Housing Market Faces Reckoning: Price of Used Houses now the Same as Price of New Houses

Sales of used houses are dismal, even as supply & days on the market rise. Homeowners await inspiration. Homebuilders got the memo.

By Wolf Richter for WOLF STREET.

Sales of previously owned single-family houses fell by 3.4% in June from May, to a seasonally adjusted annual rate of sales of 3.72 million houses, the lowest since January, according to the National Association of Realtors today. This is deep-dismal sales territory, even as supply rose to 3.1 months, and inventories to 960,000 houses, both the highest since November.

Compared to June 2022, sales of let’s just call them “used” houses were down by 18.9%. Compared to June 2021, sales were down by 29.0% (historic data via YCharts):

A bizarre twist in the market.

The median price of used houses has dropped from a year ago, but just a hair. The median price of new houses has dropped more sharply, as homebuilders got the memo, and now the median price of used houses is the same as the median price of new houses. This is a historic pricing disconnect that will correct.

The median price of used single-family houses, at $416,000 in June, was down 1.2% from June last year. The month of June is normally the seasonal price peak for the year. Prices normally decline in the second half. This comes amid rising supply and rising days on the market.

The median price of new single-family houses, at $416,000 in May (last data available), was down by 16% from the peak in October, and by 7.6% year-over-year.

Potential home sellers are going to figure this out eventually. But they haven’t yet. And so you get this crazy-looking chart (historic data via YCharts):

This is a reality check. Homebuilders are the pros; they have figured out what it takes in this market amid the 7% mortgage rates. They cut prices and they’re building at lower price points, and they’re buying down mortgage rates and throwing incentives at buyers to make deals. And they can because some of their costs have gone down. And they’re selling homes to buyers that would have bought a used home.

Year-over-year, the median price of existing single-family houses fell by 1.2%, the fifth month in a row of year-over-year declines (historic data via YCharts):

Median days on the market lengthened year-over-year, by both measures:

  • Homes, whether they sold or not, spent 44 days on the market before they either sold or were pulled off the market, up from 34 days a year ago, according to realtor.com.
  • Homes that sold spent 18 days on the market in June before they sold, up from 14 days in June last year, according to the NAR. This excludes homes that failed to sell.

Inventory for sale rose to 960,000 houses in June, the highest since November.

Months’ supply rose to 3.1 months, the highest since November. The range in 2017 through 2019 was between 3.0 and 4.3 months (historic data via YCharts).


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  299 comments for “Housing Market Faces Reckoning: Price of Used Houses now the Same as Price of New Houses

  1. Pusheen says:

    As a FTHB, these trends are finally moving in the right direction. As a Seattle renter, I’m focusing on tripling my income by up-skilling as fast as possible to better job-hop because that’s the only way these mortgages will ever make sense. Our housing market is absolutely dismal right now – little on the market, and what is there is ludicrously overpriced.

    Wolf, if you happen across this comment – what would you do in my shoes? FOMO now? Wait it out indefinitely? I don’t have a ton saved up ($15k in stocks, $11k in savings), or any family I could borrow from, so I only have one shot at getting this right. My credit score is 800 though (and my partners is 830), so I’m a solid borrower.

    • Wolf Richter says:

      “what would you do in my shoes?”

      I’m not in your shoes, thankfully. Only you can make that decision.

      • Dick says:

        good to have been a few decades earlier. before all this bubble bullshyt.

        • Wolf Richter says:

          We had housing bubbles too, and housing became unaffordable, and then they blew up massively in our faces and crapped all over us during the oil bust and the S&L crisis – TX and OK. Lots of people lost everything. The housing market in Tulsa, where I lived, spent the next 30 years not recovering. You’re naïve to think that this is the first RE bubble — though it may be the first for you. RE bubbles and implosions are quite common at the local level. They’re just uncommon all at the same time at the national level. But for individuals living at that location, the effects are the same.

        • Juliab says:

          *They’re just uncommon all at the same time at the national level.*

          I would supplement at the world level

        • KGC says:

          As a guy who lost money in RE in Los Angeles a few decades back I can only say it’s not the first time, and there’s plenty of room to fall left.

        • Dick says:

          Not naïve wolf. Been there done that. Have the tee shirts. Was there in 08. Saw the blood in the streets. But we’re not going to get that this time. Not with this labor market. This will be a long slog of denial on both sides. Years, without some major event dislocating the labor market, for which the boomers — they already got theirs. They’re retiring.

        • El Katz says:

          Hartford, CT in the early 1990’s (insurance company and defense contraction (United Technologies)

          Pittsburgh, PA (steel mill closures / coal) in the early mid-1980’s.

          Chicago @ 1984

          It’s amazing that people think that this is the *first time* there has been a housing bubble and housing price collapses/market freezes. These same folks don’t realize how many people got destroyed back then…. when the geezers were their age.

          Here’s the secret to real estate success: Don’t buy a house to make money on. Buy one to live in. Buy one you can afford. Pick a good location as you can always change the house, but you can’t move it (unless it’s a mobile home, but even then….). If you wake up every morning worrying about the value of your house, then there’s something wrong with you.

        • georgist says:

          This is so much worse than prior bubbles. Housing has been detached from wages since 2002.
          There are now no free markets.
          Annoying to see comparisons drawn with prior bubbles.

      • Exiter says:

        Plain talk from truthful Wolf. That’s why I come here.

    • Debt-Free-Bubba says:

      Howdy Pusheen, How about a starter home? Old school way but could still work for certain people. A smaller home that needs work. But if you are job hopping and hop into a different state for a job, then renting should work out better.

      • Herpderp says:

        Starter homes dont really exist. Anything in the lowest price bracket has more potential buyers and thus drives its price a little higher than otherwise. A 800sqft home may sell for 380k when a 1300sqft home sells for 420k. Fixer uppers dont exist. They’re food for flippers. You could find a teardown, but then you might as well just work with the homebuilders without the hassle of clearing out some superfund site.

        • Dale says:

          Not true. Some Millennials said this on twitter and I found a $25K home in St Louis that needed work, and they scoffed that it was a high crime area (i.e., minority area and they were racists).

          Maybe things are worse now due to Dem local governments, but back in the day the Boomers would buy exactly those as starter homes and then fix them up.

          I can show you a house in St Louis for $15K if you like, but I know you don’t want that, you want a $500K home w granite countertops and tile floors.

        • Dave Chapman says:

          In Tacoma, if anything comes on the market listed at $399k, it looks like a feeding frenzy. There are a lot of people who are pre-qualified at $400k, and they drive up anything which is possible for them to buy.

          If you can pay 10% above the bottom of the market, you get a much better deal.

          This is despite the recent unpleasant mortgage rates. . .

        • Larry says:

          Well said. Especially last sentence as government permit requirements can be an eye opener

        • Herpderp says:

          No Dale, Boomers never bought exactly those as starter homes. Maybe the silent generation had a migration to the worst parts of the country during the dust bowl, the boomers never did though, they had it easy. And I wish I could buy a real starter home, not some gawdy mcmansion with tacky granite countertops a boomer high on leaded gasoline thought would be their “dream home”.

        • The Struggler says:


          I see what you’re saying in St. Louis. Lots of foreclosures available, and many houses for less than $20,000.

          My take is that they’re not exactly “move in ready.” With broken windows, boarded up and tarps over the neighbors’ houses; I can only imagine what squalor is inside.

          On top of that I am curious about the job market?

          There’s a difference between having a well paying job and finding a place to live and buying a complete remodel, having to be a house flipper just to get a place.

          St. Louis is the next Detroit?

        • elbowwilham says:

          As Wolf would say, plenty of affordable starter homes in Tulsa.

        • Wolf Richter says:

          My propaganda about moving to Tulsa for cheap housing is working. Home prices have shot up over the past couple of years. Still cheap though.

          I need some people in Tulsa to thank me for this. I have the most thankless job ever, LOL.

        • Happy1 says:

          @ Dale

          I’m familiar with St Louis, the 25K homes there are in disrepair and also typically in neighborhoods that are demonstrably high in crime. This isn’t racist, it’s a fact. And St Louis has lost more population since 1950 than any large city in the US, more even than Detroit, so you are buying in a falling market with no clear bottom in sight. People are happy to buy a starter home but not a crap hole in a neighborhood that isn’t safe.

        • Venkarel says:

          I have seen a few recent glow ups of Tulsa. I guess there are a few very wealthy people putting an enormous amount money back into the city. Didn’t Tulsa offer to help people buy a house there at one point?

      • georgist says:

        > starter home
        This only works if housing doubles every few years.
        That’s over

        • Debt-Free-Bubba says:

          Howdy Herpderp and Georgist, My definition of Starter home is defined as less of a home than you can afford. Live within your means and life is good. It also means a home that needs work and todays buyers have thousands of reasons against that word.

      • Pea Sea says:

        Starter homes are batshit expensive too.

        • El Katz says:

          Sure starter homes are expensive… if you’re looking for one in a beach community, 15 seconds away from The Domain, or in a trendy community with 12 Starbux within walking distance.

          A “starter home” is a small house, likely with one bathroom without 300 shower heads – but a bathtub with a shower, has laminate countertops not granite, and maybe missing a dishwasher as there’s no room for one. What you have to understand is that there’s a line of people behind you that will be looking for such a house if and when you decide to move if you doll it up. Is it work? Yes. Does it take time? Absolutely. Will you learn a lot? You betcha.

          Then you can enter what was formerly know as the “property ladder”…. which was a quaint concept where you step up to your next house when you have a kid (or can reasonably afford to upgrade). Before you all jump on “the realtor fees will eat up any profit… blah blah blah…. that’s not necessarily true. Certainly wasn’t ever true for me…. and I’ve owned 8 houses. You just have to be prepared to ride out downturns and not angst over it. Put away the game console and live a life.

          Flippers don’t get every house. That’s what HGTV will have you believe. We played on heart strings when we bought our first house… wrote a letter to the owners basically begging them to pick us. It worked. And if you think that’s “old fashioned”, we had the same experience with the buyers of our last house – which sold in the 7 figures.

          As mentioned in another comment, there’s websites featuring cheap old houses. Historical districts (i.e., Wheeling, WV) also have listings of homes for sale – some owned by the city and available for next to nothing. Are they move in ready? No. But there’s a group of not lazy millennials that are buying these and fixing them up as they go. Google Betsy Sweeny.. Another thirty something single female bought a farmette and a 100 year old plus house and outbuildings. She and her family have done a number on it…. and there’s a network of like minded people that she tapped into – to the point that these folks take “vacations” to help another with a project.

          In our last move, we sought a simpler life. We can see stars at night. We live in a dark sky community. We hear birds, not freeway traffic wash. No sirens. No car alarms. No Civics with fart pipes. Only air traffic is at high altitudes. Mountain views in 3 directions. Sure, the grocery store is 13 miles away…. OMG! But, sincere there’s only one traffic light and two stop signs in that entire distance, it takes less time to get there than it did when there was a grocery store that was 1.5 miles away – with 9 stop lights and two stop signs – in the cityburbs. I could never be a “cliff dweller” or live in a condo. Closest thing to torture I could imagine.

        • Einhal says:

          As I’ve said before, the world is different now. 40 years ago, there weren’t as many absurd permitting requirements and hassles from every municipality when you’re trying to do a fixer upper.

          You didn’t have to worry about the Fed deciding to start printing again and letting the next “step” house running away from you.

          When people committed violent crimes in bad neighborhoods, they didn’t have Soros DAs letting them run wild.

        • Mitry says:

          El Katz: Today’s buyers get an exceptionally bad deal because the new homes, dollar-for-dollar, are built with cheaper materials; while the used homes have been tinkered with and might need expensive repairs. Put down the coping saw!

      • Lili Von Schtupp says:

        Starter homes are, as discussed, generally few and far between. Fine few 2-3br/1 bath homes up for sale, certainly in the North East. In my area they were the first to be gobbled up by early pandemic Brooklyn transplants primarily for AirBnb and ‘passive income’ landlords. And what is out there is insanely overpriced and typically in rough shape, far too rough to be able to finance with FHA, or even a rehab loan which a lot of first time buyers need given how high rents have been relative to income the past decade or so. I was fine with taking on a 203(k), but couldn’t find one that was workable or the offer was rejected for another cash offer by a flipper.

        For jollie, google the Million Dollar small Cape Cod home in Beacon, NY that went viral recently. Its an extremist example of what is happening to the ‘starter homes’, most of which are 50-80 years old in this area.

      • SOL says:

        I bought a starter home in 04. It was a super competitive market, and we got so lucky to get it. 5 years later we owed more than what we could sell it for. By 2015 we got lucky enough to sell it for a very small loss.
        Great starter home!

        • Mellow Ruse says:

          Similar story here… Bought in ’06 and eleven years later (2017) was able to sell for close to what we paid. At one point our starter condo was down 60% in value!

    • KingKong says:


      A lot of this depends on your salary, your age and your personal situation (in terms of putting down roots and having children).

      You said you were focused on tripling your income. So I’m assuming you’re making less than 6 figures, would that be correct?

      Right now, you should absolutely focus on maximizing your income. You don’t know what that might lead to in the future, including having to move away for further salary increases.

      Once you have had a higher income for at least a few years (be wary of fluke years), then you should consider a purchase.

      You’ve got $15k in stocks, $11k in savings. Right, those are numbers that need to go up first before you even consider purchasing a house.

    • Not Sure says:

      Pusheen, are you dead set on staying in overpriced Seattle? I moved from CA to NM. I make exactly the same money, but almost everything is 60% of my previous cost of living here. House was $335k in a good part of town with good schools which would have been $550k to $600k in a mediocre part of CA’s inland empire in rougher parts 50 miles outside of L.A. My summer electric bill is $70 vs. at least $300 in CA. Similar ratio for most other bills.

      Basically, my wife and I were struggling to keep our family barely in the middle class on a very good combined income in CA. But we have a better standard of living here on just my income, and my wife can comfortably take a few or even several years off of work to get my son established in school. Life is vastly better for us, not just a little. We moved 750 miles away, but it feels like we moved to a different galaxy in terms of quality of life.

      Meanwhile we have friends in other places (Seattle included) overstretching themselves financially into ludicrously dangerous waters and hugely stressful situations. My advice is, “Don’t be them.”

      If you can’t make it in Seattle, maybe consider relocating. Life is very very good in lots of other places.

      • HowNow says:

        I agree, completely. There’s a “cool” factor that is very expensive to maintain. Kick the habit, asap.

        • KingKong says:

          You’re absolutely right. I see many of my generation (millenials) trying to keep up with the Joneses. They make more than me, but they also spend way more than me to stay with the cool crowd.

          The flipside though is that if we all lose our jobs, I’ll be in a significantly more comfortable financial position than them. I can cover over a decade of living expenses, my friends can barely cover a year.

      • Lili Von Schtupp says:

        Definitely agree with above, especially if you don’t have kids/aren’t divorced yet. If things go south with your partner, state custody laws have this funny tendency to trap you in their suffocatingly expensive state as a struggling single parent for up to18 years. Or so I’ve heard.

      • jon says:

        I totally agree with you.
        I am in SoCal but would love to leave it but for 2 reasons:
        1==> Waiting on my kid to graduate high school.
        2==> Have a cushy job.

        My auto insurance increased by 100% in last 3 years and home insurance by 300% in last 3 years,

      • I Can't Do That Dave says:

        I’m from CA. Moved to NM 20 years ago. All that you mention is correct. NE ABQ has good, if boring neighborhoods. I am so over this place, however, and miss the ocean. Besides, unless you’re work from home, or work for the labs, this place comes with a LOT lower wages than other states. It’s also sort of low energy while at the same time being high crime.

        • KingKong says:

          I’ve got friends from graduate school working at Los Alamos. It seems to be a common phenomenon for the STEM PhDs – many move to LCOL places where the national labs are and live very comfortable albeit in boring circumstances.

        • Not Sure says:

          We’re in the NE heights, and like it a lot. The neighborhood is fairly quiet and we have a couple of nice parks within short walking distance. I quite like the laid back atmosphere. The fast pace of life coupled with the slow pace of traffic had become unbearable in CA. I’m in manufacturing & automation and can’t complain about pay. Had no problem finding a great job here very fast. I agree that low skilled jobs don’t pay much here, but there are solid opportunities for skilled folks certainly not limited to work-from-home. My perception is that crime is pretty regional here, certainly no less safe than CA’s inland empire where I lived. There are some homeless folks here or there just like all cities, but homelessness isn’t remotely on the scale of CA’s problem. In theory, there is so much to do around L.A., but every activity is crowded beyond belief, ludicrously overpriced with impossible parking, and you get to sit in a couple hours of traffic there and back. For example, I could spend $500 to visit Disneyland and wait in line all day for like 3 rides with the family, or I could put down 100 bucks here at Cliff’s and have a perfectly fun day with the family packing in rides non-stop after a 10 minute drive from home. Disney is far more grand in theory, but miserable in practice. That pretty much sums up southern CA in general… Great in theory, but ruined by crowds, cost, and wasted time.

      • dubronik says:

        Hey Not Sure,
        What part of NM?

        • Not Sure says:

          Albuquerque. So far I really like it. It’s a big enough city to have most of the amenities I’m used to, but small enough that people are quite nice and I’m not stuck in traffic for half of my waking hours.

    • Fed Up says:

      Good luck to you, seriously. You sound like a good person doing the right things with your credit and trying to better yourself. I truly hope it works out for you. Our government and the Fed have screwed over good people like yourself, and it sucks. It’s sickening what’s happening.

    • Richard says:

      We have 470k active listings (single family homes) today. In 2015 we had 1.2M active listings (single family). Let that sink in.

      Historic low inventory….

      We have 12M vacant homes! No forced selling so they will remain vacant until the labor market turns.

      Also, out of all owned homes, 38% are owned free and clear. Unless there is massive unemployment this market won’t go down.

      I am hoping for lower prices in the next couple years.

      • Wolf Richter says:


        But demand plunged too. That’s the thing. Prices are down year-over-year. The price increase through June was seasonal. NAR prices always peak in June and then drop. See the red line in the second chart.

        The people with their 3% mortgages cannot sell but they cannot buy either. So they’re out of the market entirely, as buyers and as sellers. Their homes are out of the market, and they’re out of the market as buyers. This means that the entire market may have shrunk by 25%. Inventory down 25%, demand down 25% just from that one factor. It that’s the only factor, the market would be in balance. Buyers and sellers decline in equal measure. But there are other factors too.

      • Sams says:

        Are you sure it is the state of the labour market that decide if vacant «homes» comes on the market? What if these «homes» are «investments» or maybe parking of money?

        If so other considerations than the state of the labour market decide if they are offerered for sale.

    • Random Intime says:

      Sorry. You are collateral damage in the Fed scheme of things.

    • andy says:

      Why would you buy a house if you plan job hopping? Or why would you have $15K in stocks if you only have $26K.
      How about you read a book or something.

      • Brian says:

        Agree about buying a house when the future is uncertain but $15K in stocks and $11K in “cash” isn’t bad if that $11K is six months worth of living expenses and he doesn’t expect to need the money from the stocks for at least 5 years.

      • HowNow says:

        Consider, too, the carrying-cost and the buying and selling costs of home ownership: buying is about 3% of price – depending on how you deal with “points”; selling is about 8% of sales price assuming you pay the typical realtor cost. Replacing an A/C unit? Repainting? Interest, insurance, HOA?, property tax. Buying an old “fixer” may require “fixing” forever.
        Yes, it provides the shelter that you’d pay in rent, otherwise. But there IS risk. Suppose you catch a downdraft in home valuations? Or there’s a surprise change in your job(s). And then there’s inflation: that price increase may only keep pace with inflation or possibly less.
        Lots of factors. Is this the best investment possible? When it comes to investing, there’s a strong desire to buy when everyone else is buying – be fearful when others are greedy; greedy when others are fearful (Buffet).

        • El Katz says:

          Or you could get hit by a meteorite. The world could end.

          Mortgage interest and property taxes are tax deductible. Right now, they’re capped…. but just the same.

          You have renters insurance, correct? If not, you’re stupid if not only for liability reasons (someone breaks their neck in your apartment…. renters plus umbrella.)

          Houses are not an investment. They’re a place to live.

          How much does it cost to move your apartment/rental when the landlord raises the rent or the complex deteriorates? How often do you get your damage deposit back? If my daughter is any indication, it’s rare if ever.

          If you buy a house to live in, the future realtor fees are not an issue.

          Buyer’s points you roll into the mortgage. Adds pennies per month.

          Air conditioner? They have insurance for that (home systems insurance through many homeowner’s policies and underwritten by a third party commercial insurer. Costs next to nothing and covers up to $50K in repairs. Same for supply lines – water and sewer.)

          There is no home ownership boogeyman. Use your head, buy good tools (number one mistake people make is trying to use a hammer for everything), look at online videos that show you how to repair just about anything…. and have a partner that’s not enthralled with granite and likes to get dirty.

        • Gooberville Smack says:

          I always love these folks that declare “a house is a place to live, not an investment” as if they somehow make the rules and everyone else is.. what? Supposed to fall in line?
          It is probably safe to say that 99% of houses were at some point an investment. The land, infrastructure, the subdivision or just the house. At some point in the creation of a home, some form of investment was made. Even the current owner/resident is investing in the property, even if it is paid off. But please, enlighten us all about the true purpose of a house, I’m taking notes.. or not.

    • n0b0dy says:

      “tripling my income by up-skilling…”

      could you please sir explain what you mean by this, and how exactly that is even possible?

      • El Katz says:

        It’s called education / professional licensing. Increased (up) skilling “skills”. Becoming more valuable to your existing employer or more attractive to a prospective employer.

        • n0b0dy says:

          el katz?

          how is it that you seem to know what pusheen meant?

          there was no detail in their statement.

          perhaps they are a freelancer and have no employer. you PRESUME an employer/employee relationship for some reason.

          its a pretty bold claim that anybody is going to TRIPLE their income by ‘upskilling’.

          in fact, the only thing pusheen defined was the AMOUNT of increase. this would seem to indicate some type of plan to get there.. a series of actions, or a strategy. THAT is what i asked about.

          you claim to know it?

          since you replied and not pusheen,
          id like to hear a scenario from you where ‘upskilling’ as you claim to understand it.. TRIPLES an employees income with their current employer, or a prospective one.

    • Richard says:

      Pusheen, 26k in funds doesn’t get you anywhere. If you had 260k for a DP you would buy in Seattle (that’s at least what most people who have the cash and the willingness to own do).
      Keep saving lots of money and buy when you can comfortably afford it.

      • Corey says:

        Agreed. Save up 20% down and plan for a payment that is no more than 25% of your take home pay on a 15-year note. Until you can afford that, don’t buy. Increase your income or move to another area. Pay off your mortgage early, shun all other debts. Oh, and don’t buy a house with a “partner” to whom you are not married.

        • Phil says:

          @Corey, this advice makes sense in theory, but in almost every major market it’s impossible and thus not practical advice.

          $250K/yr gross = $187K-ish net
          $15,625 gross per month
          25% = $3,906 per month gross

          Based on these figures and your above stipulations, anything over $500K would be out of budget, and that’s assuming household income of $250K a year, which in the Chicagoland area (where I’m from) would put you in the top 8% of incomes.

          Lower it down to median income at $75K and your max payment under your stipulations would be $1,172 per month, so anything over 200K would be out of budget, which here in Chicagoland gets you literally nothing aside from maybe a 2 bedroom condo. Good luck.

        • Gooberville Smack says:

          Right out of the Dave Ramsey bible. 15 year mortgage, payments not to exceed more than 25% of your income.
          I agree, everything Ramsey says sounds great in theory, but I think it’s all outdated by about 30 years. We are all going to be debt free living on beans and rice and will be paying our kids college.

          Not so sure..

    • blahblahbloo says:

      You know the rent you’re paying now, and you know what the mortgage payment + HOA would be on buying a similar house. How do they compare for *you*, after taking taxes into account (that requires knowing your own top marginal tax rate and whether or not the mortgage interest would be enough to itemize)? If renting is still cheaper, just do that. No reason to expect runaway home appreciation in Seattle at this point.

    • blahblahbloo says:

      This “hellhole” business refers to Seattle proper, and only parts of that. Whether Pusheen decides to live in Seattle or Bellevue or Kirkland has very little to do with the buy vs. rent question.

    • PI says:

      “….what is there is ludicrously overpriced.”

      I believe you answered your own question of what you should do. That said, come on down to greater Tacoma and Pierce County and see what’s out there. Best wishes.

    • SocalJohn says:

      Don’t listen to the morons. This situation is so effed up it isn’t funny. Only hope for propping up the insanity is the fed. If they make one minor misstep, this whole thing implodes. That’s why QT is anemic.

    • Gabby Cat says:

      Don’t give up hope. We all have been there. If you are a first time home buyer you can qualify for grants to get you over the down payment hurdle. Don’t be scared to look out of your comfort zone. We purchased a fixer upper almost for cash and rebuild it from the studs with family help. It is a much better house in an established area. Takes a lot of work and patience, but worth it. Plus little debt and good employment it allows us to be debt free in 4 years by paying cash. That is the advice I gathered through Wolfs sage advice for the last few years. Live below means = freedom.

    • To be where I have been says:

      Late comment…

      Move to Spokane or Tri Cities…save yourself 10k a year on rent. Better yet move to a medium size city in Ohio, save a little mord and avoid wildfire smoke and sizzling summers. Enjoy the long autumns… they last only about 6 or 7 weeks in Spokane. Humidity… yes there’s that in the summer maybe a problem half to 65% of the days. 4 decades ago lived there.
      Or try New Jersey, or Pennsylvania.
      West Virginia is pretty cheap and not so much snow but not too hot either. Perhaps the best of all worlds Morgantown or Charleston.

  2. Mak says:

    As somebody living in one of the most inflated housing market’s in the world (Australia), I find this article confusing.

    Down under we’d generally expect that buying a “used” home would be much more expensive than buying a “new” home. Here it is not uncommon to pay $2mil for a 50-100 year old house.

    I’d be curious to understand the dynamics of this separation more. Over here it is definitely to do with the concentration of desirability of property around our city centres. Is the reverse still applying in many areas in the US? Hollowing out of the city centres?

    • SomethingStinks says:

      Don’t you have a problem with foreigners buying real estate for investment driving prices up for everyone?

      • Mak says:

        That issue is massively exaggerated. Sure it is present, but it is a marginal effect. We do a great (terrible) job ourselves of buying up real-estate and pricing our younger generations out of the market.

        It is extend and pretend. In the US you guys seem to be great doing it with your share market. Down here we do it with our residential real estate market.

        (But there is also demographic and geographic difference in the real estate market which is what inspired my first comment. I was completely unaware that older real estate is generally cheaper in in the US as the opposite is the case here.

        We have more ‘mega’ cities here, so land value plays a much bigger role in the cost of housing than it does in the US. And we have largely kept our downtown area healthy so hollowing out to suburbia is something the poor do and not the rich.)

        • Steria75 says:

          This is a great point.
          The markets I know best are Chicago, DFW, and Houston.
          Definitely there are a lot of neighborhoods of “used homes” close to the downtown/central city that are much more expensive than new homes in the suburbs.
          It would be pretty easy to research.

        • Wolf Richter says:

          The vast majority of “used” single-family houses in the US are not in city centers. They’re outside the center, urban sprawl has been a huge factor for many decades. So you’re comparing a relatively small number of used SFH near city centers to that vast mass of used SFH in the urban sprawl that has developed over the past 70 years. In the urban cores of big cities, just about everything that has been built over the past few decades has been multifamily. The median price is much more determined by the used SFH in the vast urban sprawl than the relatively small number used SFH in city cores.

      • Perth is Nice says:

        The problem is that your post is not correct.

        Foreigner purchase of used residential real estate is basically prohibited and only allowed in a very, very few limited circumstances.

        And when they do get approval to purchase any type of real estate they have to apply for a licence and pay for it prior to the final closing.

        The median price of a house in Sydney is still well over A$1 million and Melbourne way under that.

        Prices of houses in Australia are high, but still cheap compared to houses in the USA. Yes, houses in the big cities near the CBD areas are sky high, but are much cheaper the farther out you go. There are of course pockets of high priced areas between areas of depressed low cost ones too.

        And there are other differences between the Australian residential real estate markets and USA ones too.

        One is the cost of selling is cheaper here than the USA with RE commissions about 1/3rd that of the USA.

        Buying costs are higher as you have to pay stamp duty to most states when you buy a property. I think that the state of Victoria has the highest rate at 5% of the selling price on property over A$1 million.

        Property taxes or rates on as we call them on your own home are one of the few things in Australia that is still relatively cheap compared to the USA. The rates bill just for the property taxes varies between areas, but paying A$1000 to A$2000 on a million dollar plus property is quite common.

        And insurance on the property is probably a lot cheaper too in many areas as we don’t have a lot of the natural disasters common in the USA in our big cities. Usually no typhoons in Sydney, Melbourne, Canberra, and Adelaide. Very few tornadoes, earthquakes, and bush fires in the big cities either.

        We also have much lower crime and property damage claims as well.

        And of course the two biggest differences:

        1. No capital gains on your principal place of residence;

        2. No inheritance taxes at all in the country.

        So owning and carrying costs here are overall much cheaper than in the USA.

        Apples and oranges, mate.

        • Einhal says:

          Good points, but regarding #1, the first $250k for singles and $500k for married are exempt from capital gains on primary residences here too. For most people, that’s the entire gain.

    • Timothy J McLean says:

      So, one big issue with buying an older house is insurance. Insurance for a 40 yro house may be $20k and a new house is $3k.

      • Buffalo Billion says:

        Wow, where do you live? My family has been in insurance for generations and while it is true that insurance can be more expensive in some older neighborhoods due to various risks (fire due to older wiring, theft, water damage due to bad mains, etc.) and it can also be more expensive in older developments with solid masonry construction vs. wood framing; but I have never in my life seen a quote for two similar sized homes that would be anywhere near the difference you mentioned. Not even close.

        It’s funny how Americans get a little squirrely when questioned about cultural differences (valuing suburbia vs urban living). Some of the comments on here are outrageous, I don’t want to live in North Saint Louis because it’s still burned out, but Clayton, MO is wonderful. I couldn’t imagine living in one of the many, many destitute suburbs of Saint Louis as I’d be living with a bunch of uneducated, prickish morons who don’t seem to understand much about the USA. Cheers!

      • Apple says:

        Why is insurance lower for a new house?

        • Herpderp says:

          Cheaper for the insurance companies to replace chipboard and pex than antique tube and knob or asbestos. Things get real pricey if they have to find lead paint, r-12 is liquid gold at this point.

      • Bill Ferrer says:

        That is B.S., I live in 5,000 SqFt house in Denver, built in 1893, and I pay $5K for property insurance. And I assure you my house is sturdier and certainly better made than 90% of the homes they will make in 2023. Most modern construction is pretty darn janky, and certainly not made to last 130 years.

        • Harry Houndstooth says:

          Richardsonian Romanesque is my favorite of the period. New electrical and plumbing can be laborious, but improving the insulation can be difficult. Do you have fireplace inserts?

      • El Katz says:


        You’re on crack. $20K for insurance? Maybe in a hurricane prone area… but usually, they’ll just drop you like a bad habit.

        I own a 45 year old house…. I have a HO5 insurance policy and the cost is @ $1,500 for 12 months… with a structure replacement cost value of $600K + inflation endorsement and $500K in contents coverage – plus the other gingerbread endorsements that I added.

    • Kentucky says:

      I believe, in this article, the correlation between used and new home price points is comparing production/tract homes.

      These types of homes are built where land as well as the construction standards are cheap.

      The lack of appreciable equity in the suburbia used homes because the corporate builders will build 1000 new homes in a new development phase directly next to the 1000 used homes.

      Always by location, location, location first. I’m assuming the $2M home you’re referring to is in a desirable part of town. Maybe 50 years ago it was a production house on the edge of town. But now, it’s in the center of the city.

      • Wolf Richter says:

        The article compares the median price of ALL homes that sold. The median price is the price in the middle. If 1,000 homes sell, you put them all on a list, sort the list by price, and then the price of house #500 from top or bottom is the median price.

        • Juliab says:

          Wolf, I think what you are talking about is called the Median, it is right in the middle of the column.
          The average price is generally the arithmetic mean.

        • Wolf Richter says:


          Everything in this article and in my comments about price is the “median” price. In my article, I specifically say “median price” 8 times. In my comment, I explained the “median price” with the 1,000 homes example. There was NOTHING mentioned about “average” price. Is Google translate throwing you for a loop? (idiom for “confusing you”). At some point, you have to look at the actual English here, not just at the Google translate version into your language.

        • FogCutter says:

          Isn’t that, in large part, the conundrum of trying to level these figures out as comparable? If the majority of new construction is in the South and Southwest, generally those prices would be lower than the Northeast, far West, etc. If we localized these stats, the difference might be more telling. Purely anecdotal, the most recent 2 sales to me were a new construction split level, legitimately no yard cut out around the house to the point of trees are almost touching it, small lot, house right on a main road, you get the picture. The other was built 25 years ago, custom cape, meticulously maintained and the list goes on. Guess which sold for more? Data doesn’t look at product in every scenario.

      • Custer says:

        IMO you have it nailed. I love Wolf’s analysis, but in this case, Location Value in established homes is acting as the boat in a rising tide that is pulling up aggregate values of the cohort. Desirable building locations do not grow on trees. Unfortunately, it seems that the First Three Rules of Real Estate have been forgotten, or at least often overlooked to focus on Amenities.

    • Not Sure says:

      Houses built here in the last 10-20 years are garbage. Low density Douglas Fir or white wood lumber, 5/8″ imported drywall known to make inhabitants sick, PEX plastic plumbing that will definitely leak causing massive water damage within a few years. Particle board cabinets and only the cheapest laminate flooring that’s only a hair stronger than cardboard. Wiring is just thick enough in gauge to squeak by minimum code requirements. Also thrown together by the lowest-bidder unskilled labor scrounged up in the pandemic years. Not to mention the minimal landscaping and tiny sapling trees that may or may-not grow into big greenery. Oh, and the owners get the nearly guaranteed excitement of participating in a class action lawsuit against the developer for building a hilariously sub-par product full of egregious defects.

      I’ll take my 1978 build with dense old-growth lumber, 3/4″ drywall made with pure domestic gypsum, copper tubing & heavier gauge copper wiring plus durable tile floors any day. Big green fully-grown trees in the neighborhood add charm. This place will easily be here 100 years from now with just basic maintenance. In comparison, people buying new houses here in the states will be lucky if their cardboard & stucco shizboxes are still standing in 50 years.

      • dougzero says:

        ‘PEX plastic plumbing that will definitely leak causing massive water damage within a few years.’
        Nope. Pex is fine. You may be confused with some of its predessors.

        • Matt says:

          My guess is we’re going to be seeing lawsuits in the future when someone discovers toxic chemicals leaching from PEX – either all of it or just that from specific manufacturers. There are some papers on that already.

      • Swamp Creature says:

        Not Sure

        Add, make sure you have good fire insurance. If you live on a block with these cardboard homes, if one catches fire the whole block may go up in flames.

      • Nissanfan says:

        Nonsense. Your 1978 will creak, squeak have a lousy insulation and generally have outdated layout aka time capsule (Huge living room, small kitchen). Might not even have a garage. 1978 house will use 3/4 drywall, but will be generally built with 2×4, paper insulation, while new one will be built with 2×6 and r19 insulation per most local build codes. Your house will probably have a better lumber, that I agree. Quality of work by contractors used by builder is a key.

      • rick m says:

        Building cable is AWG12 or AWG14 in the US,other than installation or lightning damage it’s fine with appropriately sized circuit breakers. Connections are the weak point as residential new-construction electricians are the least experienced and lowest-paid. Quite agree with your other points.

      • Lynn says:

        haha, I just looked at a house built in 1974 that has copper clad aluminum wiring, early particle board floors, crappy insulation and doug fir framing. It’s rotten, literally.

        They’ve been building well and building crappy for many many decades. Honestly not seeing much in the way of used homes that don’t need at least some structural work here, and many that need more work than is anywhere near realistic for the price..

  3. SoCalBeachDude says:

    Since house sales are plunging in the US to the lowest level in 14 years, why aren’t housing prices falling accordingly in most US markets?

    • KingKong says:

      Sales plunging could be symptom of less supply (house owners waiting for rate cutes or “knowing what they have”).

      Price is detemined by supply vs demand. If supply drops, but demand is still roughly the same, prices may stay the same or even increase.

      This feels like the quiet before the storm – actually it feels like the last frenzy at the end of a party – we’re simply waiting for the tsunami of sales as panic finally sets in. We’re not there yet.

    • LongtimeLurker says:

      Realtors, Sellers, and Builders all want the highest asset price as possible. Even if anyone in those groups could predict where the market was going, his greed will make him want to hold out just a tad longer for that highest paying buyer. This causes a lag where sales must be fewer and for longer. Lack of sales must prelude a drop in asset price because of man’s nature. And since we are in a downward trend, it behooves them to adhere to what Wolff has said, “the one who panicks first panicks best”

      • blahblahbloo says:

        This is much different for homeowners vs. builders. Homeowners can simply change their minds about selling based on whatever market predictions they have in their heads and continue living in their homes. Builders are not free to do this; if they are not continually building and selling new homes, they have no revenue and yet still have salaries to pay, etc., so they might as well permanently close up shop.

        Wolf has done recent articles on the current margins of publicly traded homebuilders. Those margins are great, so don’t expect any of them to close up shop soon.

        • JimL says:

          You are correct in that homebuilders are like Sharks. They meet to keep moving (turnover houses). They have zero attachment to the property, they just want to aquire land, build, sell and move on.

          However, it should also be noted that homebuilders are also more experienced and knowledgeable than the average seller. So if they are dropping prices quickly relative to used house sellers, it is probably a good harbinger of where used house prices are going to go.

    • Juliab says:

      This is how every market crash begins.
      Deals fall first, but prices take more time.
      This is the time when supply increases and deals remain few.

    • Flea says:

      Because people know in a inflationary environment to hold assets ,

  4. VintageVNvet says:

    Thanks for the update Wolf. Definitely the craziest housing market I’ve seen, and very thankful to be fully retired from five decades of construction and rehabbing of homes, as well as commercial and institutional facilities.
    Question is, what are folks going to do when faced with interest rate rises and incredible increases in property insurances, especially with increased losses?
    Just saw report of a condo in FL facing a 1,000% increase THIS YEAR!
    Anecdotal for sure, but other reports have insurance companies leaving FL and CA, etc.

    • mol says:

      Celt, in the last ~200 years, people have dug up billions of years worth of dead plants and animals, then proceeded to burn them in the funeral pyre of their lifted dually diesels, on the way to Walmart, for the third time in a week. Yet, the airborne carbon dioxide levels, while much higher than they were, are still only ~400 ppm. Most of the CO2 has been absorbed by water, in the ocean. I don’t have space to discuss why this is important… my main point is that nobody I ever met denies how much carbon humans have oxidized for fuel over the last two centuries, yet people deny the ramifications of doing this. I can’t understand this denial… the mass balance and energy balance equations for this are not at all theoretical.

    • KingKong says:

      They’ll go bankrupt.

      That’s the only way out of this huge mess. Everything eventually ends up in bankruptcy.

    • Swamp Creature says:


      Why are the premiums going up so much in Fla and Texas? I also believe the insurance companies may be cost shifting their large claims to other states. I recently noticed a high premium increase from my USAA homeowners ins here in Maryland for no apparent reason.

      • El Katz says:


        Roof replacement fraud in FL. It’s a big business down there (actually “here” at the moment).

        Also: roofs here in FL (allegedly) have a 14 year life span. Insurance companies want some assurance that the roof has been replaced after that window or they kick you to the curb.

        Son lives in TX. Roof fraud there too. Hail damage claims.

        • Sams says:

          14 year life span of a roof? What kind of roof is that? I had the roof on my house redone after close to 100 years service life. If maintained the roof should be good for close to 100 years more.

          Ok natural stone roofs are of the more durable kind, but even galvanized steel may last 50 years.

    • Robert Hughes says:

      Your drywall thickness understanding needs updating. 1/2 drywall for walls ( 16″ centers ) and 5/8 for ceiling ( 24″ trusses or joists) has been the standard since the 50’s, never seen the 3/4 you state. Even if 1″ or 1 1/4 required for fire or code separation esp in commercial, usage just doubles up the 1/2 or 5/8 to achieve the thickness. Even curved surfaces use doubled 1/4″ to get to 1/2.
      Your understanding of Pex versus the older discontinued grey poly needs updating. Air contamination pitting and pin hole leaks of copper is very common, requiring re-piping.

      • VintageVNvet says:

        Correct on all details RH.
        Copper challenge is the fact that we put copper pipes directly through concrete without any sleeves for many decades, and the chemicals in the concrete eats away at the copper.
        Once had a client that insisted we jack hammer out the floor of the bathroom where the copper was leaking, so we did. Came back a couple months later and did it again.
        Finally convinced them to run pvc at the perimeter of the slab and just go in through the exterior walls to the fixtures, as had been standard practice for years by reputable plumbers once this problem became understood.
        Plaster used to be common in approximate thickness of 3/4 inch, with a 3/8 scratch coat, 1/4 brown coat and 1/8 finish coat; good exterior plaster, AKA stucco is at least 7/8,,, but both can and do vary a bit depending on how straight is underlying framing. I have seen both 1&3/8 thick on top of older rough cut framing that varied from 4&1/4 to 3&3/4, put up before planering of framing to net sizes was common.

      • jr says:

        We use 1/2″ ultra-light drywall on ceiling and 24″ stud bays now, works great and easier to hang. I think the aeration makes it stronger and the lighter weight resists sagging. I’ve also been using FM1960 PEX (expansion) for a couple of decades, good stuff. I’ve replaced a lot of leaking copper with PEX, even non-buried copper will develop pin holes if you don’t control your water’s PH.

  5. Herpderp says:

    18 days on market. Doesnt look like home buyers got the memo either. Cant blame the home sellers for not dropping prices. Until that pent up demand fades I dont see these numbers going south in a hurry outside the major metros that are being emptied.

    • heyjagoff says:

      Their memo is different than ours. It reads “There’s no tomorrow”

    • Pea Sea says:

      At least Wolf and many of the commenters here are coming out of denial regarding used house prices shooting back up nearly to the peak. All spring some of us were trying to sound the alarm–prices rising, multiple offers and swarmed open houses returning–and were dismissed over and over again.

      Accepting reality makes for healthier analysis and better forecasting.

      • mol says:

        Pea Sea, I would not characterize Wolf’s analysis as being in denial. He shared the data at the time, and the data did not support your contention, until now. Thank you for bringing forward insight from a specific market area.

      • Wolf Richter says:

        Pea Sea,

        LOL. I don’t know how many times I hafta repeat it, but I will:

        It’s seasonal. The peaks every year are in June (see the red line in the second chart). Today we reported June. Prices will drop for the rest of the year. We know that. What we don’t know is by how much they will drop.

      • Fed up says:

        No one is coming out of denial. The spring season was pathetic period. Only a few homes had multiple offers from the very few buyers who were in the market.

        • Herpderp says:

          What metro?

        • Fed Up says:


          Most metros. It’s BS that there is a robust housing market with huge, dare I say it, “pent up demand.” 🤮 There is low inventory but also low demand. During the spring FOMO, a few morons came out of the woodwork and bid up a few homes period.

        • Pea Sea says:

          Yeah, that must be why prices are almost back where they were at the June 2022 peak.

      • Seba says:

        Lol, are you a realtor Pea Sea? Because that’s exactly what my realtor friends sound like, except since they are friends and I know them I can see the wishful thinking behind the facade of confidence they try to sell. I can’t blame them because RE is a tough business in the best of times, and it isn’t the best of times right now given the sales volumes.

        • Pea Sea says:

          That “are you a realtor” bullshit is exactly the response we got for the last six months while we tried to tell you that the bubble was reinflating.

          Nope, I’m just a person who doesn’t see any point in being delusional.

        • Wolf Richter says:

          Pea Sea,

          Later this summer and in the fall and winter, when the red line on my charts heads south, as it will because this increase through June is seasonal and happens every year, to be followed by a decline, are you going to recant?

      • Ratios, ah ratios says:

        Wolf is not alone in thinking home prices will drop later this year. Plenty of Utube video people as well… he is not so fond of.
        Wolf has his pretty convincing graph demonstrating the seasonality effect… I’ve let others (yahoo finance) know about it.

        The utube people usually cite median house price to median household income or median household income to median mortgage payment, etc … as reasons for a downturn in prices.
        Of course if the 30% wealthiest segment in our country decided to invest strictly in real estate these median based ratios wouldn’t be of much use.
        Others have pointed out that the median priced home is not bought by the median priced household. Rather by a higher (perhaps 60 to 65% decile ranking) than median income household.

        • Wolf Richter says:

          BTW, a lot of renters have high incomes and are “renters of choice.” Nearly all multifamily that got built since 2008 was built for people with above median incomes, because that’s where the money is. The big landlords of SFH are also marketing to renters of choice with nice houses and fairly high rents. This whole thing that the only people who rent are lower-income people who cannot afford to buy a house is nonsense. That’s not how the rental market works. The median rents of a 2BR in New York City, San Francisco, Miami, Jersey City, and many smaller markets is at or above $4,000 a month. This changes the equation that a “household with median income doesn’t buy a median-priced house,” considering that about 65% of households are homeowners; 35% are renters, and of those 35%, many are renters of choice with above-median incomes.

        • Renting says:

          The point is not that there aren’t plenty of wealthy people who rent.

          I am ALL TOO AWARE of that otherwise CBS would not have had an article recently about a gal paying 2400 a month for a 800 ft² apartment in Dallas.
          Don’t know that she is wealthy but there are (per websites) plenty of 1 BR apartments in Dallas in the 700 to 1000 price range.

          The point is that a large percentage of people who are poor or lower middle class can not afford a house. I’m guessing you agree with that ?

          I am sick and tired of the media telling the world that apartments only rent for 2k and up.

          Please stop it.

        • Wolf Richter says:

          About HALF of the apartments on the market in June asked for over $2k; the other half on the market in June asked for less than $2k. Because $2k is about the median asking rent in the US now (Zillow has it at $2,054).

          I’m sick of this stuff about only poor people are renting. It misrepresents the vast and complex rental market.

          Yes, there are lots of people who cannot afford the kind of house they want where they want; but they can probably buy a halfway decent house in Tulsa or Omaha (50% of the houses there sell for less than $275K, so $200k should buy something halfway decent). But they don’t want Tulsa or Omaha, and they don’t want halfway decent.

        • Did Dallas 11 years...did my time says:

          Replying to Wolf,

          We’re bothnrihht yo some extent you are simply ignoring my point.

          As for Tulsa…its ok. Already 30 90 degree highs, 3 100s with 9 more 100 degree highs forecasted per accuweather website.
          Tornado issues. Too religious for my liking. And it gets cold as it’s windy in winter so wind chill is for real.

        • Dallas, been thar, done that says:

          Correction in brief response to Wolf,

          We’re both right… to some extent you are simply ignoring my point.

    • Fed Up says:

      There isn’t a lot of pent up demand, only propaganda,. There are very few buyers period. If I hear that phrase “pent up demand” one more time I’m going to lose it. It’s so overused by the mainstream propaganda sites.

      • Herpderp says:

        My brother sold his house just this last monday, he had over 30 offers. I put offers in on 3 houses in NH this spring, 5%, 8% and 11% over asking, respectively. Outbid on all three.
        If theres no “pent up demand” then why are there so many additional buyers for every house being sold? The housing market is simple supply and demand. If there was no demand we would have seen more than a 1% yoy drop in prices with these high mortgage rates, and yet the sharks still feed.

        • Fed up says:

          Lololololololol whatever!

        • Herpderp says:

          Great chat

        • Fed up says:



        • Fed Up says:

          Plenty of metros are way over 1% drop. Geez, you believe that all homes are only down 1%? Wow!

        • The Bob who cried Wolf says:

          Millennials, while several years late to the buy a house game, are definitely in the game now. That’s a sizable chunk of the demand. Combine that with very few houses being built. My first loan back in 93 was at around 6.5 or so. These rates aren’t the abnormal rates; it was the fire sale rates that were abnormal, and people got used to them so thought that was normal. All that happened was folks who otherwise couldn’t afford a place got lucky with super low rates so bought. Don’t count on them selling anytime soon.
          This was a Fed created mess.

        • JeffD says:

          They were obviously investor purchases. When great homes come on the market, investors step across “the sidelines” to create dynamic demand that will match the supply of great homes. What your brother sold, and what you are bidding on are obviously “great homes” only.

        • J says:

          Fed Up,

          I’ve been sort-of looking to buy in
          the Boston metro for a long while
          now. At the low end of the market,
          anything that is remotely reasonable
          sells extremely quickly.

          If HerpDerp’s brother had his house
          priced in line with everything else or
          a tad under, and let it sit on MLS for
          two or three days, I can totally
          believe he gathered up 30 offers.

          I’m not even looking that diligently
          anymore, since the last three times
          I contacted a used house salesman
          with a question about a property, the
          answer has been a variation of
          “already accepted an offer”. One of
          those was the same morning it was

          It’s still stupid out there.


        • Jack says:

          Differing opinions create a healthy market.

          Based on historical data prices should reduce after spring price increases, however historical performance does not tell the future.

        • El Katz says:

          There’s also a lot of games played. The house “sold the day it listed” was probably what is referred to as a pocket listing for a week or so. The realtor contacted a few of their customers to see if there was interest in that property. They wrote a contract, listed it on the MLS, and then it went “under contract” 5 seconds later. Ethical? No. But it happens.

          Those of you trying to buy a house with 5% down and an FHA loan…. most sellers won’t even talk to you – in good times and bad. I know I wouldn’t. Why would anyone in their right mind take their house off the market, suffer through a “get me done” sale, and potentially miss a qualified buyer that walks past a house showing under contract? Too much brain damage.

        • MM says:

          The Boston & NH markets haven’t come down much, but never got ridiculosly overpriced like Seattle or coastal CA.

          Housing is coming down overall nationwide, but there are still local differences.

          The greater Boston area has always been an expensive market to rent in – perhaps this has kept home prices elevated?

        • J says:

          El Katz,

          It’s possible that there were shenanigans
          happening with that listing, I don’t know
          about “probably”, though.

          Things really are silly enough that a offer
          of $35k over asking on a 850-square–
          foot 3 bed, 1 bath sight unseen or with a
          drive-by, but with a stipulation that “you
          have to agree right now, and cancel the
          open house you have scheduled for noon”
          seems like a reasonable strategy.

          Almost nothing that makes me stroke my
          chin and go “Hm” lasts for more than a
          handful of days on the market. Like I said,
          I’m sort of tuning out, and hoping for things
          to calm down. (That is calm down from my
          perspective; panic on the part of sellers
          would suit my own situation.)


        • Kurtismayfield says:


          Also in the Boston market.. the houses are just sitting there now in my town. The only sale I have seen in the past month was waterfront.

        • J says:


          I’d really like something cheap in
          the Cambridge/Somerville/Arlington/-
          area. I’ll browse through stuff for sale
          at far as Billerica or Framingham, but
          I’d really like something closer. Of the
          houses that catch my eye, the ones
          that tend to last the longest are the
          ones with open houses over a weekend,
          and go under contract on Monday or


          My current rent is actually way below
          the going market rate, so that’s sort of
          a disincentive to buy a place. (The
          landlord seems to like us, he thinks we
          are good tenants because we have
          never hassled him, and if something
          breaks, we just fix it ourselves.) If you
          took the 71 or 73 bus regularly in the
          last couple of decades, you might be
          a familiar face, by the way.


      • bulfinch says:

        Yes — and pent up does not equal realistic or qualified.

        I’ve been p

        • bulfinch says:

          I’ve been pent up for years where a house on the Big Sur coast is concerned.

      • CCCB says:

        And your expertise in the real estate industry comes from where, Fedup???

        I own a brokerage in south Florida, a single family construction business in Texas and investment properties and land in both places and you are 100% wrong.

        • Steve says:

          Florida and Texas had some of the biggest bust last time with no work. This time? Just look at the upside of the graph from bubble to bubble and imagine the scale of downside coming this time. All these theories why “this time is different” by R.E. investors is so fully laughed at by equilibrium. I said this two years ago and still believe its coming that a Costco job will be considered a good job and buy you a house, and people will be giving away houses for free to get out from under the tax burden. NOT doom and gloom just what I see as a global economist(my hobby).

        • Hotter...bit by bit says:

          I lived near Dallas in the 1980s, 1990s.
          Mid May to early October the weather was quite bad. Has only gotten worse.

          I think people are foolish to move to Florida, TX, Arizona… I live in eastern Washington and the summers starting in 2013 have gotten hotter, not unusual to average 90 for July August. We never have a below average month…always hotter just a matter of how much.
          Two years ago it hit 113, five days over 100 in June. Per the accuweather website for Spokane. We are almost a 1000 miles north of Atlanta, just north of Quebec, Canada.
          Will I move back to Texas… not likely !

        • Worse weather says:

          Per my comment below… I follow weather temps just looking at monthly data from accuweather website.
          Dallas-Austin is having its 2nd very hot summer. I noticed 2021 was average possibly even a degree or two before.
          But last year and so far this year…as nature seems to do… its way more than making up for the slack provided in 2021.
          Wish I could brag about Spokane’s climate. Its not the worst in the world, but its closer to the worst than the best imo. Been here 24 years know what I am talking about.
          I’d move back east but still remember the humidity difficulties. And deluges of rain. Not a problem here… just wildfires and potential smoke August thru mid October.

  6. TerraHawk says:

    Just today I saw a house pop up on Zillow I had marked as a reference. Listed in May 2023 for $1.5M, dropped to $1M today. I have seen about 20 like it over the past month. It is in an area that was up 80% from covid at its peak, but it is a start.
    I have the sense that some sellers are starting to take their 40% gains in 3 years instead of waiting for the mythical 100%.

    • Einhal says:

      I’m seeing that too. Basically, there are a lot of empty houses. People aren’t going to hold them empty forever, paying the carrying costs (taxes and insurance are increasing every year, sometimes by double digit percentages), before they realize to cut their losses.

      We’ve seen this movie before, and we know how it ends. I heard the same nonsense in 2007 about it being different this time because of Gen X buying new houses…

      • Lynn says:

        Not only that, unless they are just concrete shells, an empty house rots. It decays faster from condensation than damage a normal tenant will do to it. And that decay is structural and inside walls, not just cosmetic wear and tear.

        • JimL says:


          Unless you live in some wierd area that has severe condensation damage (like say saltwater damage on the coasts) or have been lucky and have had the best renters ever, your comments about an empty house decaying faster than renters damage is crazy.

          Sure an empty house generates no income, but it doesn’t depreciate that fast. There is a reason houses have a 30 year depreciation schedule in the tax code.

  7. Digger Dave says:

    Look at how irrational the used-home market is. Huge spikes and drops every year.

    • American Dream says:

      I think that’s seasonality but the ridiculous gains over the last decade aren’t. Nearly 3X the 2012 bottom!

      Outpacing median income I’d venture to guess.

      Another great illustration pointing to the damage done by juicing asset prices in the years before COVID.

      If we only would have had the COVID relief nonsense but not had an already inflated base the world economy wouldn’t be so F’d

      At least stocks may have topped today🤷

    • Wolf Richter says:

      Digger Dave,

      Seasonal. The peaks every year are in June. Today we reported June. Prices will drop for the rest of the year. We know that. What we don’t know is by how much they will drop.

      • Digger Dave says:

        I should have clarified. I was commenting on the magnitude of the seasonal changes in the used market versus the new one. The used market, with irrational parties on both sides, swings greatly seasonally compared to the tight swings in the new sales market, where one party is completely rational. It just shows to me that used buyers can be duped into paying inflated prices in the spring when demand is up marginally and that used sellers can panic in the off season in the same manner. Like you’ve said, someone in the business of making these things knows what they need to do to move it, so they price it appropriately.

        • Streaks says:


          I’m not disagreeing with your opinion…only the confidence in your opinion.

          Bill Miller (at Legg Mason i believe) beat the S&P 500 index 15 years in a row, 1991 to 2005. It came to an end. I think it underperformed badly for one year thereafter anyhow.

          There were 8000 funds at one time.
          You can make some simple assumptions, pretty reasonable, and see that it could be expected that one of these funds might be expected by chance alone to beat the market 13 years in a row (2¹³ is just over 8000).

          Humans can be quite surprised by what probabilities tells us sometimes.

      • Streaks cont... says:

        The assumptions in my 8000 funds discussion are pretty strong. They actually aren’t all that reasonable… all 8000 funds would have to have stayed in existence the full 15 years (each with probability of 0.5 of beating the S&P 500 in any given year, i.e. mimicking an SPX index fund. Fund performances independent of each other.
        Probability none beat it all 13 years is only
        (1 – 0.5¹³)⁸⁰⁰⁰ …giving it brief thought).

  8. RH says:

    Nevertheless, in the same neighborhood, and with the same square footage, new houses are more desirable (if of equivalent quality), and many neighborhoods now have new and old houses. In 2006, and earlier, I was telling clients that real estate agents were being crooked in claiming they had to buy real estate or its price would increase later to infinity and beyond. One was even convinced to max out his credit cards and business’s credit line to be able to buy a mini mansion that he could ill afford and abandoned years later when it went underwater!

    Now, the same thing is starting to happen: inflation and comparatively limited wage hikes are making higher and mid level homes less affordable: new homes decline less, because they are more desirable. Smaller, used homes are also over valued, so will sell less until the correction in prices occurs. That (and their car loan debacle, loss of their temporary “investments” in CCP, Ponzi companies, over leveraged crony companies, and even in the value of their longer term bonds and Treasuries paying lower interest rates) means banks’ are again legally insolvent.

    These banks incredible greed and consequent reckless risk taking repeatedly get their total assets’ realizable, fair market, value reduced below the value of their debt so that they are like the mythical lemmings –financially speaking. Their not really “Federal” Reserve will have to give them gigantic ultra low interest ratr (below the real rate of inflation), gift loans to recapitalize them again: i.e., it will give more US tax payer capital (in real dollar terms) to its bankers and their cronies, yet again! As Simon Johnson’s “A quiet coup” pointed out, their control of politicians makes them our new aristocracy –since they got their not “Federal” Reserve con job passed into law in the last century and repealed the Glass Steagal Act.

    • Eddie says:

      Before you start beating the correction drum there’s a couple reasons why this phenomenon may not “correct” as you seem to believe. First has to do with location. When buying a home unlike a new car the location is of utmost importance. New homes although shiney may not be in the best location. Certainly the case for cities like San Fran, New York and others with very limited space. Second reason is very few are will give up a 2.5% interest rate to buy anything new at 7%! So relax with the correction drum beat 🪘!

      • Wolf Richter says:

        “Very few are will give up a 2.5% interest rate to buy anything new at 7%!”

        Correct. But they also then vanish as BUYERS. So supply and demand drop in equal measure, and the entire market, buyers and sellers, drop by 20% to 25%.

        Hot off the press:

        “They’re not listing their homes because they’re not moving out because they’re not buying a home to move into because they don’t want to give up their 3% gift from God.”


        • random50 says:

          Do they all vanish as buyers, though?

          A house with a 3% mortgage makes for a pretty nice investment. I would expect the rent covers your mortgage and costs in most areas, and often with money left over. That’s before you even take into account house price appreciation, which is where you likely need the long view, and yearly rent increases.

          You don’t think there will be an increase in people who just buy a second home and rent out the first?

        • Wolf Richter says:

          One topic at a time. What you outline is another topic that may be coming soon here. This article discussed homeowners living in their homes.

          You’re discussing how a homeowner becomes an investor. This is happening a lot: condos listed as vacation rentals or permanent rentals, rent-controlled apartments where the tenant doesn’t live in it anymore but subleases the apartment or lists it as vacation rental (rent arbitrage); homeowners that move from a touristy city to somewhere else and list their house as vacation rental… This is a very different topic, and it does have an impact on the housing market, but it doesn’t belong here.

  9. mowgli says:

    Sales of used (resale) single-family (SF) homes is going to remain at low levels as long as the 30Y fixed rate remains high. Existing homeowners are locked into record low mortgages rates from refinancings during ZIRP. Unlike many countries, US homeowners typically have the luxury of no prepayment penalty and 30Y fixed rates. So intelligent consumers locked in 30Y rates ~3%. Now that 30Y rate is closer to 7% and existing homeowners cannot qualify for a new mortgage to buy a larger home or change locations. Unlike some other countries, US mortgages are non-portable. So you have a whole epoch of homeowners who are handcuffed into their existing living situation by their golden mortgage rate.

    Further, newly built new home sales, mostly the large public homebuilders, are devouring market share and have more than doubled their share of overall home sales (new & resale) to over 30% from historic 13%. And they have tools that resale sellers simply do not. Namely, mortgage finance divisions offering permanent 30Y rate buydowns so that home buyers can afford that new house, because they are getting a discounted mortgage rate (5% is the magic number). It’s 1/3 the price to buydown the rate as it is to cut the home price to qualify the same buyer income. Builder margins remain well above long term averages, so there is room to accommodate buyers. Resale cannot compete, not that there is inventory anyways.

    Personally, I think the YoY drops from peak market in 2022 are still fairly inconsequential. Homeowners are sitting pat on high home equity and are still deep in the money. Even if you bought at peak, you don’t care because you locked in a low mortgage rate so even if the sale value has decreased, you are still ahead on cash flow at current rates.

    So what’s it mean? My predictions: SF home sales are going to keep ticking because that’s the only way many buyers can afford it, (and those incomes are still juicing with service inflation but new grads are about to get a kick in the groin). Resale home volumes (and prices) will stay in the gutter until rates come down and the next wave of opportunistic high-value home sale transactions. Sure, there is a valuation bubble, but which event will pop it remains unclear.

    • andy says:

      Well said. What will pop it is the incoming srock market crash ( entire market hangs on 5 stocks). Then layoffs. Then foreclosures. Every third house will be for sale.

    • Thunder says:

      Of this I am certain, even though many have Low LOW mortgages and Yes they will never give them up…. Death, divorce and the vicissitudes of employment are the acid that eat those binds away in short time.
      Thus the 7 year turnover rule.
      Slowly slowly catch the monkey.
      It will fall and it will fall until they, who hold the reins, panic …. that may not be for a long time as we are not yet out of the woods of Inflation.

  10. William Leake says:

    I’d rather buy a new house than a used one. At least I can get some kind of warranty, for whatever that is worth. Sellers of used homes are still in greed mode, or imprisoned in their 3% mortgages. Cash buyers like me can just wait, and collect 5.5% while waiting. Or rent a nice place cheaper than a 7% mortgage on a $500K house, plus all the other crap you have to pay for when “owning” a house.

    • nefff says:

      “Cash buyers like me can just wait, and collect 5.5% while waiting. Or rent a nice place cheaper than a 7% mortgage on a $500K house.
      that don’t make sense to me, what did I miss?
      if you pay cash then you have no 7% mortgage payment.
      if you collect the 5% but pay rent its a wash at best.
      a paid off house is the end game, anything else is just spinning your wheels imo

      • JeffD says:

        Renting is much cheaper than buying right now, almost everywhere. And by a lot. I’m renting a place for $2000/month, and I could buy a comparable sqft condo, making a 20% down payment, and still be paying $4150 a month.

        • Jack says:

          Historically rentals have been cheaper than purchasing.

          Percent home ownership has increased over last 50 years as SFH new builds increased and multi-unit dwelling new builds decreased.

          Between 1950-1975 baby boom increased population and there was not enough housing so multi-units were built as rentals.

          Since 1980s less people wanted to rent. Kids started to live longer with their parents and move out directly buying a house.

          However, recent trend shows multi-unit new builds increasing again. Some rental builds, some condo builds.

        • jr says:

          “Renting is much cheaper than buying right now”. If you say so, I built a beautiful custom home 3 years ago for $375k a slightly bigger( but older) house across the street just rented for $4950/month.

      • William Leake says:

        I was just saying it is not a good time to buy a house, whether with cash or using a bank. I could have been clearer. I imagine a lot of buyers are on the sidelines now.

        I wonder what percent of the new homes built are built for rent.

      • elbowwilham says:

        Its not a wash. Its much better to rent and collect 5% then buy a house right now. Play around with some rent vs owning calculators. Prices have to come down a lot for me to trade in my cash for a house.

        • Jack says:

          100% agree.

          I have seen rentals for $1500/mth in a lot of metros.

          Same house next door on the market for $1.5mil.

          Does not take a rocket scientist to figure that math.

        • William Leake says:

          Elbow, that’s my opinion too.

        • El Katz says:

          You can rent a $1.5M house for $1,500 a month?

          Or is it the tear down next to the $1.5M house that’s for sale?

        • blahblahbloo says:

          Don’t forget property taxes. The property taxes get paid out of your rent, and that’s something you would have to pay even if you owned the home free and clear, anyway. The 5% on your cash only needs to cover the remaining rent.

        • MM says:

          “I have seen rentals for $1500/mth in a lot of metros.”

          Nonsense. In any area where the hoses are “worth” that much (even w/ today’s bubble prices), the landlord can and will charge much more.

          It also doesn’t make sense that a landlord would rent below the property’s carrying costs – that’s happening now only bc rents haven’t caught up to home prices.

        • HowNow says:

          elbow, I agree.

          For instance: if you buy a $500K house with 20% down, and an interest rate (straight interest, no principle), you have a $2300+/mo. cost. In some cities, a $500K house is in a marginal neighborhood. When it comes to home ownership, nothing is more important than the school district.
          Now factor in: property tax: $850/mo, give or take. Homeowners insurance at ? Maybe HOA costs (which only go up over time), some utilities or landscape maintenance costs that you wouldn’t have if you were a renter.
          Deferred maintenance set-aside for carpets, paint, appliances, HVAC, water heater, misc. expenses. And these numbers are worse for a used home. Add up the pieces and you’re probably well over the cost of renting that house. Youtube videos and some good hand tools won’t help with most of those costs.

          Bottom line: at the current nosebleed house prices, “value” of a real estate investment is not being considered and RISK is being ignored. Everyone is duped into believing that housing prices can grow to the sky. Bubbles pop. Ask Isaac Newton.

      • rent vs buy...slam dunk ? says:

        Many urban areas 1 BR 700 to 1100.
        Mortgage for 300 to 500k house 2000 to
        3000. So on average 1500 difference…hey I can’t buy a 1 BR, 1 bath house.
        Condos very dangerous i have read on resale… Boston late 80s, early 90s i read (Dallas Morning News) some condo owners could not sell them for half what they had paid. Nevermind them.

        So 1500 savings per month, 18k annually.
        Save utilities, property tax (4k), maintenance total 6k.
        So 24k saved, more time to read Wolf street and other stuff.
        Not insignificant.
        If I invest that 24k at 5% CDs an extra 1200.
        (Sorry Wolf, I still do CDs, maybe treasuries in the future).
        I owned a 3/2/1 SFH, 1650 ft² for 10 years. It was much more than I needed, now at
        575 ft².

  11. Random Intime says:

    This is the consequence of Fed pumping housing during pandemic. Majority of existing mortgages are sub 4%. They are not going to sell. That causes existing inventory to be very low and keep housing prices high in bubble area. This is very good news for builders who are happy to sell new homes. Also commodity prices have gone back pre pandemic levels. So builders will pocket good margins. Eventually this will result in over supply. Until then let the fun continue…

    • heyjagoff says:

      You can’t pay even a 0% mortgage without a job

    • Einhal says:

      Again, while they are not going to sell, they’re also not going to be out buying new houses. It’s a wash.

      • Random Intime says:

        It is not wash. Without housing churn, new people who want to buy will have time to enter market. If people won’t move up/down, the number of starter homes for new entrants are limited.

  12. Celt says:

    Bingo. Folks are reaching the maximum commuter time in a car limit, however, as the zone of chaos spreads. Most of us are beyond a 2 hour run each way to and from work primarily to avoid getting mugged or shot and to protect our families.

  13. OutsideTheBox says:


    Gross exaggeration of actual risk. Fear and paranoia are not virtues. Treatment can help.

  14. Desert Dweller says:

    There are a couple of things that are confusing regarding the current SFR market. The first thing is the claim of lack of available inventory when the National Assoc of Realtors reports that there are currently 16 million vacant homes. The other thing is that if there wasn’t a chronic shortage in 2017, why is there one today? What has happened in the last few years to change the dynamic? Have millions of young adults now entered the market or is the new fad to own multiple homes?

    Regarding price; here in the Coachella Valley, SFRs prices have gone up almost 100% in the last 4 years. It seems that short-term rentals have a lot do with the price increases since up to 20% of homes is some neighborhoods are short term rentals. Assuming that a recession comes along that impacts travel and rental rates, I expect a lot of SFRs to come on the market once these homes start costing the owners money out of pocket. In the aftermath of 2008, SFR prices were basically cut in half. I hope the same thing happens this time around.

    • Ed C says:

      DD: “The other thing is that if there wasn’t a chronic shortage in 2017, why is there one today? What has happened in the last few years to change the dynamic?”

      The answer? Millions of illegal immigrants. Sure they may cram more than one family or generation into an apartment or house but they have to live somewhere.

      • JimL says:

        Your answer is simply wrong. A look at historical immigration trends would show that. I know blaming it on illegal immigration makes you feel better, but it isn’t true. If you are looking to be better informed, you should get better sources of information. If you are looking for sources that take advantage of you, but tell you what you want to hear, then you are doing fine.

    • Kernburn says:

      Don’t bet on it. In fact, residential real estate is likely to outperform other investments in the event of a major recession. The housing situation is the complete opposite of where it was in 2007

      • SoCalBeachDude says:

        How so? From what I see, it is IDENTICAL to 2006-2007 except it has a lot farther to fall.

        • Herpderp says:

          Theres no overbuilding (yet), a decade of largely depressed new construction, a generation who was largely gimped by poor timing with the last turmoils still eager to buy and the ones that did buy are unlikely to be forced into mass foreclosures by variable rate mortgages. It has further to fall but until buyers disappear theres far less downward pressure. Metros suffering from a WFH exodus have that pressure and youre seeing large price drops there, mostly offset at the national level by those people moving elsewhere and keeping those (lower) prices inflated. Only down 1.6% yoy as the article states, with the increase in mortgage rates meaning people are actually paying more monthly. I think some inflation surprises later this fall will provide some spook, but my largely uniformed opinion is this will be a slower burn down that 2007-12. We will see

      • Jon says:

        I thought the same in 2008.

        Residential real estate is heavily dependent on mortgage rates and hom e prices move very slow.

        At the end of the day it is all about monthly payment.

        Last downturn took 4 years to find its bottom.
        This time the show has just started.

        I don’t know which way it’d turn but most of my friends are priced out of housing market.

        They earn 200k per year and if they are priced out I feel bad of common Joe making 100k or so

        Something has to give ..

        • bulfinch says:

          Sounds like they have a spending problem…not an income problem

        • Dick says:

          something has to give. you are correct. it’s slow. it’s the Titanic turning. I wonder how many of these people will just inherit their parents house. I’ve seen it everywhere.

        • Volvo P-1800 says:

          “At the end of the day it is all about monthly payment.”

          Couldn’t agree more.

        • El Katz says:

          The $200K per year folks are priced out of their aspirational home, not a home purchase.

          Bullfinch is right: It’s not an in-come problem. It’s an out-go problem.

        • Augustus Frost says:

          Common Joe’s make less than $70K annually, certainly if you’re referring to a single wage. The US median household income is slightly more than $70K. Most of these are presumably more than one adult, wage earner, unemployed, or retiree.

    • Jon says:

      There was a article that says the in Coachella valley per night price for short term rentals have collapsed.

      This is with strong job market
      Think about what would happen if recession hits.

      • NYguy says:

        That’s really demand from hipsters in LA wanting to get away for a couple of days. I’ve read palm springs isn’t so hot either, unless you’re talking temperatures

  15. Gary says:

    It’s just like Jerome Powell said in a couple pearls of wisdom:
    “The solution to high prices is high prices;” and “…maybe they will build some more houses…”
    Looking at his and the Federal Reserve’s prescient Quantitative Easing (QE) MBS foresight, explains Wall Street developer conglomerates trying to build and cash in on prices far beyond fundamentals while they can get them. Happens all the time in the oil industry, mining, etc.

    With housing, modern “new building techniques” can rapidly churn out huge subdivisions of textured plywood sided toolsheds on acres of worthless arid to semiarid land (non coastal California) and about 1/4 of the whole United States. Beauty part of it is the construction “style” has been going on for decades, so used houses are just like the new ones except they have aged gracefully or not; with each frozen in time with whatever economic disaster era they were built in. With as many as 4 cramped floorplans to choose from and a garbage can width of space on each side to the neighbor’s biggest, main lifetime investment “estate;” pay anything it’s our whole financial “nestegg,” you are sure to be promoted to the big $$$ to pay for it or refinance about the time the Martian colonies are booming.

  16. Paul says:

    The term low inventory or low supply is confusing and misleading, what is typically meant by those terms is “number of active listings on the market.” The number of homes per capita is actually at record highs.

  17. Thomas Curtis says:

    I see more and more senior homeless living in used RVs, trailers and 5th-wheels with pickup trucks. This group lives on social security plus I assume.

    In New Mexico the state parks cater to them. $100 for a yearly senior pass and then it is like $16/night for water/sewer/electric. They move to another park every 2 weeks.

    In the West these senior upwardly mobile homeless migrate with the season alpine to desert. The BLM has LTVAs (long term visitors areas) in the Arizona desert for winter camping that cost like $200 for the whole winter but no electricity and you must drive to dump and fill up water.

    • Sea Creature says:

      This is what happens when you get rid of defined pension plans. This is the first generation to “retire” without them.

      • Debt-Free-Bubba says:

        Howdy Sea Creature. There is about 1 million full time RVers and I am proud to be one of them. After living this way for a number of years, life any other way seems crazy to me now…….. Doubt the one million or so of us has much effect on economic trends, factors or not…….Sorry, Gotta go and kill my dinner…………HEE HEE

        • Dick says:

          you retired on a pension?

        • Debt-Free-Bubba says:

          Howdy Dick..Below. Retired Couple….Pension, SS $ , and finally interest income rolling in. Giving more $ to our children while alive is fun. Seeing this beautiful country before I die is priceless to me. Not BIG cities, just beautiful landscapes….

      • Happy1 says:

        Lots of generations retired without pensions, the retirement pension is basically people who worked from about 1920 to 1970 in large corporations, it’s more of an anomaly.

    • rojogrande says:

      Should the Fed take a bow for this?

    • Flea says:

      Been seeing tv parked in wal mart parking lots

    • Lynn says:

      It’s the same throughout the west. Very difficult to get a camping spot in national or state parks and BLM camping is sketchier than it used to be. Some state parks in Ca have officially supported the vehicled homeless and allow more than 2 weeks. Not just the RV and camper people, also tents and cars.

  18. Mainly on the Plain says:

    One thing to keep in mind is the land value of new homes on average will be lower than that of old homes. New homes will be build primarily in places where land is cheap; many (most?) new homes are tract housing on large expanses of cheap land. So it’s not “odd” to have new house prices be less than used house prices on average, when you consider it is actually new house+land prices being less than used house+land prices.

    Nevertheless the price trends of old and new house has clearly diverged, so it tells us something about the different markets for new vs used houses. We might expect these newer neighborhoods to target more economically sensitive buyers (e.g. younger first time buyers, lower-income people); the prices of these new homes would have to come down faster when interest rates rise to keep selling.

    • Gattopardo says:

      Could also be a difference in the quality of what’s selling. New homes, as Wolf notes, may be smaller/lower end, while the “used” homes selling may include fewer condos or be higher end homes. The sample size is still huge, which argues against this, BUT we’ve never seen times like this. It’s entirely possible that lower end stuff just isn’t selling, while higher end is, because higher end buyers use cash or don’t care about prices or whatever.

    • jon says:

      Not true really.
      IN my neighborhood, zoning laws are opening up new land for development.
      New homes in this neighborhood are now competing with older homes.

      If you are in a highly developed neighborhood e.g. coast it’s a different story.

    • JWB says:

      Yep and if you want an established neighborhood of well-kept homes on quiet streets lined with beautiful, mature trees and an excellent school district close in to all the stuff and if you want the extra perks of a fine vintage house like they used to build them then you are buying a used home.

      • Jon says:

        My friend recently bought a brand new home on new sub division in a good school district in Orlando.

        Many older homes there as well.

        • Jack says:

          Orlando does not have vintage houses. It was a swamp in the 1960s.

        • bulfinch says:

          Jack – sure it does…everything from craftsmen bungalows to Spanish colonial-style homes and sweeping modern ranchers. The problem is that they’ve all been gutted to look like a generic Marriott or Hilton Garden Inn on the inside…maybe because people wanna feel like they’re on perpetual vacation when living in a place like that

    • Lynn says:

      It’s been the same since at least the late 60s. This is nothing new. there are homes with small lots and large lots. None of that has changed.

  19. Debt-Free-Bubba says:

    Howdy Folks, another interesting article Mr Wolf. You young-ins ain’t seen nothing yet I am afraid. What could be coming may be bigger than the 70s 80s.

  20. Richard says:

    Wolf, debt to income is back to close to 40% for homeowners. Seems insane and unsustainable. All depends on jobs?! Don’t see any other way.

  21. JeffD says:

    This inventory problem could be corrected in three months if the government was in the business of solving problems, rather than creating them. The government could pass legislation to phase out the depreciation tax break on Single Family Residence ownership, over a three year period. This would mean 75% of currently calculated depreciation deductions the first year, 50% the second year, and 25% the third year, with no ability for investors to claim depreciation on Single Family Residence ownership after that. Depreciation has never made sense for Single Family Residences in the first place, since the house itself may lose vary, but the land itself appreciates, offsetting that depreciation. My wife just sold her mother’s 100 year old tear down in Costa Mesa for $1,500,000 million that was purchased for $50,000 a few decades ago. Where is the depreciation? Owner-occupiers can’t claim the depreciation tax break, so why should investors get special treatment here, especially when it allows investors to buy up all the homes, and leave US citizens with nothing, erasing the “American Dream” of homeownership? Current law makes no sense, and it is exacerbating inflation. Stop supporting a corrupt set of laws that favors investors while punishing citizens, and fix the housing problem, to boot.

    • JeffD says:

      Sorry, the word “vary” above should be “value”. No idea what the spell checker did there, and I hope Wolf can correct it for me.

      PS I invite you to write your Congressperson. Cut and paste what I said with corrections, modifications, or extensions, and help make the world a better place for the next generation. If the young suffer, the old will feel it, as society continues to decay around us at an accelerating rate. If you have children or grandchildren, even more of a reason to do something.

    • JeffD says:

      One more point to share here about phasing out depreciation for investor ownership of Single Family Residences — it’s a solution for California’s tax revenue problem. California is in a tax revenue bind due to Proposition 13, a law passed in 1976 that only allows property taxes to increase by 2% a year. The result of this law is that investors started hoarding California homes as soon as the law passed, due to tax advantages. As a result, about 46% of housing in California is occupied by renters who never had a fair chance at ownership, like other states. Now, if depreciation were phased out as indicated above, some homes bought by investors that have been passed down generation to generation without a property tax adjustment would be overwhelmed by the loss of the depreciation claim, and would be “forced” to voluntarily sell, because many of their properties would no longer be profitable as rentals. California would get a boon in tax revenue from these sales, since the new buyers would not be investors, for the most part, and the property taxes would be reset to the current assessed value rather than running on the fumes of prop 13. That 1.5 million house in Costa Mesa I mentioned was paying $1,000/yr in property taxes, while the new owners are paying $33,500/yr, according to Zillow. If California wants to solve its tax problems without being “blamed”, then it would quietly start lobbying the Federal government to phase out the depreciation tax break for investors for Single Family Residences. That’s a lot of extra moola to solve the “homelessness” problem, which Newsom has claimed for decades is his top priority.

      • SoCalBeachDude says:

        In order to qualify for those Proposition 13 property tax stability benefits a home must be OWNER OCCUPIED by a spouse or child and cannot be used as rental property here in the State of California. Otherwise, the taxation reverts to reassessed property valuation and that has long been the case with Proposition 13.

        • JeffD says:

          There are almost certainly legal tricks around this, especially if the person dying was a landlord who set up all the properties behind a solid legal vehicle in the first place. When one partner dies, another partner runs the business? If set up as a corporation, is it merely a change of CEO when the CEO dies?

      • VintageVNvet says:

        Very good comment JD, and I, for one, hope that Wolf will take a look at the very unfair situation you describe and do his usual great analysis and reporting.
        While the intent of the Propositions in CA and FL,( incidentally pushed into law by the same person) was good, as many folks were being pushed out of their homes by the incredible increases in property taxes when a mega mansion was built next door in old neighborhoods, those laws were certainly not intended to protect ”investors” in any way.
        Not sure if the same results exist in FL today, as it seems there is verbiage in every notice of property taxes in recent years indicating one must report any change of usage — from owner occupied to rental, etc., as it should be. And there are warnings of stiff fines and penalties for failure to comply, etc.

      • Flea says:

        Not going to happen blackrock would lose tons of moneyLet them eat cake

      • Debt-Free-Bubba says:

        Howdy JeffD Owner occupants can easily avoid the taxable profit on the sale of their house . Asking Government to solve a problem? Good Luck with that….

        • JeffD says:

          Depreciation is a different beast that encourages hoarding. Any investor who rents out their home can claim a depreciation deduction for 27 years, *for each home owned*, that offsets their income. For many/most homeowners in California, the depreciation amount is so large, it results in tax losses every year that can be carried forward to future years. Think of home ownership in California as a form of money laundering — the more homes you buy, the more you have available to write off your income from other sources. It’s the perfect place to invest for the rich, in combination with Proposition 13 and sky high appreciation due to land availability and regulation issues. Take away the depreciation tax break for Single Family Residences, and that little tax avoidance scheme collapses quickly, resulting in investor home sales and higher inventory. This would fix the inflationary housing appreciation that puts upward pressure on wages, at least in California, and also give people some affordable housing to own, for a change.

        • 91B20 1stCav (AUS) says:

          JD – interesting observations, but how would/did depreciation function in an area of economic collapse similar to Detroit or other Rust Belt cities?

          may we all find a better day.

        • Lynn says:

          JeffD, the depreciation tax is the bigger problem. Without prop 13 there would be many more homeless.. Prop 19 took care of inheritances at least on rentals and vacation homes. And empty homes, we can’t forget those..

      • Einhal says:

        Are you suer? I thought Prop 13 only applied to primary residences, not investor homes.

        • JeffD says:

          @Gomp, Not with a 1031 exchange. With the 1031 “two schedule depreciation”, It also resets the clock for depreciation on the new asset, if I understand it correctly.

          @Einhal Proposition 13 applies to residential, commercial, and industrial properties. Corporations are treated as persons.

        • JeffD says:


          PS Not a suer. Just someone who liked America the way it was when the “American Dream” of everyone owning a home was an actual thing. We can get back to that, and remove a lot of tension floating around in society today.

        • Einhal says:

          That was supposed to be “sure,” not “suer.”

          I’ll research Prop 13, my curiosity is piqued.

      • Gomp says:

        Pretty sure capital gains tax is paid on all previous depreciation.

      • Gattopardo says:


        You’re overestimating the impact of depreciation. I know from first hand experience owning a rental, the depreciation benefit was modest at best. As you noted, it only applies to the building value, which in most of CA is a minority of the total value. Divide that building/improvements value by 27 years, and the number is small. Then consider that if property appreciates, rents increase, etc., the depreciation looks smaller and smaller every year. And then you’re paying it all back (as cap gains) when you sell anyway.

        Then there’s another factor…the reason for depreciation. Renting a property out DEFINITELY accelerates the decline of the building. That’s a genuine expense slowly accruing over time. You could argue that maybe that expense should be deducted when realized. OK. There are some distortions from that, but all tax policy distorts something, somewhere.

        IMO, eliminating the depreciation benefit would have, at best, a tiny effect.

        • JeffD says:

          I have no problem with multi-family apartments being a depreciable commercial asset. My argument is that Single Family Residences should be a special class of property, not open for commercial use. We created commercial and residential zoning laws for a reason. It makes sense. We should use similar reasoning in building commercial vs purely residential properties, where the owners of commercial properties are given investment tax breaks, and the owners of residential properties are not. I believe this would fix a lot of serious problems plaguing society today without creating any serious new ones.

        • JeffD says:

          PS In all honesty, would you have bought the rental in the first place if there were no tax breaks for depreciation, mortgage interest paid, and maintenance/upgrades/repairs? If lack of depreciation would have been enough to change your decision to buy a rental, it would not be fair to claim I’m overestimating the impact.

      • Flea says:

        California tax revenue problems,Dre because people can’t afford to live there .Really stupid political decisions

    • Jack says:

      Tax code should be put back to original 2 pages.

  22. Jon says:

    You would think that these reluctant home sellers would at least rent if they need to vacate. Where I live, there is zero availability. People are living in hotels, waiting for an apartment or a home to rent.

  23. JG says:

    Wolf – IMO, this bump back UP in home prices since JAN 2023 is much more than just “typical seasonal demand”. As a buyer, there are no existing (not new build) homes to even go look at. One comes up for sale, and the open house is packed, and the home receives multiple offers, and is sold within days at a ridiculous price. It is stunning that with 30 year rates at 6-7%, this housing market continues to hold prices so high. A 1% drop? Come on now. They just went up 35-60% in the last few years! What am I missing?

    • Wolf Richter says:

      “there are no existing (not new build) homes to even go look at.”

      Well, there are 1.08 million of them to look at. And they sit on the market on average for 44 days before they’re either sold or pulled off the market, up from 34 days a year ago.

      • JG says:

        Thx WOLF. Again this may be true overall. However dumpier, higher cost, high price, high tax city markets seem to be dragging down this average. However suburbs, exurbs, and rural areas IMO are still very hot in terms of sales prices (not transactions) I dont care about transactions as a buyer. In MY market, this is the case. I felt like a running back trying to dodge linebackers at the last open house I was at with my wife. It was insane.

      • Gattopardo says:

        Hold on a second.

        ~1 million for sale, across about ~3 million sq miles in the U.S. That’s only 1 house per 3 miles, Wolf! It takes one hell of a Saturday open house tour to see very many of them. Better not try that in an EV.



    Excellent analysis of the used home and new home paradox. The great insight here is that the market has lost 25% of buyers and sellers thereby shrinking the market. The used home market is now a moving target for the coming massive real estate crash. The inability to adjust price and interest rates creates a situation where the used homeowner can slowly watch their savings and equity vaporize into the real estate black hole. The coming new home bonanza within the crash is an excellent opportunity.
    See The Bubble That Broke The Bank.

    • gametv says:

      What really causes home prices to fall is distressed properties and we still need to work through alot of equity before people get distressed. So this takes time.

      My guess is that prices start dropping into the end of the year and that there is no major spring price surge next year, which will finally put a stake in the heart of the real estate market.

      Stock equity prices will fall first.

  25. spencer says:

    The FED mismanages risk premiums/price signals. R-star is fictitious. The FED’s manipulation of interest rates as its monetary transmission mechanism has hammered the real rate of interest while minimizing credit spreads and has unnecessarily stoked asset prices (where housing prices are a principal target).

    Contrary to its mandate, the FED directly affects specific real-estate prices by buying and selling MBS.

    • jon says:

      The FED’s mandate is a sham. The real job is FED is to enrich themselves, friends and their masters.
      Once, you realize this truth, it’d all make sense why FED is doing what they are doing right now.

      People think that FED’s explicit mandate ( Price stability and employment ) are the goals towards which FED is working for.

      People should see what FED is doing, not what they are supposed to do via their explicit mandate.

      • Wolf Richter says:

        “People should see what FED is doing”

        Yes, jon, you “should see what the Fed is doing.” The Fed has hiked rates by the fastest in 40 years and cut its balance sheet (QT) by nearly $700 billion in less than a year.

  26. Hubberts Curve says:

    In Wolf’s last article I reported how my neighbor was got a job transfer and put his almost new home up for sale, right across the street from a block of new homes that is just coming on the market. He was in a big hurry and very motivated so after the first weekend of open houses he dropped there price from $740,000 to $690,00. This seemed to make the real estate agents trying to sell the new homes across the street mad as someone kept knocking the for sale sign ( his house was listed by different realtors) off the little hooks and on to the lawn. He left town for his new job and a week later the house went pending. But that sale fell through and the house is still on the market. The listing agent finally put zip ties through the sign attachment holes so the other agents ( I assume, no proof) couldn’t knock it down.

    • Einhal says:

      A great anecdote which illustrates the points many make in these comments, that prices are set on the margins. Once the foreclosures/forced sales start, it doesn’t matter what things were “worth” six months ago.

      • VintageVNvet says:

        Good point E,,, and I will repeat a true story here:
        In 2006 a friend showed me a flyer for a couple of older ”rancher” type houses side by side on a deep water canal with ”sailboat water” and no bridges to the GOM.
        The asking price was $885K each.
        In 2009, he showed me a flyer for an absolute auction with ”asking first bid” was $225K each.
        By then however, there were multiple brand new condos nearby and with docks and directly on the river that had been $750K for similar SFs going for less…

        • jon says:

          Classic case of sellers chasing a down market. This would happen more and more with time I guess.

          My friend bought a home for 750K in 2006, Put it on market for 850K in 2007m finally sold it in 2012 for 450K in hottest housing market.

    • elbowwilham says:

      I’m currently renting in what is supposed to be one of the “fastest growing cities,” but houses all around me are sitting until their prices are slashed. I’ve seen some slashed 100k. As wolf said, there are still buyers at the right price, but the market has definitely changed.

  27. Tom S. says:

    To the new vs used debate I completely agree with Wolf. It has nothing to do with old homes being more quality or whatever, but keep telling your dead self 100 years from now about how solid that drywall is. Everything to do with the homebuilders not wanting to get trapped in a ’09 scenario with no buyers and entire subdivisions sitting vacant. They are priced to move. Obviously location dependent, but $416k doesn’t seem outrageous for the median new home to me at this time.

    Real incomes are rising and unemployment is at historic lows. I don’t see why prices would drop all that much until the labor market loosens up. Even then, people who work remote can continue to work remote and may not need to sell. There’s also a bunch of freshly retired folks in their forever homes that aren’t going to sell under any circumstance. Volume of transactions is low and could remain low for a long while.

    • jon says:

      In my hood, real income of people at the lower wage spectrum increased a lot in last 3 years. For example, $12 increased to $18 or so.

      But people at the higher wage spectrum e.g. 150K or more, not a lot of increase.

      The median home price is $800K here. Starter home is ~$550K.

      I wonder about people who got raise from 12 to $8 in last 3 years can afford $450K home at 7% mortgage rates.

      Last downturn in housing took 5 years to bottom out.

      From what I see, the current situation is highly unsustainable: High rates, High prices ==> historically high unaffordability.

      Something has to give in, I just don’t know what that’d be.

      Most of the companies, if not all, are calling people back to office.
      My company employs 50K people and they want people back to office 4 days a week. On top of that company is in cost trimming mode based on quarterly results so more and more lay offs coming if consumer does not spend enough.

      Consumer is the lynch pin of us economy and as long as they remain strong , US economy would chug along.

      • bulfinch says:

        Yeah…I went to sleep back in 2012 when a half mil for a 3/2 SFH was aspirational, and got you an acre on a corner in a nice zip code; woke up in 2023 to read how it’s the price of a ‘starter home’ — o-k.

        Seems totally reasonable & sustainable.

  28. Bobber says:

    There is a great deal of seller complacency out there. People don’t really worry about their stock or RE investments until something happens. We’re all guilty of it. When we see the price of a stock dropping, we start to investigate things in earnest. When the price rises, however, we have a tendency to let it ride.

    We are entering the phase where home prices are declining and owner’s are starting to take notice. I’ve been seeing many listings where a home was purchased no more than 3-4 years ago. These people are trying to lock in quick gains, fearing the gains might evaporate as quickly as they arose. I see many other listings where homes were purchased the past two years, which indicates seller’s are trying to limit the consequences of their “mistake”.

    People who purchased in hot markets have reason to be concerned. These areas were inflated by the AirBnB supply bubble, which is receding quickly. Investing in rentals simply doesn’t pencil out any more, with risk-free alternatives at 4-6%. In some of these hot areas, prices have to come down 30-40% to bring things back in line with sanity. I have a feeling that price adjustment will happen fairly quickly from this point forward, as potential sellers head towards the doorway.

    In a neighborhood I’m watching, a recent July sale reflected a price/sq foot that is 30% less than currently listed properties. Thus, we are seeing price drops at the margin. 90% of potential sellers will stand by and watch, while 10% of sellers move early to capture gains.

    • Einhal says:

      Bobber, very well said. I’m noticing EXACTLY the same thing here in South Florida. The number of houses I see for sale that were purchased (according to Zillow’s price history) in 2021 or 2022 is just astounding. That says to me one of three things:

      1) People purchased these as “investments” in 2021 or 2022, realize now that they purchased at the peak, and are trying to get out, mostly unscathed.

      2) People moved down from New York or Washington figuring they’d “work remote” forever, and now their employers are telling them to get back in to the office, and they have to sell.

      3) People moved down figuring they’d take the opportunity to live in a tropical beach climate, and don’t actually like it, and are moving out.

      Either way, I knew that the 90% increases in two years were not sustainable, and look to now be reversing.

  29. gametv says:

    Amex reported results and year over year revenue growth declined from 30% in past to 11%. Total network volume fell from a yearly gain of 15% to 8% in just one quarter. Credit card sales volume will reach zero growth by end of year at the latest.

    Travel expenditures are still growing at 15% year over year in last quarter, but that means that non-travel expenses were much lower than 8% growth, maybe they even declined.

    There are still people with money that are spending, but there are other people who are cutting expenses.

    Credit losses rose by 400% year over year. Watch those balloon further over the coming year(s).

    • random50 says:

      As somebody that’s travelled an enormous amount the last year, I suspect those travel expenditures have gone up almost entirely because the prices have gone up rather than because people are changing their habits.

    • Wolf Richter says:

      Credit losses are up from near zero last year (stimulus money) and are still relatively small.

      Travel spending growing by 15% is HUGE. Card spending growing by 8% is HUGE. These are HUGE growth numbers, in an economy that grows 1%-3%.

  30. SoCalBeachDude says:

    MW: Nearly everyone ‘thinks’ the Federal Reserve’s rate hike next week will be the final one — except the Federal Reserve, and the Fed’s Waller, unimpressed by inflation data, calls for two more rate hikes this year.

  31. random50 says:

    The median prices are the same. I wonder what this median house looks like?

    In my area, the only logical thing for a builder to do in most towns was buy an old house, tear it down, then build the biggest thing the local authorities would permit on that plot. So the new builds are all enormous. (It’s still the only logical thing to do, I’m just not sure even that’s financially viable any more)

    The prices between new and used here won’t equalise, but it’s certainly the case that “used” homes are increasingly looking like awful value next to these brand new constructions twice the size, wired for modern living, free of lead and coming in at a lower price per square foot.

  32. fullbellyemptymind says:

    Used was effectively flat seasonal peak to peak, although the year/years were more negative recently. Still, this means that most (~all) of the decline in the “total” market was due to New units, right?

    Curious if this offers any insights into the auto sector.

  33. RickV says:

    I’m having a little trouble with this post. Yes, demand is down, say, 25% because of owners with 3% loans who don’t want to lose their great deal. But isn’t demand down another, I’ll guess 25%, because new, first time, buyers are being priced out of the market because interest rates are now 7%, and these buyers don’t have the income to qualify for a home loan at median prices and 7%. So now with first time buyers out of the market, the demand curve shifts even further to the left and demand declines 50%.

    • Wolf Richter says:

      1. One topic per article. Yes, there are other factors that impact demand up and down.

      2. You’re mistaken about first-time buyers. The share of first-time buyers of total sales has been about normal compared to recent years, in the 27% to 30% range. Note that many millennials, despite all the wailing and gnashing of teeth, have great jobs and make great money in what is a very tight labor market with the biggest pay increases in 40 years. They’re now in their big earnings years.

      • RickV says:

        It would have helped me understand your approach if you had explained that this was a partial explanation of the housing situation. According to the NAR “Profiles of Buyers and Sellers for 2022”: “First time buyers made up 26% of all home buyers, an eight point decrease and the lowest rate since 1981 [in 2022].” Based on my calculation, the average MBA weekly conforming mortgage interest rate during 2022 was 5.47%. The average MBA weekly interest rate this year (2023) was 6.57%, 1.1 points higher, so I would expect the number of first time buyers to have declined even further this year. Thanks for your excellent work.

        • Wolf Richter says:

          You have to distinguish between “% share” and “number of people.”

          There was a time when first-time buyers had a “% share” of over 40%. But that was a long time ago, when there was a lot less mobility in the housing market. When home prices started ballooning since the financial crisis, people started selling and buying homes like stocks, and the “% share” of first-time buyers dropped because the repeat buyers were so active selling each other homes. This is a HUGE principle that has been well-documented.

          When repeat-buyers pulled back in 2009 during the housing bust, the “% share” of first-time buyers exploded to 50%, even though they (number of people) too actually bought fewer homes, but activity in the speculative repeat-buyer segment plunged to near-zero, and the “% share” of the first-time buyers within this plunging market jumped to 50%. It wasn’t that there were suddenly a lot more first-time buyers, but that activity in the repeat-buyer and the speculative repeat-buyer segment collapsed.

          Then, as home price began to recover and surge, repeat buyers became more active again, trading houses like stocks, and the “% share” of first-time buyers declined.

          The millennials are now the largest segment of home buyers, but many of them are already repeat buyers; the housing boom in recent years allows them to sell and buy, and make some money. This was also described here in the comments just now, by a commenter about his daughter’s multiple buy-and-sell activities (5 houses so far, if I remember right). This is very common. Even though she is a millennial, she is not a first-time buyer but a prolific repeat buyer that helps push down the “% share” of first-time buyers.

          This time around, the housing market went nuts through mid-2022 (peak in June 2022), and repeat buyers went nuts with huge volume, buying and selling, and buying second homes and multiple homes, rental properties, etc. (look at my home sales chart below). And so the “% share” of first-time buyers fell within this overall surge of repeat activity. The survey you cite captures this period. It was sent out in July 2022, and captured responses reflecting the prior 12-month period.

    • The Real Tony says:

      In Canada they won’t even state the percentage of first time buyers anymore since none are left. Even studio apartments start around the $700,000 mark and very few can get funding today for a mortgage even at that low a price.

  34. Tom says:

    What happens when something like this comes to American residential real estate? I’m surprised it hasn’t already….except for the political power of the NAR. And it could spread PDQ, esp if the lenders get burned with another 2008.


  35. Daz says:

    Went out to dinner tonight to a popular restaurant in an affluent So Cal beach community. Surprised that there was no wait for a table, especially Friday night at 7:30 pm. Only half the tables inside were occupied, patio and bar pretty empty too. Wonder if people are starting to seriously cut back on spending to try and stay afloat?

    • rick m says:

      Maybe they’re eating down here. Beach restaurants are busy from Bay St Louis to Ocean Springs. Friends just sold a 2007 3-2 for 100k+ over the 2020 purchase price. Prudent move, the first house on the lot floated away on August 29, 2005.

  36. SOL says:

    I’m just waiting for the 0% FTHB loans from the politicians.

  37. Julie Davis says:

    You are probably right about used housing correcting soon but just to play devil’s advocate, new houses are mostly all out in the boonies so maybe this current call back to the office is increasing close in used house pricing.

    • Wolf Richter says:

      For someone who lives in an urban core, like me, it looks like most houses that were built over the past 40 years or so (used houses now) are out in the boonies. So that’s the “urban sprawl.” There’s of course a degree of boonies, such as 45-minute commute, 1-hour commute, or 2-hour commute. But to me, it’s all out in the boonies since I can comfortably walk everywhere I need to go, such as 20 minutes on foot into the financial center.

      BTW, there is still lots of new construction going on in or near urban cores, such as big redevelopment projects. Think of former military bases, shopping malls, old industrial and warehouse areas, etc.

      In San Francisco, for example, there are about 65,000 new housing units in the pipeline. About 3,000 to 4,500 are getting completed every year. Most of them are sited on former naval bases and shipyards (with nuclear contamination that they’re trying to remediate), our biggest shopping mall with parking lots, old sprawling industrial and warehouse areas, an old long-shut-down power plant, a football stadium with huge parking lots, etc., plus a bunch of fill-in projects. In SF, nearly all new housing is of course multifamily (condos and rentals), given the density and costs of the city.

      But if you go out a little further, those redevelopment projects are often turned into subdivisions of SFH.

  38. The Real Tony says:

    In parts of Canada like Alberta new homes cost twice as much as resale homes the same size. In the Chinese cities in Canada new homes cost about 50 percent more than resale homes the same size mostly due to the price of land and the need for fieldstone. The Chinese like homes built out of fieldstone. Overall in Canada a new house is somewhere around 25 percent more than a resale house the same size but of course on a much smaller lot. If the new house is on the same sized lot as the resale house then the new house would cost at least double what the resale house costs.

  39. Itsbrokeagain says:

    I think the biggest thing on some of us first time homebuyers is age. I’ll be 41 next month, yeah I kinda started my life late in this game, chasing careers and renting and not really caring about owning a home when j should have. But with a wife and kid now it’s been a more important priority than ever. So everyone that is saying just wait it out, I’m not exactly 25 where I can wait til 30. If the market slumps by the time I’m 50, either the market has to be in the bottom and I can swing a 15 year or be able to pay extra payments because there’s no way I’m paying a 30 year til I’m 70 or 80.
    The sad thing is at the current prices and rates we can barely afford a regular home here in Long Island (and pretty much ALL of them need some work, despite being renovated or move in ready), so there’s no headroom to make advances in principal, much less even save for an emergency. And this is in decent to good school districts. Even in the low income/high crime areas homes are going for 500k.

    I will say tho they are slowly starting to correct. Sales history is showing one or two drops or being pulled and relisted. However everytime contact my agent about several places of interest I come across, I get the response ‘sorry already has a contract out’ or multiple offers over asking’.

    I feel like those two answers contradict what I’m seeing with the price drops…home prices are dropping because they can’t get a buyer, but when I ask there’s multiple buyers on every home I question about.

    • Itsbrokeagain says:

      Forgot to mention that I can take my career almost anywhere, if things don’t correct significantly here (which I’m guessing they won’t), I can easily get a career lined up in NC/SC or head to FL where at least I have family and the beaches.

    • bulfinch says:

      Gotta wonder whether they don’t sometimes tell you that to stoke FOMO…if there’s multiple qualified offers, and not just shill offers, let that be transparent — prove a buyer isn’t outbidding their own shadow…

  40. KRil says:

    I wonder with the interest rate buy downs that builders are offering. I can’t find if most are offering buy downs for the life of the loan. Or just a teaser rate for the first few years. I’ve seen both but don’t know which is the more common one. Either from the builder side or the consumer side. If its just a teaser buy down we might be in for some hurt in they can’t refinance later on down the road.

    • Wolf Richter says:

      These buydown deals vary. Buydowns are often for the first few years. The hope is that by that time, rates will be back to the buydown rate. If not, it’s going to be problematic.

  41. TK says:

    Used homes can be nice. I spent 20 years making ours something special and will never recoup. But we like it here and that’s all that matters. Someday our children will sell it and I hope it sells at a premium. I guess we never thought of our home as an investment.

  42. tannin says:

    Love the concept of ‘a used house’……very funny. Coming from U.K., where a house could be 400 years old……..
    Btw. a ‘used house’ is way better to live in than a new built…..all the off-gassing has taken place, whatever settling is going to happen, has happened…..a mature garden, landscape.
    Mainly it’s the off-gassing, the poisons that people with new houses live with, breath, for years…………brutal

  43. Words matter (and I hate that phrase, funny) says:

    I’ll have to post this again sometime…its about a day or two too late.

    Title of article:

    “Housing Market Faces Reckoning: Price of Used Houses now the Same as Price of New Houses”

    I follow the housing market some but I’m not obsessed with it. I’ve never seen the word “used” used to refer to the existing housing market.
    Is my memiry terrible ?

    Wolf certainly likes colorful phrases, some of which I believe he originates.
    Nothing especially flamboyant about “used houses” yet if that term gained a lot of traction… could it influence existing, I mean used, home prices going forward ?

    I for one hope so. Maybe I’m being silly and don’t realize it, but if you are in the market for a used home it might be good if you could help the phrase catch on when conversing with realtors, mortgage lenders, etc.

    • Wolf Richter says:

      I worked in the car business a long time ago. It was during the time that the industry tried to find a more appealing word for “used” car. They came up with “pre-owned” car. Now there are even “certified pre-owned” (CPO) cars, which are newer cars where the dealer performs a long list of check-and-inspects, including the vehicle’s history (CarFax, which every dealer does anyway), etc., plus some kind of limited warranty (such as for 12 months). People are expected to pay a premium for a CPO car. That’s what this is all about.

      So in the housing market, no one has any problems talking about “new” houses, and all I did was stick to the parallel word of “used” houses. Fair is fair. It was the first time I did that, and it was fun.

      “Existing homes” is just a BS term that the NAR came up with to increase the churn in the market and extract more commissions. New houses “exist” also. So maybe we should say: “non-existing new houses” (in the pre-construction stage), “existing new houses,” “existing used houses,” and “non-existing used houses” after they get torn down?

      And just maybe I can make “used house” stick.

  44. Elvis says:

    The correct term is “previously-owned” houses.

    • Wolf Richter says:

      🤣❤ I’m gonna make “used houses” stick. This was the first time in the ten years I have been writing about this stuff that I deployed the term, and I had a blast. Sort of like I refuse to call used cars “previously owned cars,” which was invented during the time I ran a big dealership. Now the industry even has “certified previously owned”(CPO) cars, LOL. All of this stuff is designed to put some verbal lipstick on the product you’re buying — “used” — so that they can get more money for it.

      However, you nor anyone else has any problems calling new houses “new houses,” but you’re squeamish about calling used houses what they are?

      FYI: The value of the house will eventually be zero when it gets torn down or abandoned. What has permanent value is the land.

  45. Andrew Trupin says:

    Has anyone considered that we are in the mid stages of a crack-up boom, so no crash, no recession, just dollars priced in houses trending toward zero in logarithmic decay.

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