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How home-price growth has damaged the housing market

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S & P Core Logic Case Schiller Home Price Index Just recorded Growth of 20.4% year-on-year across the country, record high of 21.2% in the complex of the top 20 cities, and now my most important concern for housing Overheating of house prices2012-2021 will not crash as people warned.

from S & P: The S & P Core Logic Case-Shiller US Census NSA Index covers all nine divisions of the US Census, with an annual growth rate of 20.4% in April from 20.6% in the previous month. The annual growth rate for the 10-city composite was 19.7%, up from 19.5% last month. The 20-city composite recorded an increase of 21.2% from 21.1% in the previous month … 9 of the 20 cities have higher prices in the year ending April 2022 compared to the year ending March 2022. Reported.

This data line is a few months old, so it lags behind the current housing market. Since the summer of 2020, we’ve been talking about how to cool home sales. A 10-year yield is required to exceed 1.94%. This happened in March, and thankfully it is.Please try to imagine Mortgage rates It didn’t rise this year.We are still showing Double-digit home price growth Recent data trends as it takes time for supply to return to normal levels as mortgage rates rise.

However, as shown below, the damage is caused by the rise in house prices. I have developed a specific house price increase model from 2020 to 2024. This means that if home price increases increase by 23% over five years, there is no problem with total housing demand for both new and existing homes reaching 6.2. Over a million.

What do you guess? America did Hulk and the Agents on my model in just two years. Whenever you see house prices rise vertically over a period of time, it’s never a good thing. This means you had a major supply shortage or a credit boom.

Since 2014, the credit housing boom seen from 2002 to 2005 has not been seen. Even today, the MBA Purchasing Application Index is below 2008 levels. The housing market cannot reproduce the massive credit growth seen in 2002-2005. So the story of rising prices is related to the lowest inventory collapse in history.

It’s not just about house price inflation. Shelter rental inflation has also begun. If supply is low and demographics are equal to demand, don’t complicate it. People always have to live somewhere. If they are employed, they either buy or rent a house.

Still, we can see that the damage has occurred in the last few years as total home inventories have fallen to record lows. 1.52 – 1.93 million.

For a while I’ve been focusing on it 1.52 to 1.93 million people Total housing inventory data is the level of inventory that changes my dissertation that this is a terribly unhealthy market. In reality, inventories collapsed to record lows when our most prominent demographics reached the peak age of home purchases. Even with historically low inventories dating back to 1982, I believe the housing market could be healthy again when it reaches 1.52 to 1.93 million. Podcast With Altos Research.

Hopefully you can see why higher rates were needed last year and earlier this year to cool the rising market. In reality, homeowners and builders were too price-determining. Also, some investors were not afraid after 2020. Since 2020, the proportion of home flipping has increased beyond the housing bubble period, and aggregate investor demand has increased to some extent, but institutional investors are still a small number of home buyers, as shown below. It is a ratio.

from Freddie Mac:


In general, most investors are mom and pop investors, many of them want rental yields, and everyone needs shelter.

From 2020 to 2024, don’t think about the housing boom in sales and credit. Consider together the largest and youngest demographic patch in history, replacement buyers, ups, downs, cash, and investor buyers. This is driving the demand for large replacement buyers during this period.

That demand didn’t look like what was seen at the peak of 2005, but it was enough to drive the historic rise in home prices these years. The only thing that can cool this is a higher mortgage rate that has already begun.

nevertheless Pending home sales Yesterday it turned positive as a beat of the quote, but we can see that sales are declining as rates rise. This is because the biggest buyers of homes are mortgage buyers. They run shows, not Wall Street investors or iBuyers. These players are too small.

In summary, this is not the way I wanted to achieve 2020-2024. When people were talking about Housing Bubble 2.0 from 2012 to 2019, I knew that a demographic muscle patch would come from 2020 to 2024.No one can say I didn’t warn Housing bubble boy crew That said about this in 2019 — and a special greeting to me Patience Crash Brothers — I understand what happened to the home because the price was negative rather than positive. If house price growth grew from 3% to 4% annually, it would have been a clear voyage for years without much damage to rising interest rates. Of course it wasn’t. From 2020 to 2024, housing inventories hit record lows and paid for.

Currently, the focus is on the future of the housing market, and for me it’s all about the boring and balanced B & B market. To have that market, you need total inventory data to return to 1.52 to 1.93 million with at least 4 months and monthly supplies. That way, you can stop calling this a terribly unhealthy housing market.

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