pigmen won, pottersvilles became norm and no angel was jumping in for joe 6 pack

      • Evelyn Wood Head says:

        It is said, and I personally feel that it is very true, that your success and wealth in your life depends more on the moment that you were born then anything else.

        • rojogrande says:

          I agree the economic outcome for similarly situated people can be very different depending on when they are born. A working class person in the 60s and 70s had much more opportunity to get ahead financially than in the past 20 years. I consider myself fortunate that I completed college in 1992 and purchased a home in 1999 before prices for both began to spiral completely out of control. People 5 to 10 years younger faced a different reality.

    • Mike says:

      As a Realtor of 35+ years, I have been through several changes in the market. I have always told my clients that buying an owner-occupied home is just that, a home to live in. It normally turns out to be a good investment, but that is not the reason to buy one. You can only lose money on a home if you sell it. I advise you not buy a house unless you know you will be in it for at least years.

      I am actually hoping that we see at least a 20% drop in home prices in my area (top 5 most expensive in the country). You have to have housing for the people that you really need in your community (teachers, nurses etc) and that is not attainable where I live.

      • Depth Charge says:

        Of course you suddenly want prices to fall. You guys are now getting financially crucified due to a lack of transactions. You make money off the churn.

        • Mark says:

          “As a Realtor of 35+ years, I have been through several changes in the market.”

          Stopped reading right there …….

      • Seen it all before, Bob says:

        Houses are places to live. I say you need to live there at least 10-15 years since over that timeframe, historically, every house has gone up in value (I used Wolf’s excellent charts).

        IMHO, in a stable market, house prices should track inflation when calculated for the entire US. Real Estate is local so Detroit may be less than track inflation and S.CA , Austin, Boise, Seattle, pick a popular place, may be higher. Land rather than building replacement costs drive that.

        When the inflation line intersects with the house price line again on Wolf’s chart for the entire US, my son will buy. It did in 2012.

      • Bobber says:

        I’ve been a finance guy for 40 years, and I can tell you that hoping to break even in 20 years is not a good wealth-building goal.

        Today, the market is valuing homes as speculative investments, and that will be the case no matter how any particular individual looks at it. If you try to force your views on the market, you are like the sheep who tries to make peace with the wolf.

        • Seen it all before, Bob says:


          You have a very good point. Housing is not a financial investment. It is a place to live.

          You also have to consider the ROI of a fixed rate mortgage vs rent.

          If in 2006 (16 years ago), at the last bubble peak, rents for a 3 bedroom house were about $1K/month. Now the same house rent is at least $3K/month and the house is currently worth much more than the purchase price.

          Rent has historically always gone up. Fixed rate mortgages have always been stable (or goes down with refi’s) in the US.

          Nobody wants to overpay, and I admit that it is a gamble, but historically it has been a safe gamble over 10-15 years to purchase a house vs renting. The people who purchased at the last bubble peak are so grateful and are laughing all the way to the bank vs the bear renters who are paying 3X in rent than they would have had they purchased at the last housing peak. History has repeated itself over 10-15 years throughout recorded house price history. We’ve seen it all before.

          Short term investing in a house has always been high risk.
          I wouldn’t recommend it.

    • Digger Dave says:

      First rule is that we don’t talk about living in rural New England, unless we’re talking it down. Let everyone keep thinking that the deep south is the place to be. It’s bad enough that there was a surge of city slickers invading and pricing out the locals the past few years. I know global warming is shortening our winters but it would be real great to have a deep freeze to drive the rest of them back to where they came from.

      • JoshWx says:

        Can’t say I miss the COVID days of every open house lined with NY, NJ, MA license plates…

      • Escierto says:

        Rural New England and Atlantic Canada are the real estate secrets of one’s dreams. If you don’t need to go to an office, they are places where the prices are unbelievable. Low property taxes and insurance too.

      • 91B20 1stCav (AUS) says:

        Dig – have ‘talked down’ my beloved California (family here since 1910) most of my adult life (70y now). Didn’t seem to have much of an effect on immigration, domestic or foreign…

        may we all find a better day.

    • crazytown says:

      Everyone loses money the second they buy a house. Those 6% realtor fees for driving around and sticking a key in a box are a permanent drag on housing.

    • SDEngineer says:

      Pretty much sums it up! – millennial living on the West Coast

  6. Phoenix_Ikki says:

    Looking at the deceleration, it’s definitely nice to see it’s heading in the right direction and speed for most major markets especially for super bubble like SD and LA. However, let’s say we let this play out for another year or two at current trajectory rate, we probably still wouldn’t even get back to 260 range which was the peak from the first housing bubble. That is pretty depressing in itself and that’s under best case scenario, if market stall and deceleration slow…then I guess 300 is the new norm.

    In the meantime, only sliver of hope I have is maybe the correction to both up and down side will be just as amplify as the saying goes. That’s the only way I can see LA/SD going below 200 ever..

    • Augustus Frost says:

      LA/SD will eventually turn into 3rd world cities, to the extent not already there. Housing can be expensive in third world (due to a shortage of quality housing) but you might not want to live there anymore anyway.

      Rates are destined to “blow out” later, though not imminently. US isn’t exempt from math. Housing should be noticeably cheaper (measured by the index and multiples to income) but may not be much more affordable due to rates.

      • Heron says:

        I was in SD for 17 years, lived in some sketchy neighborhoods as a student. Some of those sketchy areas now have homes selling for 700k! Back in the day there would be gang bangers hanging out on the corners at night. I looked up recently sold on Zillow and wonder what is in the water there. Mass psychosis.

      • Escierto says:

        There are Third World cities with relatively low real estate prices and a high quality of life. Most Americans are clueless dolts who spend their lives watching television passed out on their sofas. Get a passport and use it!

        • josap says:

          I agree 100%. And go someplace else other than the hot tourist areas.

        • Augustus Frost says:

          I’ve been to plenty of larger cities in third world countries.

          Housing in these places is not affordable, to locals. I wasn’t referring to affordability for Americans.

          Most of these I’d describe as dumps. Difference between there and here though is that I’d mostly prefer to have them as neighbors than those who live in US dumpster areas.

  7. Dan says:

    Real incomes are declining also, and cost of ownership going up. One needs to look at the whole picture…home prices, repairs done after home inspection before closing, cost of insurance, cost of maintaining the home, HOA fees if applicable, etc. Home ownership may simply be less affordable for an entire generation, ?more renters (though rents are up a lot also). It is kind of depressing to think about, or am I too pessimistic.

    • Adreyona says:

      It sure seems like the Fed, Banks, and Wall Street are trying to make 90% of the population renters.

      And that lines up with the stated goals of the World Economic Forum and the Great Reset.

      Some say the Federal Reserve and politicians are “stupid”. Others say they know exactly what the are doing.

    • Augustus Frost says:

      No, since you didn’t provide any price targets, probably too optimistic.

  8. Worker says:

    I am still hoping that Tampa and Miami mountains will end in symmetry..

  9. Bobber says:

    Buying a house now would be like “dropping the soap”.

  10. Hard pass in Cencal says:

    We’re looking for our second home. We will buy when the mortgage payment is equivalent to the rents in the same area. At this point, given the high prices and rates, it is $1k more per month to buy the same house than rent it.

    -Hard pass in Central California.

  11. Xavier Caveat says:

    AirBnB wasn’t around in 07′ when the real estate market crashed, what difference will it play now?

    • jon says:

      Good point.

      I was reading an article that 57% of the ABNB properties were bought during pandemic.
      During recession, the owners of these properties would be very motivated to sell them.
      Bottom line: ABNB would have adverse impact on home prices when the going gets tough.

      • bulfinch says:

        So weird, given at the outset/shortly after the pandemic, there were myriad articles aout how all of these ABNB infestors were losing their shirts, which made sense to me at the time. I didn’t realize there was a surge in purchases at the same time.

        • Lune says:

          I think what happened is that people moved out of their city homes, but didn’t actually sell them either because they weren’t sure if they would move back, or because prices were rising so fast so why not hold it for a year?

          In the meantime you’re not looking for a long-term renter, just something quick and short term, so you put it up on Airbnb. Even if you don’t fully pay back your costs it’s better than leaving it empty.

    • Depth Charge says:

      It will exacerbate the crash. These people are getting ruined as I type. They’re losing the appreciation, and vacancies have skyrocketed. It’s the wealth effect in reverse. Their net worths are dropping like a crypto rug pull.

      • The Colorado Kid says:

        I just spent a few hours going through a lot of the Airbnb listings in E. Utah and W. Colorado, some resort areas, some not, looking at bookings. This is an area I know well.

        It looks grim for a lot of them. If I owned one, I’d be selling ASAP. I also occasionally read social media such as Airbnb Superhots on FB and Reddit, etc., and a lot of them are really hurting, but in denial, saying it’s just the season. Some of them are in ski towns that get a lot of winter bookings. I’m also seeing a lot of new listings.

        I hope they all crash and burn.

  12. Old school says:

    All assets were over valued unless the free money was going to be around for the next 10 – 20 years.

    Powell has got to convince the world that the free money is over and done. If so, all assets that can be purchased with leverage have got to reset to a much lower number. Existing houses, stocks and bonds deserve a much lower price if rates are 4% higher for a decade.

    • dang says:

      I agree with the general claims of your post. Assets are overpriced. It is only a matter of time until the holders of those assets will be forced to lower the asking price in order to sell them.

      Whether that will come to pass, only time will tell.

      I think that are at least four pregnant bubbles that have the potential to suddenly explode:


      • Old school says:

        Good interview out there between Hugh Henry and Lacy Hunt.

        Summary is if Fed can run QT til March and raise rates to around 5% then they will have neutralized the mountain of money they created during pandemic. Both agree that is going to cause a severe world wide recession with all the damage that causes risk assets.

        Lacy made a good comment that the Fed did a no no and colluded with politicians to overdo the money drop, but politicians will abandon the Fed and it will be the Feds job alone to kill inflation.

  13. Rowen says:

    The decreases aren’t so harsh when priced in FAANG stock…

    • Seen it all before, Bob says:

      This discussion can become very philosophical.

      If someone sold all of their 20 bitcoin in November 2021 for 1.3M and paid cash for a nice house, are they up or down if the house is now worth 1.1M?

      • BS (ini) says:

        If moved Bitcoin to real estate any time that’s a positive move since real estate has a tangible value Bitcoin ? I say no value. Can’t rent eat or drive a Bitcoin and as Wolf says Bitcoin can implode and our lives go on. Housing not so.

  14. Steven R. Smith, MSRE, MAI, SRA says:

    Supportable Demand for Housing is easily calculated if you know the local HHI, and the Loan Constant.

    I created this in 2005 for a real Estate appraisal class I was teaching at CSUSB. and then had each student go home and check their local Zip Codes. Universally each area was already priced beyond supportable demand. Anyone can calculate their area, a region, city, etc.. I have this in spreadsheet format.

  15. Michael Engel says:

    1) Price/rent is still very high. Can landlords raise rent in nominal terms when COLA is 8% : yes !
    2) C/S US National dipped from 306 in June to 299.32 in Sept. or minus 2%.
    3) The leader of the pack is SF. In 2007 C/S was 184. C/S rose within a decade from 137 in 2012 to 306. This tiny correction isn’t good enough. C/S might even go higher, if mortgage rates dip.
    4) The Fedrates are in a trading range since Nov 2015. It reached the 1992/93 congestion area. It’s about half of 2007 rates. Nothing radical like Paul Volcker dbl humps in 1980/ 81 that led to two severe recessions.

  16. Michael Engel says:

    Real wages are down from 393 in 2020 to 361. They are likely to rise.

  17. Beardawg says:

    Those red lines on the charts are helpful. The rise was so fast. Those peaks are like pinpoints !!

  18. will says:

    I know this is off topic, but the two consecutive negative GDP numbers and inverted yield curve… do you think this is just transitory or sign of a bigger problem?

    • Depth Charge says:

      The FED is pivoting to even higher rates. The only thing that was transitory was November’s lower mortgage rates. It’s about to get much more expensive to borrow money to buy a house.

      • dang says:

        The market is saying that mortgage rates are soft, falling from the peak to a recent quote of 6.4 pct. Perhaps there is not the demand for loans for overpriced homes.

        You seem to have a different , emotional, POV.

        • Depth Charge says:

          Are you drunk? Because you are making zero sense. The FED is going to raise yet again in December, and mortgage rates will be going even higher.

        • Depth Charge says:

          By the way, I just looked up mortgage rates and found this from Bankrate, TODAY:

          On Tuesday, November 29, 2022, the current average rate for the benchmark 30-year fixed mortgage is 7.32%, up 15 basis points over the last week.

        • Wolf Richter says:

          Depth Charge,”

          All 30-year fixed:

 “current mortgage rate = 6.81%. But it also says what you said, “On Wednesday, November 30, 2022, the current average rate for the benchmark 30-year fixed mortgage is 7.32%,” ==> I guess you get to choose which you want.

          The daily measure by Mortgage News Daily = 6.65%

          The weekly measure by Freddie Mac = 6.58%.

        • Swamp Creature says:

          They quote these low mortgage rates and they sound good until you get to the settlement table and some scumbag loan originator shows up and gives you a HUD settlement sheet you never saw with extra points and lender fees thrown in at the last minute which push the effective interest rate up 50 basis points or more. Been there, done that. I had to walk out of a settlement because this happened to me. I told them all to go f$ck off.

    • Wolf Richter says:


      1. Q3 GDP jumped more than the negative Q1 and Q2 fell combined.

      2. Raging inflation is a HUGE problem for the economy.

      3. The Fed’s crackdown on raging inflation is a problem for asset prices. Get used to it.

      • will says:


        I think without unloading MBS and finishing rolling off treasurys from the books they can’t pivot with QE. I am curious how unloading MBS will effect mortgage interest rates on the MBS. Also as the assests decline I think many people will lose enough equity to “call” the margin on them and force insurance. Then it will drive up the price of the insurance, because high demand. This with high inflation low income raises will cause monthly payments to weigh heavily on credit dependance and maybe defaults on credit. If they dont want the insurance they have to increase equity in their homes, if no savings….. since like you state in multiple articles people are able to endure a light recession. Tomorrows JOLT will be interesting. The FED is looking for any reason to pivot and a tight labor market will be one. I think the pivot will be stagnant rates on interest, then as inflation is in control, lower interest to keep economy afloat and have low interest debt hince my soft landing theory. Remember Pelosi and FEDs pretty much are millionaires. Dont quote me its in their interest for soft landing. The pop is Forced sales, of any assests, investors dont like to sell and hold on as long as possible.

        • josap says:

          The Fed has stated very clearly that they want 5% unemployment. They think that is the norm.

          The 5% thinks it’s a bad deal.

        • Wolf Richter says:

          3.6% is very low. That only occurs during the Best of Times. So an increase from 3.6% to 5.0% is not big.

      • Swamp Creature says:

        Inflation is completely out of control. I have been keeping accurate records of items that I buy at the grocery store that are necessities. Some items I buy every trip are now up 30% in the last 3 months. The quality is also going down at the same time. A frame house around the corner from me just sold for 2.2 million. I don’t care what the government inflation figures are. Inflation is running at 15% or more. I’ve got hard data to support these assertions.

        • Depth Charge says:

          The BLS engages in what can at best be described as “tortured statistics.” The soft peddle the inflation numbers. It is indeed worse than they say, always.

        • Swamp Creature says:

          I ran into a dude at my breakfast hang out who worked for the BLS for 30+ years. I told him inflation was much higher that the statistics his agency, the Labor Dept, was putting out. He became unhinged, and told me I didn’t know what I was talking about. These people believe their own lies they put out.

        • will says:

          I see the same thing, in 6 months my insurance rose 30%. My driving record hasn’t changed. I keep a strict food budget, weekly its $150 I do wholesale, 2 people. Little of it is junk food. I plan my small and big purchases, even if I have the money for it. Inflation is out of control, I have the luxery to do this, what about low income/ many mouths to feed?

        • Wolf Richter says:

          Your auto insurance rose in part because it became a LOT more expensive to repair and replace vehicles. Used vehicle prices (replacement cost for the insurer) are up 40% over the past two years. New vehicle prices are up a bunch, repair costs skyrocketed…

          That’s how inflation works, and that’s why it’s so hard/impossible to get inflation under control without a big recession.

        • will says:

          Also, BLS may be accurate, its the narrative that is wrong remember the words FED preferred measure of inflation?
          I think Inflation should be measured by consumers ability to afford, I believe our GDP is based on consumerism.

        • Swamp Creature says:

          My homeowners ins went up from $650/yr to $1,500/yr between 2010 and 2022. This is with multiple discounts and no claims filed. I asked them why the increase. They said Inflation. I told them I live in Maryland, no tornados and no hurricanes here, what gives. Then they told me that the states write the policy and they have nothing to do with it and make only 2% profit, and if I didn’t like it to take it up with my State ins commission. I didn’t tell them that I had already cancelled them and went with another company for $874/yr

      • will says:

        I wanted to reply this with facts, from my understanding the imports to exports had a big impact with Government spending on Goods and inflation reduction act.

    • sine99 says:

      The yield curve inversion is indeed fascinating. The narrative of course is “yield curve inversions predict recession.” True enough, I’m not going to fight that narrative. But I wonder how much the deep inversion is not just because of “deep recession is imminent,” but instead another mindset at work. It has become so deeply rooted that the Fed will send rates back down to zero at any hint of a recession and that the “Fed will bail us out quick.” Which of course history indicates this could be true. But this deep-rooted bail-out psychology is not good for a Fed trying to curtail inflationary psychology. I think the deep inversion could be argued as a sign the Fed is so far losing the psychology battle. (But they always win…eventually.)

      • dang says:

        Thank you for eloquently describing a common angst. I think you captured an important concept:

        ” But this deep-rooted bail-out psychology is not good for a Fed trying to curtail inflationary psychology. ”

        Deep rooted, indeed.

      • Wolf Richter says:

        The US economy NEEDS a recession to get this inflation down. The Fed even is now essentially admitting that’s what it takes. This raging inflation will not go away without recession. Maybe a mild recession will be enough, and I hope so, but it may not be.

        • Depth Charge says:

          We are so far off from this supposed recession that’s going to tame inflation that I’m not holding my breath. New car lots still empty, restaurants packed, Black Friday sales humming along…..the FED is getting punked.

        • will says:

          I agree with that, you need a recession. At my work if they cut my pay 10%, I am moving on tp another job. That 10% pay is because of demand for now, with a 25% bonus at end month.
          The FED or its people are double speaking which is F’ing up its message. Yeah we need a recession to battle this inflation as we need price stability, dont worry it will be mild. With all the voting not voting members saying look inflation is coming down, we can now slow the rate increases. The problem is my generation was one of the first lost generations for housing, when I finally started making real money prices were not affordable.

        • Swamp Creature says:

          We’re going to have a recession all right, along with inflation. STAGFLATION on steroids.

          You’ll be looking back on Jimmy Carter’s STAGFLATION of the 1970s as “The good old days”.

      • Augustus Frost says:

        The FOMC members are not immune to crowd psychology. How else would they actually believe what its members have said?

        The FRB was infected by the same manic psychology as everyone else.

    • dang says:

      My opinion is that it is hard to tell since the economy was essentially, controlled for the past 15 years or so under the economic agenda of quantitative easing which inflated the prices of assets in their head long dedication to attain a zero interest rate economy.

      Why did they do it is a question for the future. The current catharsis indicates it failed.

  19. Sammy says:

    A few years after the previous housing bubble burst, my wife and I bought a modest home in an older neighborhood — built circa 1991. Literally EVERYONE we knew told us we were crazy to buy at that time. It was (almost) the bottom of the market, there were foreclosure signs everywhere, and we had friends and family who thought we had lost our minds.

    Every day, I thank GOD that I have a beautiful and talented wife, two wonderful sons, and that we told all those folks — in a nice way — to pound sand. What is it those bitcoiners say about HODLing?

    Yeah, that’s what we’re doing, only with our house. I really do empathize with anyone trying to figure out whether to buy now or wait. That must be torture! In our case, we had the decision made for us.

    Good luck to everyone here, and all across America. We’re gonna need it

    • Depth Charge says:

      “Good luck to everyone here, and all across America. We’re gonna need it.”

      My favorite was from Robert Kyosaki yesterday: “The economy is the biggest bubble in world history. God have mercy on us all.”

      Robert has been getting destroyed in BitCON. That may have something to do with his palpable fear.

      • Old school says:

        It’s not the norm to go from a large asset bubble back to the trend line.

        The likely scenario is you are going to bust through the trend line to the downside as the fear and panic cause people to try get out of the asset to limit losses.

        Pretty funny story about the inflation around 1980 when stocks fell to a PE of 7, that stock brokers were driving taxis at night because there were no buyers of stocks. We got a ways to go before capitulation.

      • Jon says:

        I have respect for lot of smart people who made it big.
        But the moment they start peddling cryptos my respect goes away.

        May be I am too stupid.

        • Sammy says:

          Jon, I’ve been asking for years how to use cryptos as an actual currency. I have NEVER gotten a satisfactory answer.

          Whatever. they do their thing, I do mine

    • Prairie Rider says:

      You may find yourself
      Living in a shotgun shack
      You may find yourself
      In another part of the world
      You may find yourself
      Behind the wheel of a large automobile
      You may find yourself
      In a beautiful house, with a beautiful wife
      And you may ask yourself
      Well, how did I get here?

      Same as it ever was

      -Once in a Lifetime

      • Sammy says:

        I LOVE that song!

        True fact: I grew up not 10 miles from where he went to college at the Rhode island school of Design

        • 91B20 1stCav (AUS) says:

          Prairie (Dan Ro?)/Sammy –

          “…and you may ask yourself: ‘…My God, what have I done?!…” – D. Byrne

          may we all find a better day.

  20. Dang says:

    Your graphics are superb and complement your narrative, which is restrained by the conventions of the master analysts.

    My take away is that the retrenchment is insufficient to balance the “economic headwinds” facing the people, not only the domestic economy, but the world economy.

    • dang says:

      Thankfully, today, I had a sensational experience that tilted my point of view of the future. What happened was I had an appointment that changed the time of day that I normally go to the gym.

      After starting my routine, I noticed that I was working out with women. It was about that time that the change in the atmosphere that I was used too, male, to female, instigated a temporary change in my attitude about hope, love, sacrifice, dedication, etc. Their elegance is intoxicating, obviously.

      I only mentioned that as it relates to how the future unfurls before us, for the previous eternity. Which is a long winded way of saying that I see that the blowoff top in price of a sample of the California housing market seems to have blown off.

      Other than that, I haven’t a clue about where the prices of houses is likely to end up. I have an extraordinarily biased opinion.

      • dang says:

        If I were forced to divulge my opinion about the likelihood that housing prices would decline precipitously I, have too admit, I don’t think they will crash.

        I think there is an argument to be made that they will decline towards the historical cash flow to income metrics that have been a historically consistent representation of American society.

        • Dang says:

          On the other hand, they (housing prices) could crash, paralleling the insane slope of the bubble expansion.

          I am of the opinion that the Federal Reserve Bank is so far into failure that they have only one choice that remotely fulfills there sacred obligation as clearly outlined in the tenets of the Constitution of the United States of America.

        • bulfinch says:

          …damn’d evocative, if totally inscrutable.

        • josap says:

          As long as employment doesn’t crash home prices will reset to local ability to pay a mortgage. People are not going to give up their 2% mortgage.

          Sellers, for the next few years will be those who need to sell, not want to sell. Remember that if you are a buyer. Sure, there will be a few who have inherited who decide to sell.

          Also, and this is important, the goal of large rental companies is to charge just enough rent to make it almost impossible for a family to save for a down payment.

          Inflation is taking a much bigger bite out of budgets than the adjusted/substitutions /everyone buys a car every month type of numbers the government comes up with.

          Inflation should be tracked using what normal households use every month.

        • bulfinch says:

          “People are not going to give up their 2% mortgage.”

          I would, depending on the circumstances.

          Here in Austin, I’ve continually encountered so many transplants over the years who’ve hinted at their creeping remorse; they buy the hype & then spend a few years wrestling with the trade-offs of here vs there which sometimes only crystallize after you’ve woken up in a new city enough days. Almost all of them capitulated & moved back to California or New York or wherever they came from (or make the next hop on the hipster diaspora chart). Emotions are powerful stuff.

          Other things which compel a move: expanding family; divorce; death; career opportunities; air quality; long-distance love; aging out-of-state parents; good pizza or the lack thereof.

          I suspect that a low interest rate is less of a barrier to exit than you might suspect.

        • MiTurn says:


          “I’ve continually encountered so many transplants over the years who’ve hinted at their creeping remorse; they buy the hype & then spend a few years wrestling with the trade-offs of here vs there which sometimes…Almost all of them capitulated & moved back to California or New York or wherever they came from…”

          Perfectly encapsulates the way real estate works here in North Idaho. People come during the summer, read all the hype from the realtors (downtown is nothing but real estate offices), and buy their dream home. Then reality hits: snow, more snow, followed by cold, long wet springs, very short but beautiful summers, and then repeat… (10 inches of snow today, btw.)

          After a year or two, these transplants sell and move on to warmer climes. It is so common here that realtors have a term for it — “winter kill.” Then they sell the house to the next sucker.

          You gotta be raised in northern latitudes to deal with northern climate. My thoughts anyway.

      • Depth Charge says:

        “Their elegance is intoxicating, obviously.”

        I suspect a different intoxicating substance. Sobriety check, please.

      • Marston Gould says:

        The problem with type of hype is that it suggests that real estate prices are plunging when in fact if you look at the price per square foot trends in many of these same markets they are steady or higher than last year. Increasing mortgage rates have driven up in affordability forcing many to purchase homes that are smaller than last year. For instance the average home price sold in Seattle dropped 2.9% vs last year, but the average square foot of homes sold was down 3.6% in that same time period – meaning that price per square foot is actually higher. Homes at the upper end of the market are becoming illiquid because owners are locked in with no mortgage or low interest rates. This is all a mix issue – not a valuation decline

        • Wolf Richter says:

          Marston Gould,

          Ignorant BS… the data here in the Case-Shiller index is based on SALES PAIRS, meaning the price of the SAME house over time. This is NOT impacted by changes in the mix. Read the article before posting garbage.

        • Swamp Creature says:

          Seattle RE is going to have a meltdown due to the tech wreck which has only just begun. Take away the primary employer and the city descends into a glorified small town High School culture. I lived there in the early 1970s when Boeing was the only game in town. They laid off nearly the entire workforce, and the town died except for a few tourists and the Univ of Washington. The headlines in the Seattle Times newspaper then were the High School football Friday night games. They only have 85 days of sun per year.

  21. TK says:

    A home is not really an investment. It’s a place to live and enjoy life. I stopped tracking all the money spent on maintenance and making the structure nice for the family. This year the designers tell us that black cabinets are now cool. So people upgrade perfectly fine kitchens. The consumerism mindset keeps the spending going even though we don’t really need all the stuff. Oh and now the ultimate capitalism irony is 1 800 Got Junk. Make room for more stuff. And we buy more when credit is easy. And speculators find a way to milk every niche. I keep saying we deserve what we get. Don’t blame the Fed, blame consumerism. Today the headline was “record holiday shopping weekend.” Oh Happy Days are here again.” Lots of sarcasm thanks for reading.

    • josap says:

      The amount of junk people buy in this country astounds me. And they dust it all. What a waste.

    • Swamp Creature says:

      I noticed everyone moving into my neighborhood with the two car garages usually junks up the entire garage to the point where they can’t even park their cars in there.

    • 91B20 1stCav (AUS) says:

      …in ‘Murica, never underestimate the mind-wrecking power of that purchase-generated dopamine hit…

      may we all find a better day.

  22. Swamp Creature says:

    One thing I noticed happening here and it has been verified by several independent sources, is that there are pockets of housing that are defying all logic and prices are still going up in the rising interest rate environment, and they are selling quickly. The more affluent people are buying these homes and probably selling one to get the cash to buy these overpriced monster homes in good locations with good schools. They are doing fine. Other than these pockets there are signs of the beginnings of the 2005/2006/2007 housing meltdown especially in the farther out suburbs and some high crime inner city neighborhoods. I wonder if the data shown in the Case-Shiller home price index takes this disparity into account, or masks it by averaging everything in the metro area together. If the latter is true, then the Feds interest rate increases are devastating the housing industry more than is being reported and creating an even greater wealth inequality between the halfs and the half nots.

    • Lynn says:

      Everything they have done since the early sixties has created a larger wealth gap. The only way for them to equalize the home/shelter situation is to limit foreign and large corporation/hedge investment in SFHs and smaller mutiunits. Everything else they do just rotates around in ever narrowing cycles.

  23. Lynn says:

    What does it mean if there are a bunch of properties worth $350 – $1.5M that sold cash for anywhere between $6K to $70K? I just noticed a bunch that sold for ridiculous amounts in the past year. One or 2 of them I would guess selling to relatives at a discount. But more than usual? They don’t seem to be foreclosures, although IDK, maybe.. None of them seem to have been listed on the MLS. They are too heavily discounted for bulk RE trades I would think..

    • Lynn says:

      $350K – $1.5M

      • dang says:

        “Everything they have done since the early sixties has created a larger wealth gap.”

        Let’s at least be honest. The “they” is us.

        I drove my truck to pick up a new water heater with my Dad, a retired Teamster shop steward who been awarded a silver, bronze, and a purple heart, at the local home appliance store.

        He selected a unit and they loaded it the back of the truck. After a final inspection, Dad found a tag that said “made in China” at which point he changed his purchase to one that said “made in America”.

        The Teamsters that had to exchange the units in the back of my truck were upset and commented to him which he replied:

        “Listen junior, it’s not my job I’m trying to save, it’s yours.”

        True story.

        • Dang says:

          Ultimately, the trauma of his being shot in the face in WW2 led to his early onset of mental disability. Before his body was ready to go.

        • Swamp Creature says:

          I replaced my whole HVAC system a few years back. It is now a Lennox system. “Made in Mexico” The Bryant system that some junkyard dog contractor installed was thrown into the trash because the Evaporator unit was defective. Also “Made in Mexico”.

          What ever happened to Trump’s promise to have everything “Made in America”?

        • 91B20 1stCav (AUS) says:

          Dang – *Star.

          may we all find a better day.

    • josap says:

      Take a look at the tax records to see who the sellers were. County records to see who the buyers were. You might find some good clues to answer your question.

      • Lynn says:

        Thanks Josap, that’s difficult right now. The names are not listed on the online taxes and the county staff is still WFH. They no longer answer the phone and it takes 2 weeks for them to get back to you **IF** you are lucky.

  24. George W says:

    The divorce rate is going to be a huge driver of future home prices.

    Current home prices must be based on extremely over extended 2 income households.

    Where is the case-shamer index based on single income households?

    • josap says:

      The single earner household went away in the 70s and 80s.

      • dang says:

        I confess, I’m the mule in the single income household from the 80’s. As I worked three jobs, I sometimes wondered.

        As it turns out, my children didn’t seem to benefit from having an unrequited mother instructing them.

        • dang says:

          Each one of them is extraordinary in their own right. Brilliant from the perspective of an old man, who thinks that every American kid has the blessed chance to change the world.

          What do I know. The world had half as many people.

      • Augustus Frost says:

        No, still around and probably mostly subsidized by government social programs. But yes, presumably not candidates for homeownership, or at least should not be.

    • polecat says:

      Should also factor in those ‘sudden dierati’ out there who’ve been cajoled, forced, or otherwise chose to roll some mystery-formula snake eyes..

      That alone could be yuuuuge.

  25. kramartini says:

    Why aren’t the investors who bought houses during the free money decade selling now? Or are they the ones driving the prices down?

    • dang says:

      Glad you postulated about the incongruity that haunts the markets, as the postulation changes.

      A generation ago, there were economists that pretended to believe that, by the time that the ugly people realized that QE was a massive con,

      Anyone who listens to an economist will lose their stake.

  26. Michael Engel says:

    1) The Fed need inflation above Fedrates to devalue gov debt. The Dow might rise for many months/ years, hugging an uptrend channel, protecting investors.
    2) Time will do the work for the Fed and investors.
    3) C/S : draw an uptrend line from 1989 to Apr 2006 to June 2022. C/S might moderately osc around this line for years. Breaching this line doesn’t mean an imminent collapse in 2023.
    4) When all x3 major central banks synchronize their actions, reducing the spread between them, gravity and friction will weaken. After years they will normalize rates.

  27. The Bob who cried Wolf says:

    I can’t comment on why, but inventory is pretty low in San Diego. Prices are dropping, no doubt, but not much is for sale. It’s very strange this time around.

  28. Michael Engel says:

    RRP is down. Commercial and Industrial loans are up.
    Draw a line from 2000 to Oct 2008. It supported Sept 2021 low, a higher low, preventing collapse.
    The Fed most important job is to protect the major banks. Without them
    the gov cannot sell bills, notes & bonds.

  29. Michael Engel says:

    When the Fed raise rates mortgage rates popup, before adjusting to
    demand. Demand for housing is falling, shifting to other sectors.

  30. Michael Engel says:

    Ukraine war demand for industrial material will keep Europe away from recession.

    • MiTurn says:

      I know you’re being snarky. For those that take your comment seriously, they should review that assessment after this winter.

  31. bulfinch says:

    Michael Engel & Mr dang = weapons-grade cipher

  32. Michael Engel says:

    The Fed most important job is our national interest. At six month, in 1914, the Fed was reeducated. The Fed supported our national interest between 1914/18.
    The current DOD budget is the smallest since 1942, in real terms. Demand is high and growing. Help is late.
    Our many friends ask for more. The Fed will support our industrial co to fill the gaps…

    • Gilbert says:

      Why wouldn’t they considering they create money out of thin air? A real racket!

  33. Nick Kelly says:

    Oddest if amusing take: what recession? ‘Restaurants full’ etc.

    The economy is not a two- position light switch: ‘on or off’. Everything takes time, including a train wreck. Actually if it’s a long train and the loco goes off the bridge, even the guys in the caboose won’t know it for a while.

    This economy is decelerating possibly at the fastest pace since the Depression: tech lost trillions in value in 22, crypto evaporating at possibly the fastest rate of an ‘asset’ ever, Seattle house prices fall 3% in ONE MONTH?

    But people are boozing it up, either on booze or Black Friday stuff. So that’s the thermometer?
    Inflation has momentum, and as in physical momentum, this can’t disappear instantaneously. A better thermometer than John and Mary going out to dine after leasing a new car is Amazon laying off ten thousand people and halting work on eight centers.

    RBC bank is surprisingly upfront about the
    coming downturn of Canadian real estate: it thinks it will exceed the last five downturns, but not hopefully the one of the early eighties when mortgages here hit 21 percent.
    A scary measure of consumer lunacy: the attraction of ‘cash back’ after financing a car, or more likely a truck. Maybe that’s the cash helping to fuel the last binge.

    The Crash, or Recession, has begun and it will not be mild or brief.

    • Wolf Richter says:

      Agreed. And I see no signs of any kind of recession here in San Francisco, despite all the tech layoffs. People — including tourists — are throwing money around like there’s no tomorrow.

      • ru82 says:

        There is no sign of a recession anywhere in the U.S. right now as far as I can tell.

        Traffic and lines everywhere.

        So far the tech layoffs have not amounted to much.

        The only things that have dropped in price the past 3 or 4 months are houses and gasoline.

        Prices of food have not dropped. Neither have new cars. Maybe used car prices have dropped some.

        No drop in prices at restaurants, rent, Home Depot, etc.

      • Gilbert says:

        Perhaps tourist destinations and big cities are the exception? Where I am (snowbird area of Florida) the reduction in foot traffic at restaurants is very noticeable.

      • MarkinSF says:

        “And I see no signs of any kind of recession here in San Francisco”

        Really? Downtown commercial real estate is on the edge of collapse. You’ve cited the vacancy rate in previous posts. If one man’s debt is another man’s asset a huge write down is in store having the potential to send a tsunami wave of loan and lease defaults. Vacancies are increasing, not being resolved.
        The financial district economy has basically evaporated. What happens to those dependent on that revenue stream?
        More and more I’m seeing “For Lease” signs springing up in virtually every neighborhood. Even here on 24th street in Noe Valley there are more vacancies than I’ve ever seen. More than 2008-2011.
        While the tech layoffs to date are nowhere near the equivalent of the Dotcom bust yet we’re heading in that direction. The dynamics are close. Then, all the zombie start ups went belly up in one fell swoop (close to it anyway). That hasn’t happened yet. If and when it does game over.
        Also reading that laid off tech workers are finding it increasingly difficult to land FT jobs and that companies are desiring contract workers instead. In other words, companies see the possibility of difficult times ahead.
        Sure people are throwing money around like there’s no tomorrow but there will be a tomorrow. I’m thinking a good many people will be living with regrets.

        • Wolf Richter says:


          “Downtown commercial real estate is on the edge of collapse.”

          Nah, not “collapse.” The leases are still being paid. Landlords are still paying their loans.

          And it has ZERO to do with a recession. On the contrary. That’s a structural shift that started in mid-2020 and will need to be dealt with, and the work & investments required to convert those buildings or to replace them are going to amount to billions of dollars and will add massively to the economy and to GDP.

          A recession is measured by a decline in consumption and investment, not empty office towers. The leases are still being paid, but the people are working at home. A lot of this office space was NEVER occupied by office workers; companies leased it for the future use that never came. Some retailers & restaurants there are struggling, many shut down in 2020 and never reopened, but retailers and restaurants elsewhere picked up the business.

        • MarkinSF says:

          @ Wolf

          Thanks for the detailed and thoughtful response but if it is inferred that the 2008 recession resulted from a residential real estate collapse then why isn’t it logical to think that this one results from a commercial real estate collapse? Or at least be a significant component?
          I just see it as a sign of a recession. It’s more than a few restaurants going out. In SF financial district there is very little left of the vibrant world that existed in February 2020.
          And it’s not just the financial district. There are several blocks where there is no sign of this (Hayes Valley, etc.) but I’m spotting shuttered storefronts all over.
          I get the definition of a recession and this seems an abstract observation unrelated to the components of one. But everything is interconnected and the fallout from the destruction of a significant wealth center conceivably ripples throughout the business world
          Okay leases are being paid. Now. And at some point they will expire. It’s not hard to imagine defaults piling up when companies with revenue issues can no longer find funding.

    • bulfinch says:

      I’d put the counter-intuitive consumer behaviors down to post-pandemic-fueled frivolity. Emerge from a collective coma, from which not everyone else awakened — including people you knew/ loved — and the concomitant urge might be to *live.* Clerical concerns and decimal stuff be damned.

      • 91B20 1stCav (AUS) says:

        …so, instead of a pot of slowly-boiling water, the frog’s actually in a hot tub?

        may we all find a better day.

        • bulfinch says:

          Pretty good. But yeah, we’re all getting cooked in the end. There’re a sweet liminality on the way to the boil, however, where things feel just about fine. Don’t miss it for wringing your hands over the nickels & dimes.

  34. AV8R says:

    Its plainly obvious here on Long Island that RE agents are not advising sellers to markdown, they’re advising qualified buyers to take on the mortgage now and refi in a year or two.

    • Bobber says:

      Nice plan, for people who like to nod their head without thinking. The problem with the plan, of course, is rates won’t come down until asset prices drop another 25% or so. Why buy now when prices are dropping and set to drop a lot more?

    • Swamp Creature says:

      Total BS from Lawrence Yun and those losers in the Real Estate industry. I tried that and wound up waiting 10 years to refinance.

  35. CreditGB says:

    I guess the real magic is figuring out if this is a slow leak or a balloon bust.

    Oh well, I am perfectly happy in the home I have and in the area I’m in regardless of it value.

    No debt insures you are an observer from the box seats in the Roman Colosseum instead of a competitor on the floor.

  36. SoCalBeachDude says:

    Federal Reserve Chairman Jay Powell will announce later this morning that the Federal Reserve FOMC is interested in seeing interest rates go much higher and the Federal Reserve will be enthusiastically assisting in that process by raising the Federal Funds rate again in December!

  37. SoCalBeachDude says:

    MW: U.S. economy grew 2.9% in third quarter, updated GDP data show, and there’s little sign of recession for now

  38. SoCalBeachDude says:

    Tech layoffs approach Great Recession levels…

    Yield Curve Inversion Reaches New Extremes…

    Rising Loan Limits Are New Federal McMansion Subsidy…

  39. ru82 says:

    What is funny is the price of houses may go up as everyone starts putting $40k to $50k solar panels on their roofs. LOL

    All those solar panel roofs are not cheap. Luckily the government will subsidize 30% of the cost to the home owner but once he sells the house, the full price will be added to the cost.

  40. azbc says:

    My housing anecdote for November: House here in Maricopa County is purchased in July by RedfinNow for $700K. RedfinNow turns around about five weeks later and puts it on the market for $699,900. 98 days and five price reductions later, the house went under contract with an asking price of $549,900 and a seller’s credit of $7500. I’m beyond curious to see what price RedfinNow accepted and how much of a loss they’ll realize.

  41. Adreyona says:

    I understand this post is about housing/real estate, so the focus is on interest rates, money supply, etc. and their effects on inflation. But doesn’t the decreased supply (and increased cost) of PETROLEUM over the past few years massively contribute to inflation of everything?

    It seems like raising interest rates is a weak weapon against inflation and that lower petroleum price would be more potent.

    I’m sure it’s more complex than that, but I’m just trying to learn. What am I missing?

    • Wolf Richter says:

      There is no shortage of supply. The US is the largest producer in the world, and US overproduction caused the price to collapse in 2014 through 2020. So supply was throttled back a little to bring prices back up in 2020 and 2021. The US is awash in supply and has become a large exporter of petroleum products, such as gasoline, diesel, jet fuel, and all kinds of other products. If US drillers forget about their newly found “discipline,” they’ll collapse the price of oil again.

  42. AuHound says:

    Don’t forget Texas!!!

    Median home prices are down $152,000 in Frisco, $115,000 in Plano, and $110,000 in Irving from their springtime highs, according to a city-by-city analysis.

    Median prices for single-family houses are down $90,000 in McKinney, $72,000 in Dallas, $67,500 in Richardson, $40,000 in Fort Worth, $37,000 in Denton, and $26,000 in Arlington from their peaks earlier this year, according to AgentStory, a tech company that pulled home price data in select North Texas cities at the request of the Dallas Business Journal.


  43. James says:

    Only Solution :
    Heavy tax on multiful home owners. About 20% home owners 2 or more homes. Some of them holding 20 homes. Some investment companies own 300,000 homes.
    They are the true evil who creat bubbles.

    • Seen it all before, Bob says:

      Instead, Congress continues to pass tax breaks for multi-home investors.

      Unlike like a primary home, a rental property owner can fully deduct all expenses, property taxes, mileage to and from, and interest. Also a generous depreciation can be deducted. All of these deductions can be taken along with the generous standard deduction. This is treated as business and not a house.

      Primary home owners only dream about having these types of deductions.

      • Swamp Creature says:

        Congress should eliminate the deduction for interest on second home mortgages. That will eliminate all this house flipping, speculation, shadow inventory, etc and get back to a house being a place to live. Why should anyone subsidize some one’s else’s vacation palace, or rental asset boondoggle?

  44. Steve Bassette says:

    I don’t know anything about housing markets, but I love data and I have a question about this data.

    I notice that almost everywhere has seasonal variation, except Phoenix which makes sense to me. This seasonal variation seems to lead to peak prices in the summer. That makes sense to me as well.

    Once I see a baseline and a steady signal, I like to look at how changes to the baseline affect the signal.

    I notice that most locations, in the lead up to the 2008 bubble, saw their seasonal increases but instead of the seasonal decline, the prices saw seasonal stability before the next seasonal increase. This is easy to see in the San Francisco, Seattle, San Diego, LA, and Las Vegas. This is the signal I think I should be looking for to indicate a possible bubble. Am I right?

    Something else I noticed is how leading up to the 2008 bubble, several metros exhibited really strange behavior where their seasonal signal was completely wiped out. This was obvious in DC and NYC but also possible in Tampa and Miami. I see it again leading up to the present in NYC, Tampa, and Miami (not DC). Does this signal have any significance?

    If I’m totally off base, I understand, like I said, I not a finance person.


  45. Gabby Cat says:

    After years of searching and holding. We are moving on to a different state. Prices are 3 times lower. My husband decided it would be best to live there and commute to office 3 days a week. Thankfully, most of our family is near by to this location. Started looking at homes last weekend. Found a few we can put an offer on. The market in the area did a 10% reduction on all housing this Monday.

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