The equation might not have gone so horribly awry if each class of graduates had seen their incomes skyrocket in line with their student debt. But that’s a crummy joke in America.
Home prices in San Francisco hit $945,000 in February, 16% above the prior peak. But momentum stocks, which the city is addicted to, are crashing. With terrible results.
That’s how it always starts: with a deadly mix. Home sales are collapsing while inventories are soaring in six housing markets that had been white-hot just a few months ago.
The gap between Canadian and US home prices is at an all-time record, with prices in Canada now 66% higher than in the US. And risks are piling up.
They’re not even trying to blame the weather this time. “Housing affordability is really taking a bite out of the market,” is how the chief economist for the California Association of Realtors explained the March home sales fiasco. “We haven’t seen this issue since 2007.”
Giant PE firms and REITs have become the largest landlords in the country over the last two years because “there was a moment in time where it made sense,” but now home prices are too high, the business model has collapsed, and buyers evaporate.
It starts here: evictions in San Francisco hit the highest level since 2001, when the dotcom bubble was disintegrating. Everything these days gets benchmarked against the last bubbles: the dotcom bubble that blew up in 2000, the housing bubble that blew up in 2007.
The stock market has soared for five years, risks have ballooned, home prices have jumped. Gains built on the quicksand of endless liquidity and a lackluster economy. “Irrational exuberance” is back in the Fed’s vocabulary. As the Fed’s Fisher said, it may end “in tears.”
National averages paper over gritty details on the ground and are a crummy indicator as to what is happening in specific metro areas. But even with this caveat, a national average suddenly sounded an alarm for the housing market: the smart money is bailing out.
Teachers are a symbol of the middle class. In California, they earn on average $69,300 annually, fifth highest in the country. Not exactly a pittance. But it is a ludicrous pittance if they’re trying to buy a home.