Prices still holding up nationally year-over year though…
Then again, maybe the cure for high prices is new supply (and higher rates)…
New Privately-Owned Housing Units Under Construction
And don’t forget this abomination - Federal Reserve holdings of Mortgage-Backed Securities:
From $0 in 2008 to $2.6 Trillion and change today. Yes, it’s a semi-log chart.
QT? What QT?
30-year Fixed Mortgage Rates
Since 1971, the average 30-year mortgage rate (using the above Freddie Mac numbers) is 7.76%, and the median is 7.43%. Currently it’s 6.42%. The problem isn’t the rate, it’s the price.
Cities Where the Most Home Sellers Are Giving Up A recent analysis by Zillow finds that homes are now lingering on the market for a median of 54 days--45% longer than last year…Sellers are taking their homes off the market because they’re not getting the price they want, or not getting offers at all
Immediately near me are 10 homes for lease right now, and only 4 for sale, which is unusual here. “For Lease” here means “Can’t Sell” (at least at the seller’s preferred price).
Back in June I noted:
I talked to a real estate agent at an open house yesterday (pricy, nice big house, nice neighborhood. No one else came by in the half hour I was there.)
He talked a lot, and I listened. He seemed honest. Normally realtors are all “Everything is awesome!" but he said his market had turned “180 degrees” in the last month or two (two failed escrows apparently on this house already, due to rates.) He said that it takes sellers “six to nine months” to figure out the market has turned, “but buyers realize it right away.”
He actually said, “Better to sell a year too early than a day too late.” Imagine a real estate agent saying that in 2022! (I tend to do this with stocks.)
He has a listing on North Rios Avenue in Solana Beach, one of the most desired locales in San Diego [it’s very nice - rh], that recently went on sale for $1.9 million and isn't getting much attention. His seller purchased the home in April, when home prices were peaking, for $2.45 million. For personal reasons, the buyer has to sell now and has put it on the market for a considerable discount.
"I cannot get an offer," Grant said. "It is worth all day, $2.3 to $2.4 million, and we lowered the price, but not a single offer has come in."
Apparently no one wants the house at $1.9 million (actually $1.995M), so maybe it’s not worth $2.3 to $2.4 trillion, all day. And when it does sell, what does that do for the neighborhood’s comps?
Ben Jones of the excellent Housing Bubble Blog adds some color:
This seller did everything imaginable to upgrade this house in NE Carlsbad, and then got into trouble – BofA filed a Notice of Default in April on his $1.9 million mortgage. But don’t feel bad for him having to drop from his lofty $4.5 million initial list price to eventually sell for $3,175,000 – it is still the highest sales price ever in this zip code.
California is largely a failed state at this point, but the weather’s nice…
Stalled S.F. housing sites are creating eyesores with tents, dumping and drug use
Downtown San Diego residents wanting to break leases because of the homeless crisis
“If a family in California can’t sell their house because it’s too expensive to afford, that makes it harder for them to move here”
Won’t someone think of the realtors?
In November, 37% of real estate agents struggled to pay rent on their offices for the second month in a row. While the situation seems to be holding steady, it is a concerning sign.
Median Price Decline from Peak in 2022 By Metro
In the bubble before this one, but after the other one, housing peaked nationally (Case-Shiller, for sake of argument) in February 2007 and bottomed in February 2012, which my models indicate is roughly 5 years later
Almost like home price appreciation the last two decades were a function of artificially depressed interest rates
Cringed listening to chatter in an Austin salon of young hairdressers discussing real estate purchases in October. Some had multiple rentals and some were flippers. It reminded me of 2006 and hearing stories of Florida pole dancers owning multiple homes for investment....
Nice having you drop a line here Rudy!