Another article showing concern in the housing market- yet the author may have lacked critical thinking

[GON]

I just saw this on ShadowStats:


The continuing year-to-year decline in September 2022 Existing Home Sales deepened to 23.8% (-23.8%) [October 20th, National Association of Realtors®]. Third-Quarter 2022 Housing Starts and Building Permits showed respective, deepening, consecutive quarter-to-quarter contractions of 38.2% (-38.2%) and 28.7% (-28.7%) [October 19th, Census Bureau].

PT,

I looked at similar stats- today's housing sales are slightly below the ten-year average. Which is amazing as so many people have locked in rates well below what is available today.

Below is some further information- and to no surprise the West is doing better than the rest of the USA.

Existing home sales in the US fell 1.5% to a seasonally adjusted annual rate of 4.71 million in September of 2022, the lowest since May 2020 and almost in line with expectations. It was the eighth consecutive monthly decline in sales as mortgage rates continued to rise and prices remain elevated making it impossible for many buyers to afford houses. On a regional basis, sales fell in the Northeast (-1.6%), Midwest (-1.7%) and South (-1.9%) and were unchanged in the West. The median existing-home sales price rose 8.4% from one year ago to $384,800. The inventory of unsold existing homes declined for the second straight month to 1.25 million by the end of September or the equivalent of 3.2 months' supply at the current monthly sales pace.​

Source National Association of Realtors (21 OCT 2022)

 

[Donald]

I am so glad I sold my NY house at the start of this year. Even if it sold for the same as I bought it for in 2007. No high NY property taxes and no high heating oil prices.

One cannot time the market. I bought the NY house in 2007 at top of the market.

But in DE I bought in 2017 and now my house is worth at least 1/3 more than I paid. For awhile we felt we had jumped the gun, buying our retirement house before we sold our NY house. But it turned out like a smart move now.

 

[georgemiller]

Over the past year and a half, 3 houses on my block sold for substantially more than the asking price. I live next door to one of these properties. Last Summer, I received a Certified letter in the Mail from a Real Estate Agent who was showing one of these houses to a client. Seems that the client liked my houses so much, that he asked the Agent to propose an offer to purchase MY home. It was a nice offer, but I have no intentions of selling. Fast forward to today, my house has been valued at close to $100,000 more now than that initial offer over a year ago. (Zillow)
Long Island, NY Market.

I'm also on Long Island. We live in such a competitive market and we don't have tract home building like other states. We have such a lack of good quality housing I see slight decline but not drastic drop.

 

[Tharber]

Buyers backed out because they could not qualify as rates increased.

There is still a fear of missing out that is driving home prices. Areas that have housing shortages will not see a decrease in values, however, they will see a decrease in the number of transactions. Election cycle years are historically hard to predict in real estate. Sales typically slow down until the election is over which is what I see happening right now even in FL where we have 900 people per day moving into the sate. I do not see the mass forclosures happening again, especially not with people who had purchased before the mortgage rate increases. 2% and 3% money is practically free and there is no reason to loose your house at that rate. 3 or 4 years from now might be different as many new home buyers are taking the ARM route and at some point housing will no longer be affordable for them.

 

[alarmguy]

This article from Fox Business dot com highlights REDFIN saying 60k real estate transactions have been called off in September 2022.

Headline was very eye catching but reading the article I couldn't help but come away that no significant housing decline will happen (unless the US dollar were to collapse).

What I came away with from the article:
- there is an overall housing shortage in the USA
- builders are fearful to build new homes- not that the new homes won't sell, but inflation and labor issues make the proposition to risky. A home a builder thinks will cost 500k to build, may end up at 650k. The market won't support the increase cost in labor and materials
- since builders aren't building new homes, the housing shortage will get worse
- majority of people in the USA have mortgages at 2%-3.5%. They are not selling unless they can get a dream deal- less inventory

End state- no housing price decline of any meaning in the USA IMHO. People may not buy new boats or new motor homes, but nobody is walking away from their house at 2.5% interest rate. I see fair value in single family homes at 2015 prices for 2022. The market just exploded. I will view a decline in housing if a single-family home declines lower than 2018 values. And I don't see any of the housing declines coming. People may want a new home, but they are not selling what they have because they have such a low interest rate.

Disclosure- I have cash ready and am ready to buy a home; I want a major correction in the market for personal reasons, but the information I read (past the headlines) shows no meaningful decline in single family home prices. There will need to be an oversupply in housing for prices to drop. No oversupply now or on the horizon.

60K real estate deals called off in September

High mortgage rates are driving down home sales and dampening buyer competition as many potential buyers and sellers remain put in the real estate market, according to Redfin.

www.foxbusiness.com

I agree with your well written post. VERY good point about the current homeowners with 3% mortgages they will face a big bump up in payment at 7%.
I did see that story you linked too, in fact sent it to my wife yesterday to see.
There will be places in the USA where the media will choose to show gloom and doom, like some high priced places settling down.

If you dont know, we put our house on the market this month, it took 2.5 days and we were in contract...
To add even more credibility to your post I have noticed the new home that is being built, the builder is now holding off realeasing any more new homes for sale in the area.
It could be for one or two reasons, so many homes have sold that they have a lot of building to do. I mean we were 5/6 months out from completion at time of contract in August or they are holding off because of your statement, which is a very good statement "builders are fearful to build new homes" and I think very plausible. I do know, sooner or later they have to start up again, after all its there business but I am sure they need to know the cost structure of everything first.

 

[SC Maintenance]

People think the housing market collapsed in 2008, but in reality it peaked in 2006, and bottomed in 2012 - 6 years. What were people saying about housing in early 2007 - including the fed - and were they lying or just didn't know?

On the opposite side housing prices tripled from 1970 to 1980 during a period of high inflation and relatively poor economy. We had no real inflation in 2008, but we have lots now.

The housing market is very sticky. People don't move / sell without a catalyst. I personally don't believe builders aren't building because there afraid there costs will over-run. The big builders have built millions of houses - it takes them like 90 days to get it 90% done, and they know there costs per square to the penny. I think there not building because there not sure what to build or where and are like the rest of us with the unknowns.

I don't believe were going back to 2008, but I don't really have a clue what to predict either. Either interest rates need to fall, housing prices need to fall, or wages need to rise to reach an equilibrium to where we are today. Which will it be or all 3 - if you know clue me in please.

 

[alarmguy]

PT,

I looked at similar stats- today's housing sales are slightly below the ten-year average. Which is amazing as so many people have locked in rates well below what is available today.

Below is some further information- and to no surprise the West is doing better than the rest of the USA.

Existing home sales in the US fell 1.5% to a seasonally adjusted annual rate of 4.71 million in September of 2022, the lowest since May 2020 and almost in line with expectations. It was the eighth consecutive monthly decline in sales as mortgage rates continued to rise and prices remain elevated making it impossible for many buyers to afford houses. On a regional basis, sales fell in the Northeast (-1.6%), Midwest (-1.7%) and South (-1.9%) and were unchanged in the West. The median existing-home sales price rose 8.4% from one year ago to $384,800. The inventory of unsold existing homes declined for the second straight month to 1.25 million by the end of September or the equivalent of 3.2 months' supply at the current monthly sales pace.​

Source National Association of Realtors (21 OCT 2022)

Maybe I missed out on the conversation? You did notice your existing home sales report from the National Association of Realtors is from last year = OCT 2021
If you are aware this might still help others if they didnt take notice.
update = the NAR date in your post is from last year but some information is current. Anyway in a following post below I posted the direct link for everyone. The west is still down the most year over year.

 

[alarmguy]

There seems to be conflicting information in two posts recently, here is the link and hopefully that clears it up.
Limited inventory is still supporting homes price in much the country. I can testify to that as we got our house in contract less then 3 days after putting on the market and at above asking price with back up offers. I think the OP from GON is well stated.

Existing-Home Sales

The Existing-Home Sales data measures sales and prices of existing single-family homes for the nation overall, and gives breakdowns for the West, Midwest, South, and Northeast regions of the country. These figures include condos and co-ops, in addition to single-family homes.

www.nar.realtor

 

[Donald]

Here are some numbers from Zillow for 19968 (Milton Delaware) predicted 12 month increase

July 2019 -1.4%
Oct 2021 +20.1%
Jan 2022 +18.8%
April 2022 +19.5%
July 2022 +12.1%
Aug 2022 +2%
Oct 2022 +0.7%

So things significantly cooled over the summer of 2022.

 

[chrlsful]

The housing shortage is a national problem & has regionally different approaches toward correction.
Just read the 1st post, only skimmed 2 or 3 beyond. Your post is laudable GON. Want to address it on the + and the -. As you probably know there are many different systems w/in which a builder can perform - build on spec ("I think if I own the land, build a certain house I can sell it."), for a realtor (They R a developer, may B more than 1 co building there), city/regional land bank (gov holds the land w/o tax, other charges till ready to build), Co-Housing, Community Land Trusts, LIHTC, etc.
Also there are many payment schemes/schedules - 1/3, 1/3, 1/3; start up and completion, one time. Apply these to the above system w/in which built (& more) can turn nice profits, adjust to changing world/local conditions, area need, builder need. 3rd parties can B involved. I'm an affordable builder when not turning wrenches. If the home were a home, not thought of as an investment (booms earlier were just cuz ppl wanted to get in a house) I think we'd C one (Now?: declining pop, low wage in comparison to goods inc lumber, cement, etc) again. We do in very local areas. Study "Y there?" and we might create conditions for more being built? There's always a need for the lower priced home. The McMansion is more of an investment, no? HTH & is not a distraction~

 

[zzyzzx]

 

[zzyzzx]

 

[zzyzzx]

People think the housing market collapsed in 2008, but in reality it peaked in 2006, and bottomed in 2012 - 6 years. What were people saying about housing in early 2007 - including the fed - and were they lying or just didn't know?

The housing market is very sticky. People don't move / sell without a catalyst. I personally don't believe builders aren't building because there afraid there costs will over-run. The big builders have built millions of houses - it takes them like 90 days to get it 90% done, and they know there costs per square to the penny. I think there not building because there not sure what to build or where and are like the rest of us with the unknowns.

For some reason people think this housing correction will happen much quicker than last time, as if 2006 - 2012 was the stone age and the internet didn't exist or something. I'm inclined to think it's going to take years. People forget that the housing market is sticky as in people asking prices as if rates are still 3% when rates are 7%.

 

[zzyzzx]

 

[zzyzzx]

 

[zzyzzx]

 

[SeaJay]

The market is changing fast, prices lower than just a few short months ago.

 

[wpod]

How can there be a housing market collapse when 10 million new migrants are allowed into the country every year now? They won't be living in Martha's Vineyard, but they'll be somewhere.

Many will be feeding from the taxpayer slop trough.

 

[zzyzzx]

 

[Chris142]

They are building cookie cutter track houses all around here. One is going to be 20000 houses.