Home prices jump for seventh straight month in August

[GON]

Seems no relief in sight for rising single family home prices. The seven plus percent 30 year mortgage rates are not impacting the steady rise in home prices.

"Home prices surged to a new record high in August as the affordability crisis continues to deepen.

Prices increased 0.4% nationally in the period from July to August on a non-seasonally adjusted basis, the S&P CoreLogic Case-Shiller index showed Tuesday.

Home prices jump for seventh straight month in August

U.S. home prices continued to march higher in August, according to S&P data, even as the housing market grapples with an ongoing spike in mortgage rates.

www.foxbusiness.com

On an annual basis, prices are up 2.6% from their peak at the same time last year. It marked the highest level for the index since 1987."

 

[Passport1]

Great time to already be a homeowner and have a sub 3% mortgage rate.

 

[hrv]

Great time to already be a homeowner and have a sub 3% mortgage rate.

or no mortgage at all.....

 

[dogememe]

I keep thinking that eventually, it must go down. But that eventually might be long after I've left this planet and I'm not even 30 yet LOL.

 

[Delta]

Great time to already be a homeowner and have a sub 3% mortgage rate.

Except for us that got one of those 3.25% mortgage right before it went up and found the house they have does not suit their needs...

That person would be me unfortunately...

 

[GON]

I keep thinking that eventually, it must go down. But that eventually might be long after I've left this planet and I'm not even 30 yet LOL.

Many of us share your thoughts. When one looks at historical data of home prices during times of high inflation, and then adds in the change in the buying power of the USD, hard to see how home prices come down on a MACRO basis.

The only suggestion home prices could fall is a repeat Japan's bubble for the late 1980/ early 1990s. One difference is the growth rate of the Japanese population during that time (static), and the US population growth now (upward).

 

[Patman]

When my ex wife and I split up a couple of years ago I made sure that I bought a place with no mortgage at all. It meant that I am now in a 700sq ft one bedroom apartment though, coming out of a 2800 sq ft brand new detached house, so that was quite the shock. But I am enjoying the much lower cost of living here, and never having to shovel snow off a driveway in the winter. FWIW, we bought our last house together for 1.1 million dollars in 2018 and sold it in 2021 for 1.8 million! Prices in Ontario went through the roof during that time period.

 

[gfh77665]

I keep thinking that eventually, it must go down. But that eventually might be long after I've left this planet and I'm not even 30 yet LOL.

Real estate prices will go down, but not like you would think. A 10% -15% retracement if it was to happen would be a great buying opportunity. The great foreclosure crisis that happened in 2008-2010 where some one could buy houses at a 50% -70% discount is very unlikely to repeat itself. The quick reasons are 1) more stringent lending practices, 2) housing inventory shortages, 3) elevated commodity prices (lumber, appliances, etc.) and 4) population growth (mostly in red states).

 

[JeffKeryk]

Earlier this year I was a buyer for a small, older condo studio nearby for an old friend to live in. It was about $430K; it is now closer to $600K. Shoulda woulda coulda...

 

[dogememe]

Many of us share your thoughts. When one looks at historical data of home prices during times of high inflation, and then adds in the change in the buying power of the USD, hard to see how home prices come down on a MACRO basis.

The only suggestion home prices could fall is a repeat Japan's bubble for the late 1980/ early 1990s. One difference is the growth rate of the Japanese population during that time (static), and the US population growth now (upward).

And the interest rates don't help. I looked at how much interest I've paid on my car loan since I got it early this year. Already over $1000! That is nuts! I never would have bought the car if I had considered that. $1000 buys a lot of gas for what I was driving before... And according to a quick Google mortgage rates average like 7% right now. That is a huge difference in monthly payment and huge difference in cost over the life of the loan. Even if home prices were exactly the same as a few years ago the difference in interest rates makes them unaffordable for many people.

 

[We're Metals]

Earlier this year I was a buyer for a small, older condo studio nearby for an old friend to live in. It was about $430K; it is now closer to $600K. Shoulda woulda coulda...

That is a kind gesture

 

[AZjeff]

@dogememe Think about this, in 1980 the average 30 yr fixed mortgage rate was 13.74% and never went below 10% through the 80s. We managed to buy and sell several houses through those years. You're a working man in California, how you will ever own property will be a miracle.

Our property value has climbed back to the high point of June 2022 after losing 10%. Not selling but it's good to keep track.

 

[CKN]

Real estate prices will go down, but not like you would think. A 10% -15% retracement if it was to happen would be a great buying opportunity. The great foreclosure crisis that happened in 2008-2010 where some one could buy houses at a 50% -70% discount is very unlikely to repeat itself. The quick reasons are 1) more stringent lending practices, 2) housing inventory shortages, 3) elevated commodity prices (lumber, appliances, etc.) and 4) population growth (mostly in red states).

I would agree if they do go down they will not exceed the amounts you mentioned. However-As long as supply FAR LAGS BEHIND DEMAND I don't see that happening. It would be a decade at least-assuming all obstacles to building are removed for that to happen.

 

[haggler]

We haven't seen the worst yet because largely people haven't stopped spending, despite the monetary policy. What has stopped is the largely inflation based price gouging. When the spending dries up and businesses aren't making money, then will come the job cuts. Then who will buy those houses at 8%. It's like the car market, that has gone back to somewhat back to more normal but prices are still very elevated.

 

[gfh77665]

Another thing to always keep in mind, todays homes are much larger, stylish and differently constructed that a generation or two ago. I grew up in a family of four, we had a 1100 sq. ft. 2-1-1. Brother and I shared a bedroom. Low ceilings, old asbestos tiled floors, Formica countertops, window unit A/C. wood shiplap siding. A generation ago I built a 3-2-2 all brick 2100 sq .ft. with cathedral ceilings and granite counters. Today we two empty nesters live in a 2500 sq. ft. two story 4-3-2.

This alone should be factored in any real estate price discussion, but it almost never is. Yes prices are higher but houses are way larger and better equipped. They should cost proportionally more.

 

[ArrestMeRedZ]

Bought my first house in 1976. Have been in real estate since then, over 47 years now. In my lifetime, 7+% rates have been the norm and sub 4% rates the aberrations.
I don't expect rates to come down much in the next decade or two.

 

[John105]

or no mortgage at all.....

My FICO went down the month after I paid my home loan off (wasn't a mortgage was a heloc), but right. Again the reason is our resources are finite. If they were not, then by all means borrow and use leverage.

 

[Torrid]

Great time to already be a homeowner and have a sub 3% mortgage rate.

What I can’t get is why Rocket Mortgage thinks that I would want to refi my mortgage with a higher rate when I’ll have it paid off in 5 years. The sales pitches are hilarious to me.

 

[hrv]

My FICO went down the month after I paid my home loan off (wasn't a mortgage was a heloc), but right. Again the reason is our resources are finite. If they were not, then by all means borrow and use leverage.

I could care less about the FICO score VS paying off your mortgage....Its a no brainer to me...NO debt...

 

[Vil_Riker]

I keep thinking that eventually, it must go down. But that eventually might be long after I've left this planet and I'm not even 30 yet LOL.

Unless we have reduction in population this is unlikely to happen. The input costs for new construction are high and that will be used for correcting the existing home prices.