Would a ‘normal’ housing market be so terrible? – Orange County Register

“”Bubble watchDelves into trends that may indicate future economic and / or housing market problems.

Buzz: Apparently some “Chicken Little” misunderstand the house hunter’s “more options”. Industry experts say their “corrected” forecasts indicate that the market has reached an “inflection” where an “equilibrium” appears between buyers and sellers. This “reassessment” creates a “leveling” to a more “sustainable” pace.

sauce: This is a summary of common buzzwords used by real estate guru in the last few weeks.

Top line

The latest home numbers weren’t clean, as the surprisingly hot markets of the pandemic era seem destined to be quite cold.

Basically, buyers Say “no” to the high priceA true wallet buster amplified by the historic surge in mortgage rates.

Southern California Home Saless decreased by 19% in April compared to a year ago.. The slump was 9% across the state. One of the US sales indexes for existing homes has declined for the sixth straight month.To buy a new home Soaked monthly in 2022.. Builder sentiment has fallen to its lowest level since June 2020.

Still, it’s interesting to see housing cheerleaders trying to spin this slowing market.

Quickly, real estate insiders have become cautious about the more subdued “normal” market in the future, as they boast of a “new normal” boom in housing.

Anatomy

But what does “normal” look like?

For the answer, take a look at a trusted spreadsheet. Let’s take a look at a real estate benchmark that compares trends over the past year with the “normal” average up to 1988 …

Home thanks: Price increases in Southern California over the past year have been 17%, with a normal annual increase of 4.7%. I’m sure most people will accept that kind of depressed appreciation, even if it’s only a small part of the current profit pace!

Home sales: Purchases in Southern California averaged 22,611 per month over the last 12 months, but are basically normal. Since 1988. However, it is far from normal in each county. Current sales are below average in Los Angeles (9% off), Orange (6% off) and Ventura (3% off), flat in San Diego and high on the riverside. (Up 18%) and San Bernardino (up 9%).

rent: The consumer price index has almost shown the pace of rent growth Tripled to 3.4% in the past year.. Historically, this is a normal level increase for tenants by this standard.

Building permit: The industry wants you to think that more construction will fix what afflicts homes. California developer building permits submitted over the past year have been 1% faster than normal since 1988.

Mortgage rates: With surprisingly rapid moves from less than 3% to more than 5%, the lowest ever, funding costs are below the usual 6.2%. However, the Federal Reserve has promised to raise interest rates to kill an abnormal inflation attack.

inflation: Who doesn’t want to see inflation return from its current highs to the normal 2.4%? At the level of 40 years. But how painful is the chill in inflation? Note that mortgage rates are currently 3 percentage points below inflation. “Normal” spreads are 4 points above inflation!

Work growth: A salary is required to join or stay in a homeowner’s club. California bosses have increased their workforce by 6.9% over the past year, compared to the usual 1%. Rehiring from a pandemic economic chill Helped to add sizzle to the housing market.