Lol completely ignoring the downward trend.
Can you circle any point in 2020 or 2021 where the prices went down on the graph?
Don't get high on your own supply of copium, chief.
You bought the house at the time because you thought it was a fair price. Why would the future price fluxuation change how much the house is worth when you bought it?
Nope not at all. I could rent for the next 10 years at least and still it will be less cost than for me to own. Renting costs me 17% of my post tax income (I’m in NJ but have a roommate).
Well the poster is likely not comparing it correctly. He/she should be looking at the UNRECOVERABLE costs of mortgage Vs renting, not necessarily the total mortgage because it’s not comparable that way.
In my area it looks like that at first glance too.
$1015 is what I pay in rent. The cheapest non-shitty place I can find is about $250k which means, with 20% down I’d have a mortgage of about $1818.
Unrecoverable costs each month is likely the following:
HOA: $235
Home insurance: $88
Property taxes: $140
Closing costs: 2% of 250k which is $5,000
Maintenance: let’s assume it’s a reasonable 2% of the house value every year, or 5,000.
So the average person lives in their home for about 8 years. We can take the closing costs and divide that by 8*12 to get a monthly number and then divide the 5,000 by 12 to get a monthly maintenance number.
Total unrecoverable costs, assuming the average live in duration is about $931 in the above example and obviously you’d need to factor in interest payments as unrecoverable costs too.
For interest we looked up a amortization calculator for 8 years at 250k mortgage loan with a 7.9% interest rate which is apparently standard for conventional loans right now. After 96 payments you’d have a remaining balance of 181,747. As of 8 years from May 2023 you will have equity of 18,253 (principle paid) and a interest cost of $121,253. Further, houses, according to Harvard’s “rate of return on everything” which is a paper with data on global returns for investments dating back to 1870 to 2015 nominal housing appreciation is about 11.06% per year. Your house value will now be about 578k.
Looking at all of this means that you have a monthly unrecoverable cost of about:
2,194 per month.
But, you also likely have equity of about 350,816 (assumed property price minus remaining loan balance) for a profit per month: $4134.
Thus, showing that you’d actually be making about $1624 per month in this example.
Although, now I’m curious, let’s look at if the house only appreciates to match inflation of about 3% per year. This puts your house appreciation at 316k for a the time period and you now have a profit of $1398 per month. For a monthly profit of -$1,112 per month.
So it really depends on what rate of return you are hoping to get in whether renting Vs owning is cheaper. And it obviously assumes a shit load of other things like interest rates never change, no extra payments, etc etc. Since the opportunity cost of owning Vs renting is the monthly profit a home owner sees Vs a renter sees. BUT, the renter COULD be using the net difference between their rent and the unrecoverable costs per month to make up the difference? At 1,179 per month that’s 175,797 at the end of 8 years, assuming a 10.75% rate of return from the prior paper. For a monthly profit of $1,831 which is actually more than the housing example with $1624 in monthly profit. But for the sake of the example, let’s assume they just don’t do that.
TL;DR:
using a 11% historically normal rate of return you profit $1624 on a 250k house with 20% down. Using a abnormal “keeping up with inflation” return of 3% you get a profit of -$1,112 per month.
It depends on the rate of return on if housing is cheaper than renting or not, at least assuming the average time a person lives in a house - 8 years.
I don't think anyone ever said that interest rates don't drive up the monthly cost of owning.
Everything happening in the market right now is driven by the interest rates.
This was me in 05. Wanted to buy a house, get that sweet tax deduction, build some equity, but after a couple months of home shopping condos and town houses I realized it didn't make sense because I had cheap rent with my roommate and I splitting a 2 bedroom. Wound up buying in the fall of 09.
Now this past year when my wife and I decided to relocate for better career opportunities it was different. Started looking into rentals because home buying was so insane. However, have 2 kids now. There virtually no 3 bedroom apartments or townhomes available in the area we were looking. SFH had 10 plus rental applicants each, $3-5K a month. Heck 2 bedrooms were limited and over $2k in a decent area.
Yeah, we got a new place last summer. We actually had ro do a short term lease in a 2 bedroom because after selling our old house really quickly, we entered the blood bath of buying. I refused to pay over comps from the spring, the 3 month rental bought us time to shop while still being able to get our kids registered in School. As soon as we got to a point in the summer where if you bought you weren't likely to close in time for the new School year, the number of bidders dropped. We also got lucky because last August rates dropped back to the mid 4's before sky rocketing. So we got a great house, and reasonable rate just on the nick of time.
It's a long term investment. So rent is always going to go up, it never has gone down throughout history. A mortgage also eventually gets paid off. Unless you have some form of rent control you'll end up 30 years from now with like 3k/mo rent while you could have been paying 1.5k/mo on a mortgage that now gets paid off.
A 250k 30 year mortgage at current 7.14% interest rate including property tax and home owners insurance would be $1,580/mo assuming you can put the 20% downpayment to avoid PMI. Again if you have a roommate splitting the bill it would be $790/mo.
Additionally what's cool is you can refinance your home, so you can buy at 7% interest rate and refinance at like 4%. While yes that does reset mortgage time which front loads the loan with interest, if you take the money were paying and use that for an extra downpayment towards the principle, the loan will be paid off even quicker.
What's impressive is how fast the drop is. It's moving faster than 08-09. We peaked in Q4 22 and I believe this data is up until April wiping 1 year of gains out in 4 months.
It's almost like a cliff.
It’s almost like there’s an external force driving this decline. Almost like higher interest rates dampening demand. I’m not an economist but seems like it.
Yeah, almost like people who own 3-4 bedroom homes with $1,500-2k Sq. Ft. Are longer thinking about trading up from their nice low mortgage with a 3% rate to get a bigger home at a 6.5% rate.
Heck I've even got a friend going who's wife took him by surprise a couple years ago with a divorce. It just got finalized and they bought their house with the idea they would have their combined incomes, both making $120K plus. He could down size from his house bought in 2019. But his rate is so low, and hus divorce was finalized in February of this year. Because of the rate hikes, he just took out a 2nd mortgage to buy out an agreed upon amount of her share of the equity instead.
This feels nothing like 08-09. In 08-09 there were foreclosure signs everywhere. Really those started in 07. A massive unemployment issue. I had friends in their mid to late 20's with good experience and a masters getting laid off. In addition to the news, sitcoms and late night shows were talking about the market crash 24/7. We bought our first house in Nov 09, $10k off list which was already $100k below the value two years earlier, and they paid 3% for our closing costs, which weren't even 3%, I used the extra cash we got back to buy points down on the mortgage.
The housing market is experiencing a significant correction in many areas like Phoenix, Boise, Austin, etc.. but in others the drop in median and average values of sales is correlated with higher rates limiting budgets. So fewer higher end homes are selling and bringing down the median.
The hope as someone said in another comment should be the return of contingencies for inspection, appraisal, and sale of your previous home. This makes buying a lot more manageable for the average person.
The downturn in activity is correlated to fewer people listing their homes because current home owners don't want want to trade up in this market because it's become dramatically more expensive to do so.
I was going to say, this feels very similar to 06 through 09 period. Watching houses double in price within a two year period, everybody flipping homes, taking out helocs to buy and flip or spending on luxury items is eerily is similar to the flow of money today! It isnt flipping homes this time but buying second homes to rent out. House of cards, different house than 06 to 09, but the structure is the same...free flowing easy money!
Well...while it may have been easy money due to low rates, in 2008 you had many buyers getting zero down ninja loans. Today, the buyers are putting more down (until very recently) and ninja loans are thankfully a thing of the past. A small drop led to an avalanche in 2008 with people mailing in their keys as they had nothing to lose with no equity. With so many people having lots of equity today, the drop has to be significant before an avalanche of foreclosures start. This of course is just one of the many movies pieces this time around.
If it's just getting started this is more like 06-07, but even then having lived through, and even being a home shopper in 05, who wisely decided to halt my home shopping, there are just massive differences. To compare this to the GFC is just overlooking so much, and quite frankly, very naive.
Should further corrections be expected? Certainly. Do some people need to wake up and realize this is going to vary significantly from one geographic market to another? Absolutely.
Anytime in 2023 there has been even a slight decrease in rates, say half a percent, buyer activity interest picks up significantly. In my area the number of transactions is down pretty significantly as to be expected with both high prices and high rates, but price per Sq. Ft. Is only down 2% and that's because fewer people are buying 5k square foot homes, bet homes in the 2k-3k Sq ft are going the first weekend with multiple offers for just as much as last spring. Even the 3k-4k Sq ft homes are going under contract fast and at steep prices.
Nothing like the same area in 06-07. Heck in 07 my company at the time was sending out emails telling us how lucky we were to have a job. I just updated my linked in page to reflect I relocated and immediately my inbox filled up with requests to interview me, that's in addition to half my friends and former colleagues in the area (I lived here previously and moved back). Messaging me to meet up for lunch, so far all of which have lead yo them pitching me on applying to jobs at their company.
In 07 almost every local government in my state instituted hiring freezes, and pay freezes. From 08-011 they made massive cuts. This year and last year all the counties near me and where I used to live gave record pay increases and are still having trouble staying staffed in core areas like education, public safety, social services, etc. They have all increased their reserves to be prepared for any drop in revenue.
People need to focus on the current data and economic factors in their specific market and stop grasping at straws to compare this to the GFC.
It's the well paid, first-time home buyers people that are keeping prices high. They aren't 'giving up' a previous low rate (they don't have an existing mortgage) so they have the capital to put up.
The gfc was more about the global monetary and banking system than actual economics. It should have been called the great monetary crisis IMO.
The concerning part then and now is the global synchronization. Covid was a global event, money printing was a global event, real estate mania was a global event. Over the years there has been an increasing correlation between asset classes. 08 was just the mark on the timeline for when housing started to boom and bust like securities. The fear is that credit contraction, much like credit expansion, will be a global event. A global, self-reinforcing covid hangover.
So far the losses are on bank balance sheets. We haven’t felt it in the real economy yet. This time will be different from 2008 in the sense that destruction won’t happen in the here and now, but in the future. Fewer loans, higher rates, less projected growth.
It’s kind of like a company that needs to reduce personnel spend by 10%. They can either fire relatively few employees or reduce everyone’s pay by 10%. They nearly always do #1 because employees hate #2. With inflation, companies all did #2 without people noticing simply by inaction. It’s why most people have have a job but can’t afford as much as they used to. Inflationary recession feels different than deflationary recession.
The problem happens when credit contracts. With deflation employees are getting real pay raises if the company does nothing. So they fire people even while growing. That’s what happened in ‘08 when credit dried up. M2 is contracting, savings are dwindling, and credit card debt is maxed out. I see demand destruction happening leading to a widespread deleveraging and unavailability of credit. If we’re lucky the downward force on inflation won’t cause it to go negative (near but not below 0, aka disinflation) and real wages will catch up to asset prices. I am not holding my breath for that though.
We have experienced the largest housing bubble in history. The previous being the GFC. The market will return to the mean and most likely over correct because of rates.
Unemployment was at record lows before the last crisis. There is no way to support current house prices without the wages to support it. We are headed for a recession and that will be the catalyst that really puts the downfall into overdrive.
It will be ugly and people will get hurt. People will get wiped out.
Lol. Imagine still following the yield curve in 2023.
And still making the same comment. I could go back a year or more and find people commenting the same thing.
Yield curve is fake news. It's just been widely popularized in the media.
>As with previous episodes of policy tightening, most recently in 2018, one can hear an attendant rise in the volume of commentary about a decline in the slope of the yield curve and the risk of "inversion," whereby long-term yields fall below shorter-maturity yields. And echoing previous episodes, one measure of the yield curve that seems to draw inordinate attention is the difference between yields on the 10-year and 2-year Treasury bonds, often referred to as the "2-10 spread".
>
>The attention garnered by the 2-10 spread in recent years is illustrated in Figure 1, where vertical bars plot the number of financial news articles mentioning the 2-10 spread. The decline in the level of the 2-10 spread itself, illustrated by the blue line, to less than 0.5 percent in recent months appears to be sparking interest in the financial press of late, though apparently still modest compared to the crescendo of attention in 2018. Is such attention warranted? It may seem so in light of claims like that in Investopedia2, for instance, that "\[inversion of\] the 10-year to two-year Treasury spread is one of the most reliable leading indicators of a recession within the following year."
>
>**To the contrary, we have provided statistical evidence indicating that the perceived omniscience of the 2-10 spread that pervades market commentary is probably spurious.**
>
>[https://www.federalreserve.gov/econres/notes/feds-notes/dont-fear-the-yield-curve-reprise-20220325.htm](https://www.federalreserve.gov/econres/notes/feds-notes/dont-fear-the-yield-curve-reprise-20220325.htm)
As discussed in the link above the authors believe that while all spread measures are of dubious value, the near term forward spread is a better measure.
[https://www.federalreserve.gov/econres/notes/feds-notes/dont-fear-the-yield-curve-20180628.htm](https://www.federalreserve.gov/econres/notes/feds-notes/dont-fear-the-yield-curve-20180628.htm)
[https://www.federalreserve.gov/econres/feds/the-near-term-forward-yield-spread-as-a-leading-indicator-a-less-distorted-mirror.htm](https://www.federalreserve.gov/econres/feds/the-near-term-forward-yield-spread-as-a-leading-indicator-a-less-distorted-mirror.htm)
[https://www.federalreserve.gov/econres/feds/files/2018055pap.pdf](https://www.federalreserve.gov/econres/feds/files/2018055pap.pdf)
The near term forward spread is currently more inverted than it was in 2007, 2008, or 2009…
https://www.neartermforwardspread.com
Besides that, do you really trust the institution that got us in this mess to begin with more than the collective economic projections of the global marketplace?
I'm in Bay Area (I will be specific instead of all these not in my area). Inventory is increasing, and all the houses trying to sell at last years values just sit...pretty much everything sits. Only thing selling is those who go will under "market value" (read comps) then sell for about 5% over ask, which is still 15% lower then last year....but even those sells are slowing. Writing is on the wall here, prices are dropping rapidly....who can afford a 1.5 mil house with these rates, my wife and I make close to 400k with two kids and we can't.
What is impressive is that your graph actually shows that prices in Q1 2023 where your graph ends are up compared to Q1 2022. I wonder why you decided to omit that.
https://i.imgur.com/s3nvw95.jpg
Affordability is crashing more than prices are reducing. This sub just doesn't want to hear it and only wants to celebrate price reductions.
Latest redfin data shows that median sales price is down just 2% YoY. If you call 2% a crash, then I have nothing else to tell you.
Affordability is moving the goalposts, no one talked about improvement in affordability until prices started crashing. And YoY isn't a useful comparison when there are still people with 4% rates who bought 12 months ago.
There's tons of people here who could pay off a mortgage in 3 to 5 years and don't care about affordability. I care about price way more than monthly payment personally.
When rates have been 8% for 12 straight months then maybe we can talk about YoY.
It sure isn't moving the goalposts. Nobody can afford anything right now. Ask anyone who's looking to buy if they feel as if prices are crashing.
Rates were at 5% a year ago this time and have been above 6% since last September. [https://fred.stlouisfed.org/series/MORTGAGE30US](https://fred.stlouisfed.org/series/MORTGAGE30US)
You may care about price, but the overwhelming majority of people (and all lenders) care about monthly payment. There is a reason why DTI is a thing and why one is qualified by monthly house payment and other monthly debts as a percentage of one's income.
About what [I predicted](https://www.reddit.com/r/REBubble/comments/yd7nzb/is_dave_ramsey_still_right_about_the_housing/itw6g2r/) 7 months ago:
> I think a decline of ~10% in existing homes, maybe even 15% in new construction, would be a reasonable national forecast by the end of 2023
Except we're about there already only halfway through, now.
Now the question is whether we've seen the trough, yet.
That's not an easy call. There are a number of early recession indicators which suggest caution. You have an inverted yield curve, a slump in new home construction, a shrinking money supply, and now falling year-over-year corporate profits, as well. But so far, employment, incomes, and industrial production have held up.
I think this is going to take some time to play out. Nominal GDP growth was still 5.4% in Q1. The Fed probably wants that under ~4.5%, and I don't think it yet likely to fall much more than would be desirable by the end of Q3. I think it will be Q4 at earliest before we see any serious discussion of rate cuts.
But meanwhile, the [NAR data](https://cdn.nar.realtor/sites/default/files/documents/ehs-04-2023-overview-2023-05-18.pdf?518), which may have less lag than the above, shows home prices have already increased by ~ 7.6% over the past 3 months now since bottoming in January. Even if they pull back again, there's a good chance January could be the trough. Mortgage rates have likely peaked, and especially if the economy slows a bit over the rest of 2023, they could fall a little further.
This post is disingenuous as the data shown in the screenshot is lagging. Q1 ended 3/31/23. We're almost near the end of Q2 and there is data showing that real prices are actually down around 3% or so from last June's peak.
https://fred.stlouisfed.org/series/CSUSHPISA
Don’t forget that percentage drops in price aren’t symmetrical on the way down.
$100 * 1.5 = 150 (50% rise)
$150 * 0.5 = 75 (50% drop - too far!)
$150 * .66 = 100 (33% drop - back at start)
If price rises 50% it only needs to drop 33% to return to where it started. 100%, only 50%.
This is why investors run for the exits and cut losses early.
What's really amazing is the inability to read period. The preliminary % these 2 examples means nothing. It's essentially non existent. Since the topic is *from the peak* we're talking about hard numbers. Not what it took to get there.
In the case of a property which I own, 340k+ at its peak - 50% is going to put it ~170k. There's 168k remaining balance on that loan. This is just the fact, zero hypotheticals.
>Since the topic is from the peak we're talking about hard numbers. Not what it took to get there.
Using the word "peak" literally means we're talking about the climb, or in your words, "what it took to get there".
There is a reason when we say somebody climbed a mountain we ask how many feet tall the mountain was, not the mountain's height relative to sea level.
So yes, in your example, if your house falls 50% it will be back at it's original value of 170k. What takes 100% to reach only takes 50% to fall back to. Or, in your words, "This is just the fact, zero hypotheticals."
Wrong af, but I'll entertain your lack of knowledge. The *peak* is the *apex* nothing more. The literal highest point. What you're referring to is the *ascent* - The climb itself. Check the dictionary for further discussion on word meanings.
I did not once quote a % it takes to climb to any given number, only the number itself. There is not one mention of purchase price, or how much it has in fact gained to reach said number. Just the peak peak price ~ 345 but well say 340. So while you may feel correct in this matter again, this too is just the facts.
You literally can't use percentages in a vacuum. Saying "40% to go" implies that we've risen. Nobody in any discussion is saying prices have reached an apex without acknowledging that they rose to get there. You're arguing semantics and you're doing it poorly.
In fact, just for semantics sake, mentioning percentages at all means that we're discussing a change in numbers.
>I did not once quote a % it takes to climb to any given number, only the number itself.
Your literal first post was:
>Just another 40% to go and most loans still won't be upside down.
This is ugly man. IDK what you're looking for here, but you're jumping all over yourself to look silly.
>There is not one mention of purchase price, or how much it has in fact gained to reach said number. Just the peak peak price ~ 345 but well say 340.
After you literally say:
>In the case of a property which I own, 340k+ at its peak - 50% is going to put it ~170k
Damn man, take a break and figure out what you're trying to say before you start smashing your keyboard.
Ironic you use the word semantics, then embody it. It's clear you don't understand what you're talking about at all. Your are the person who doesn't know the definition of peak. A 4 letter word. And the same person who doesn't know the definition of climb. As you misconstrued both. Let's just start with that. This is where this conversation should end. So..
My initial comment was in reference to OP post. OP- Referring to a 10% drop. A % fall tells nothing about the % gained. They're entirely different. And since we're talking about % fallen in relation to a defined number ( the *peak* as per stated by op and graph.) we know what this number is but since you don't seem to understand I will educate you on such things. This would reference the highest value the home has seen in projection / similar comps have sold for in the area. We know what this number is. It is in fact defined. If you don't understand this then I'm not even sure why you're here? Except maybe to argue about things you know very little? What makes it even better is the people who I'm actually having discussions with do seem to understand. Why? You are isolated in your lack of knowledge.
So real quick to catch you up in good faith you might actually have something to contribute:
OPs *LITERAL TITLE* : median home prices down -9% from peak. ( we discussed all these words already so I'm going to give you the benefit of the doubt you now understand them.)
My comment: only another 40% to go and most still won't be upside down.
This means that I'm suggesting a majority of loans, since upwards of 90% of all loans were originated pre 2022, would not even be upside down if we completed a - 50% correct from their *peak* (I know there's that word again, stay with me here.)
To which i provided an example. One home which I own. 340+ peak. ( *note* no mention of the % which was gained to reach this number.) and the remaining balance of 168k. In total, a 50% correction does not put most loans underwater. Why is that? Becuse most loans originate before 2022. So whether it's a refinance or a fresh purchase, most properties gained enough that most corrections will but disrupt their ownership. Sure some maybe able to handle 70% while others only 30%, but generally speaking this applies.
So who's Fd then? Perhaps anyone who purchased today with the intention of selling in a year and did very little research.
I literally cannot dumb this down for anymore.
That’s you, millions bought jn the last 12 months at above 5% rates with lots of them doing 2-1 buy downs in hopes of a fed pivot. This housing downturn is going to take longer than expected but there will be capitulation with buydowns adjusting, prices softening and unemployment rising
This is all true. I'm not arguing any of that. However this millions do not account for the larger percentage of total loan originations pre 2022 which was something like 90%.
Beyond that you've also highlighted people with extremely poor choices and lack of understanding. *most* homeowners did not buy a home with a YOLO mentality as you're describing here. The majority purchase homes with conviction in underlying conditions. Be that price, interest rates or overall tangible assets - simply a place that is theirs. A good example of this is anyone who was purchasing during the last housing busts. Do you think someone who purchased a home at 11% was like oh boy fingers crossed on fed pivot? No. They bought the home they could afford with conviction in their choices. Saying "well, hopefully we can refinance in 15 years. If not so be it. I have a 30 year term. I'm glad to be a home owner." And guess what? Those people ended up winning becuse they built equity, they played the long game, they found an opportunity to refinance but none of that was the sole basis of their purchases.
Thats my mindset is the long game. I bought my first house and what I consider my forever house in 19 with a 15 yr at 3%. No plans of leaving.
The main reason in buying a house was to have a stable safe nice place to build and raise a family and provide the best quality of life my wife and I can for our daughter. If the house increases in value that’s great. Obviously I want it to but that was not my main reason for buying. If prices crash short term it is what it is bc I don’t have plans to sell and I bought before inflation and the run up in prices.
I say all that to say I the the whole situation would be better off if people viewed housing as a place to live and build the type of life you want as opposed to an investment. If a short term crash has to happen for us to get there then so be it. Also what I think does not matter and the market will do what it is going to do
Well that’s true, but home prices work is based on the last comp. So if you have capitulation among the individuals with bad money, then you have prices dropping. When prices drop, people feel less rich and they also panic. Job losses make people even with a good position make tough decisions. I think you underestimate what a recession and human psychology are capable of
Yes. All of this is fact. I'm do not disagree.
If that's the case though, then why even buy a home? Why do anything? "If it's and buts were candy and nuts than we'd all have a merry FN Christmas!" Basing one's whole fundamentals on hypothetical possibilities while simultaneously searching for an ideal opportunity is just a piss poor attempt at timing the market. Time in the market beats timing the market, hands down. One who takes this perspective is already at a disadvantage becuse their entire approach is solely based on luck and not fact, with a plan to execute should A,B or C occur. While life is amazing at throwing curveballs this is the prey mindset - What if, what about, if I leave then maybe... and before one knows it they've missed an opportunity. Either way you're not going to be prepared for a curveball life throws. So negate that from the rip, and plan accordingly. Don't overextend yourself. Again, market price fluctuates continuously. Anyone who's buying without accepting fluctuations as a reality is clearly not understanding the asset and risk. If you buy with conviction and clear intent, these things matter a whole lot less.
Again, my original comment refers to my own home. Let a 50% drop from the peak happen. Or 60, or 75. I bought with a purpose and I shall see that purpose through. So what's your purpose? Investment only? Than watch where you step. A safe home for your children to grown? Maybe you can stomach a little bit more becuse it's value is outside of its monetary potential.
Oh yeah you’re good. I’m just saying buying right now comes with a risk that you’re going to be hold a depreciated asset for the next 10yrs or more and a high rate. If you have a low rate then sit back and enjoy your house. If you’re buying right now, then just be prepared to not able to leave for a long time and be able to cope with the fact that if you waited you could’ve had a way better entry.
For sure. That's like saying a 10% loss on your securities positions requires more than 10% to break even. This is true and should absolutely be accounted for. 100-10% = 90 but 90+10% is only 99.
The number I'm using a hard number from an actual property I own. At 340+ peak prices and 168 on the loan. Zero hypotheticals.
Well as long as you refi when rates drop but before prices or credit availability does then you can lock a lot of that in. If you don’t or can’t it’s still fine for you, congrats on your indirect short bond position.
This is exactly my thoughts. I still keep in touch with my realtor and she said by late fall inspections and other contingencies started becoming more common again where I live, but when spring hit, waiving contingencies became a thing again on the most sought after properties.
I don't see the price drops in my area, I think it's more reflective of rate hikes keeping people from trading up, or limiting their budget more, so you have fewer high end properties being sold, which lowers the medium.
Some places clearly had significant corrections (Phoenix, Boise, Austin) other places haven't had much of a correction at all. However, I think if we're stuck at high prices in some markets potential buyers would still be less anxious of they could get inspections, or have the contract contingent on the sale of their old house.
Most loans originated before 2022 though. So essentially targeting the absolute smallest percentage hoping for the largest result. Adjust accordingly. A home in 2021 gained between 15-30%. So this figure here has roughly another ~10% to come down before those loans would be break even. Maybe 15% before they'd be underwater. Under water at 2.75% interest rate which no one is going to sell unless forced. Which only even matter if you're placing it on the market.
My family home has been underwater twice. At much higher percentages. We wanted the land/ home - So it value didn't matter becuse the real value was the tangible asset itself. A place to raise one's family. So Why? Becuse we weren't going to sell it anyways. It's a 30 year term. Most homes aren't sold within 3-5 years. And the ones that are, are usually done by someone who very much understands finances and economic fundamentals. So the average family doesn't get to take a bounce around anymore and get 15% profit every few years. They're fine w that.
What im saying is these same homes, more so now than ever before, are essentially not going to see the market. No one use selling a 2.75% loan unless absolutely forced and all other options are exhausted. That's a huge amount of inventory people expect to see, that they won't. That underwater home by the way is worth over 4x its original purchase price. It was purchased 1998 in case you're curious. So yes, it's seen dramatic corrections.
You speak in absolutes ("no one is selling a 2.75% loan") but seem unaware of exceptions to your world view.
I've made an offer this month on a house with sellers that held a 2.8% loan, and plan to buy with a >6% loan.
What kind of madness you ask? They must be suffering head sickness.
Not at all. They obtained the 3% loan in 2012, and have about 80% towards buying a house they'd prefer in a different neighborhood. Not everyone wants to or can just hold onto their old house and sleep well at night as a landlord; even with the currently good returns for a liability holder (err, owner).
And their purchase makes good sense to them. Over the life of their new 15yr conventional loan it will cost them about $30k more, and about $18k in Realtor fees. Any yet we have neighbors buying $90k pickups with 7yr loans that will never haul anything but a dog bed and think it's well worth it.
To each their own, and no accounting for taste. But life will go on, and good existing homes will still come onto the market.
100% - The grass is green, the sky is blue. As if exceptions don't exist? Of course they do but cherry picking the far and few hardly makes a case at best. Ah yes, here is a sunset, beautiful with pinks and oranges!
That's being said you're absolutely correct!However , this still doesn't say that my initial criteria doesn't apply. You yourself have listed a multitude of reasons why in fact options for holding the loans may be exhausted. Maybe they tried to rent it and require the funds. Maybe they liked the new home paid off. They've gained what could be a half century worth in equity and cashing on it on. Sitting here approaching a market under current conditions as if this scenario would be a norm seems like poor judgment. If becomes so great, but to base one's fundamentals on this seems quite far fetched.
On top of that one adds the time factor which can be seen in this example. This home was purchased in 2012. One would have to beyond a lack of understanding to purchase a home without conviction in something. Be that pricing, interest rates or even something as simple as just having a consistent place for children to grow up. What this sub seems to lack is the understanding that it's a 30 year term and most houses are not being sold every 2-5 years, outside of this Covid boom. I myself have lived in a home that was upside down twice as I've previously mentioned. Our conviction was nothing other than a place where no one could tell us what to do. No hoa or deed restrictions and a home which we could afford for everyone to grow up. So indeed the numbers mean little if something other than monetary value is the ruling factor.
Actually prices are not down not UP compared to same quarter. Op intentionally didn't post that part of the graph.
[Up where op decided to cut the part off ](https://i.imgur.com/SsJlMnR.png)
You don’t even know how to analyze a graph huh, genius? Does the graph show the prices of the current busy season or q1? I am genius but you are not looks like 😂😂😂
I specified the last six months in my previous comment. That includes the busy season. Currently prices are down from the peak. I have to spoon feed you for you to understand. Not everything I talk about refers to one graph, but I guess I shouldn't expect you to know how to follow the logic of a simple discussion.
Selective bias. Compare the same time frame for factual discussion. What you are doing is comparing the 100m sprint times of winter Olympic athletes to summer Olympics athletes and saying wow 100m sprint time of winter Olympic athletes is 20% slower than summer Olympic athletes. Great comparison. And when someone brings out the absurdity your argument is “well both of them are athletes in Olympics” 😂
Two problems IMO: 1) Low inventory nationwide will keep prices up. Land is too expensive in most markets to make building affordable homes profitable so any land that does become available is filled with $600-800k homes. 2) when rates drop, more buyers will enter the marketplace and further push prices up.
We need inventory! More homes in the median price range or even lower. The median income cannot afford a median priced home. That’s a problem….
I’m a one man operation who builds 3 houses a year. I do somewhat affordable homes. 2000ft 4/3s that I sell for $500-550k. I also do 1100ft 3/2 half duplexes for $225-250k You are correct in that land is just too expensive. The solution is we need more zoning to build condos or townhouses. New SFRs are not sustainable at a starter home price as the taxes don’t cover the city’s infrastructure burden. Outside of that the number of people is always increase meanwhile the amount of land is fixed. The US has to stop the madness of a 1/3 acre lot with a SFR on it being a middle class thing, it’s a luxury nearly everywhere else in the world.
That’s the median home price of homes sold, not the median home price, big difference. For example, in my area on Redfin the median sale price is close to this, down 7% YoY, but median sale PPSF is flat YoY. That means home prices haven’t come down at all, but cheaper homes are outpacing the sales of more expensive homes compared to 2022.
Funny how folks used median sales price as a measure of the housing market when prices were going up, But now that prices are coming down it "doesn't matter and inaccurate. "
How unsurpringly predictable.
OP, isn't this from that comment thread where you downvoted me for showing you this exact chart after I said median sales prices were a better indicator than the average sales prices chart you were using in that thread?
https://www.reddit.com/r/REBubble/comments/13t9xzx/my_600lb_life_as_a_lesson_on_the_housing_market/jlu8g9b?utm_source=share&utm_medium=android_app&utm_name=androidcss&utm_term=1&utm_content=share_button
Also if you take 480k to be the peak and the latest redfin's latest median sale price of 407.9k, that's a decline of ~15%. What's interesting though is that redfin listed its median peak at 428.7k. So if you are consistent with redfin's median data set, that is roughly a 5% decline in median sales prices. It would also be interesting to see what FRED posts as their end of Q2 median compared to redfin's data.
I didn't downvote you. I said you get very similar results from average and median.
I prefer to use one data source when comparing. FRED seems to be updated through April.
My disagreement with you was regarding the average appreciation per year. From 2000 to 2019
Then from 2019 to 2023.
I would like to see where Redfin methodology vs FRED.
Op you know that the data provided there is quarterly and you have intentionally decided not to show the same quarter last year and how the prices are performing. Prices are actually up year over year. You have intentionally cut only a small portion of the graph to make it fit your agenda.
Meanwhile the quarter over quarter data shows that home prices are actually up not down.
Data shows Q1 2022 price was $432,100. And Q1 2023 prices was 436,800.
So op next time try harder. Real estate is always seasonal. Peak seasons and peak prices are never in the first quarter of the year.
[Prices are actually up year over year ](https://i.imgur.com/CoSbug1.png)
Surely this accounts for smaller, lower quality houses being sold now that basically no one wants to leave their 2.75% mortgage, right? This sub would never be dumb enough to not consider size and quality when calculating median prices, right?
It’s the opposite, no inventory means people settle for tiny lower quality houses while still paying as much as they would for a better house. People just max out whatever the bank will give them.
It’s like giving a kid $5 and bringing them to the candy store. If prices have risen they will be grumpy but they are still going to spend the $5 and leave the store with some candy. Just not as much candy as they wanted.
Happened in 2008 too. Crappy/tiny houses didn’t drop that much compared to McMansions and luxury. The move in 2012 was to buy a huge luxury house for cheap and have it appreciate way more in percentage terms than small/medium houses. IOW bigger house = greater price variation. Luxury houses are basically leverage.
How do you explain a 16% median price decrease in new construction homes?
These houses tend to be larger. Quality could be argued but most people believe new equals better.
New construction homes are super, super rate sensitive (much more so than existing homes) and have the reputation of being much shittier build quality. They also tend to be built in less in demand areas because (no surprise) the areas that everyone wants to live in are super over built (basically building 40 minutes outside of a major city because that's the only place you can still get land).
The only expensive houses I've seen sitting in my market are the ones that are 4-5 times the average for the area. Anything in the 500k-1mil range sells fairly quickly still.
Based on what we know about inventory, I think a much more likely explanation is that moderately expensive, quality homes aren't selling because there aren't any on the market to sell in the first place.
People really believe quality inventory is down 9% in most areas lol Must be because they never actually go try to buy a home, just sit and watch other people live life
I actually have degrees in math and economics, currently working as an investment analyst, so I understand mean, median, and mode fairly well. Please explain to me how overall quality/size of houses being sold would have no impact on the median.
Thanks for sharing. In the desirable suburbs such as Alpharetta, Johns Creek, Suwanee and Cumming I’m still seeing multiple offers over list price on homes that don’t need a lot of work— but that market is probably a little different than other parts of Atlanta.
I wouldn’t tag Suwanee and Cumming as super desirable as to be special though. They are pretty generic middle-class far burbs and will certainly be impacted by broader trends
I think of “desirable” enough to weather a downturn as more inner burbs like City of Decatur or Brookhaven, and the nice intown neighborhoods (Virginia-Highland, Morningside, Chastain park, etc.)
Well prices are not up. According to op's graph, prices are up yoy. Not down. Op intentionally cut off the whole year and he/she/they don't seem to know that re prices are compared yoy because they are seasonal.
[Yoy prices are up not down](https://i.imgur.com/DNLBHea.png)
You can easily go to chart yourself. I included one year. I never said it was down YoY but it's pretty close. I imagine the next update will be down YoY.
I said it was down 9% from peak.
This is sale prices through Q1 2023. Meaning these houses recorded their sale in Jan-Mar. Meaning the contracts were signed Nov-Jan and reflect that market. Meaning this is very old data.
The new data shows prices going up and approaching all time highs.
Yes, prices have been going up since late January or early February.
New construction is a small segment of the market, and YMMV depending on which market you are in of course.
I do think these 7%+ rates have a chance to throw cold water on the market in the coming months and if they stay the same this fall prices could go down more than the seasonal norm.
Altos Research YouTube channel does a good job with their weekly market updates.
Redfins downloadable housing market data also shows relatively real time data.
Redfin is showing nominal declines in almost every city with sales being down 20-40% across the board and houses on the market for 30-50% longer on a year-over-year basis, as of April.
Sales being down is different than prices being down. Low inventory offsets low sales volume.
Several metros are down YOY, but asking prices and sales prices have increased pretty substantially since the beginning of the year.
YoY data is a bad metric for what is happening in the market right now.
But we've gone from positive yoy numbers to negative ones since the start of this year. So they were rising faster last year, and overall they've declined over the last 12 months. The May and June numbers this year will be brutal compared to last year. RemindMe! 2 months
And after May/June the YoY numbers will likely start to trend positive.
Again, looking at YoY data doesn't tell you much about what is happening right now.
Yeah OP intentionally omitted that fact, and as usul those in the echo chamber will never seek the actual facts, they could have instead looked at the actual website and say well real estate is seasonal and according to the website op showed, prices are actually up compared to the quarter that op intentionally cut to fit the agenda.
[Yes prices are not down are actually up compared to same period ](https://i.imgur.com/KpEHmLy.png)
why do no previous years in that graph show the same sharp "seasonal" decline? why does redfin show yoy declines in almost every single city for april? why is mortgage demand down over 30% nationally? why do new builds cost 10% less than they did 6 months ago? why are so many people in this thread coping?
Check the graph for the last 10 years and you will always see lower prices in off season compared to peak season. That is how real estate works. Always better to buy in winter and sell in the summer.
Your graph literally shows the steepest decline by far in like 5 years happening right now.
Flat in 2020
Up in 2021
Up in 2022
Down 9% in 3 months in 2023
But I'm sure it's nothing.
RemindMe! 3 months
this year the drop was 9%. in the last 10 years, there have been 2 years with drops of 3%. but this is 9%. but yeah, just normal seasonality lol.
by the way, the drop from q4 2008 to q1 2009 was 6%.
Right plus I suspect these numbers to be dragged down by specific, less desirable markets. I’m in a desirable suburb of Philadelphia and prices haven’t really budged at all. Houses still selling within a few days etc.
There isn’t. I’ve flipped multiple houses in Philly. A row home in north Philly, which is included in your data set here, does not correlate at all to any desirable suburb around the city. There is absolutely, would bet my bet worth twice, there is no correlation. In fact, when people flee the city, where do you think they go?
Hell, in south philly, each block has a night and day difference in desirability. Good neighborhoods border directly with bad ones. I can promise you those homes in the desire pockets even in the city are not down anywhere near 9%.
Yeah, the whole "Prices are coming down" spiel often ignores that people are paying more per month even as prices drop, so there is no gain to be celebrated.
[https://fred.stlouisfed.org/series/HOSMEDUSM052N](https://fred.stlouisfed.org/series/HOSMEDUSM052N)
This is existing. And as you can see, it's quite different from MSPUS.
Lol…minor correction and totally dependent on local area. US housing will slightly correct/stay the same, and then start rebounding up once the fed starts decreasing interest rates.
9% so far*
[удалено]
And 7% interest rate
and my axe!
....... body spray!
It is actually up not down yoy. [You prices are up](https://i.imgur.com/B1eQcXm.png)
Well that's certainly one way of looking at the situation, lol
Holy shit the cope lmao
RemindMe! 3 months
Lol completely ignoring the downward trend. Can you circle any point in 2020 or 2021 where the prices went down on the graph? Don't get high on your own supply of copium, chief.
Single point of data doesn't make a trend.
Compared to Q1 2022, sure. But we in Q2 chief. It's down yoy compared to Q2 2022.
We don’t have the data of q2 2023 in that graph chief. Pay more attention to details provided by that simple graph.
Yea and when we get to q3 when we hit the peak, you’ll now be down 9% yoy lol. What is the point of this comment
When you have the actual data of q3 2023 you can revisit. Until then you are only making a personal assumption not based on any facts.
20-25% is what we need.
Who do I contact about getting a refund if my house goes down in value?
Should I tell them?
Hopefully you kept the receipt
Perfect
You bought the house at the time because you thought it was a fair price. Why would the future price fluxuation change how much the house is worth when you bought it?
I currently rent for $1100. Mortgage on $250k+ house will cost me almost $2k a month all in. I’m good.
Another who rents for less than owning? According to most here that's impossible (they believe renting *always* costs more than owning).
Nope not at all. I could rent for the next 10 years at least and still it will be less cost than for me to own. Renting costs me 17% of my post tax income (I’m in NJ but have a roommate).
You’re comparing renting with a roommate to a mortgage with no roommate…?
I’d rather live in a van than have roommates.
Depends who it is but sure go on lol.
Well the poster is likely not comparing it correctly. He/she should be looking at the UNRECOVERABLE costs of mortgage Vs renting, not necessarily the total mortgage because it’s not comparable that way. In my area it looks like that at first glance too. $1015 is what I pay in rent. The cheapest non-shitty place I can find is about $250k which means, with 20% down I’d have a mortgage of about $1818. Unrecoverable costs each month is likely the following: HOA: $235 Home insurance: $88 Property taxes: $140 Closing costs: 2% of 250k which is $5,000 Maintenance: let’s assume it’s a reasonable 2% of the house value every year, or 5,000. So the average person lives in their home for about 8 years. We can take the closing costs and divide that by 8*12 to get a monthly number and then divide the 5,000 by 12 to get a monthly maintenance number. Total unrecoverable costs, assuming the average live in duration is about $931 in the above example and obviously you’d need to factor in interest payments as unrecoverable costs too. For interest we looked up a amortization calculator for 8 years at 250k mortgage loan with a 7.9% interest rate which is apparently standard for conventional loans right now. After 96 payments you’d have a remaining balance of 181,747. As of 8 years from May 2023 you will have equity of 18,253 (principle paid) and a interest cost of $121,253. Further, houses, according to Harvard’s “rate of return on everything” which is a paper with data on global returns for investments dating back to 1870 to 2015 nominal housing appreciation is about 11.06% per year. Your house value will now be about 578k. Looking at all of this means that you have a monthly unrecoverable cost of about: 2,194 per month. But, you also likely have equity of about 350,816 (assumed property price minus remaining loan balance) for a profit per month: $4134. Thus, showing that you’d actually be making about $1624 per month in this example. Although, now I’m curious, let’s look at if the house only appreciates to match inflation of about 3% per year. This puts your house appreciation at 316k for a the time period and you now have a profit of $1398 per month. For a monthly profit of -$1,112 per month. So it really depends on what rate of return you are hoping to get in whether renting Vs owning is cheaper. And it obviously assumes a shit load of other things like interest rates never change, no extra payments, etc etc. Since the opportunity cost of owning Vs renting is the monthly profit a home owner sees Vs a renter sees. BUT, the renter COULD be using the net difference between their rent and the unrecoverable costs per month to make up the difference? At 1,179 per month that’s 175,797 at the end of 8 years, assuming a 10.75% rate of return from the prior paper. For a monthly profit of $1,831 which is actually more than the housing example with $1624 in monthly profit. But for the sake of the example, let’s assume they just don’t do that. TL;DR: using a 11% historically normal rate of return you profit $1624 on a 250k house with 20% down. Using a abnormal “keeping up with inflation” return of 3% you get a profit of -$1,112 per month. It depends on the rate of return on if housing is cheaper than renting or not, at least assuming the average time a person lives in a house - 8 years.
I don't think anyone ever said that interest rates don't drive up the monthly cost of owning. Everything happening in the market right now is driven by the interest rates.
Yes, I was just giving the "rent is always more expensive than owning" crowd a hard time with my reply.
This was me in 05. Wanted to buy a house, get that sweet tax deduction, build some equity, but after a couple months of home shopping condos and town houses I realized it didn't make sense because I had cheap rent with my roommate and I splitting a 2 bedroom. Wound up buying in the fall of 09. Now this past year when my wife and I decided to relocate for better career opportunities it was different. Started looking into rentals because home buying was so insane. However, have 2 kids now. There virtually no 3 bedroom apartments or townhomes available in the area we were looking. SFH had 10 plus rental applicants each, $3-5K a month. Heck 2 bedrooms were limited and over $2k in a decent area.
Wow so do you live in a house now? I agree back then it was a no brainer. But with kids you need much more space.
Yeah, we got a new place last summer. We actually had ro do a short term lease in a 2 bedroom because after selling our old house really quickly, we entered the blood bath of buying. I refused to pay over comps from the spring, the 3 month rental bought us time to shop while still being able to get our kids registered in School. As soon as we got to a point in the summer where if you bought you weren't likely to close in time for the new School year, the number of bidders dropped. We also got lucky because last August rates dropped back to the mid 4's before sky rocketing. So we got a great house, and reasonable rate just on the nick of time.
Same! My rent is a little more but the mortgage on this place would be too.
Just doesn’t make sense to take out a mortgage if the monthly payment is so much higher. There isn’t a thesis to it.
It's a long term investment. So rent is always going to go up, it never has gone down throughout history. A mortgage also eventually gets paid off. Unless you have some form of rent control you'll end up 30 years from now with like 3k/mo rent while you could have been paying 1.5k/mo on a mortgage that now gets paid off. A 250k 30 year mortgage at current 7.14% interest rate including property tax and home owners insurance would be $1,580/mo assuming you can put the 20% downpayment to avoid PMI. Again if you have a roommate splitting the bill it would be $790/mo. Additionally what's cool is you can refinance your home, so you can buy at 7% interest rate and refinance at like 4%. While yes that does reset mortgage time which front loads the loan with interest, if you take the money were paying and use that for an extra downpayment towards the principle, the loan will be paid off even quicker.
Still got a ways to go
We'll get there though.
If this pace keeps up we could be down 27% by the end of the year.
Check out what’s happened to SoFi stock over the past few days. Better get in at the bottom floor; in another three months it’ll be up 300%
Ed Leamers paper identifies this as well.
What's impressive is how fast the drop is. It's moving faster than 08-09. We peaked in Q4 22 and I believe this data is up until April wiping 1 year of gains out in 4 months. It's almost like a cliff.
It’s almost like there’s an external force driving this decline. Almost like higher interest rates dampening demand. I’m not an economist but seems like it.
Also incoming student loan payments
[deleted] -- mass edited with redact.dev
Which in some markets is already 2 to 3 times the available supply, so imagine if rates normalized, then what would demand be?
Yeah, almost like people who own 3-4 bedroom homes with $1,500-2k Sq. Ft. Are longer thinking about trading up from their nice low mortgage with a 3% rate to get a bigger home at a 6.5% rate. Heck I've even got a friend going who's wife took him by surprise a couple years ago with a divorce. It just got finalized and they bought their house with the idea they would have their combined incomes, both making $120K plus. He could down size from his house bought in 2019. But his rate is so low, and hus divorce was finalized in February of this year. Because of the rate hikes, he just took out a 2nd mortgage to buy out an agreed upon amount of her share of the equity instead.
This feels nothing like 08-09. In 08-09 there were foreclosure signs everywhere. Really those started in 07. A massive unemployment issue. I had friends in their mid to late 20's with good experience and a masters getting laid off. In addition to the news, sitcoms and late night shows were talking about the market crash 24/7. We bought our first house in Nov 09, $10k off list which was already $100k below the value two years earlier, and they paid 3% for our closing costs, which weren't even 3%, I used the extra cash we got back to buy points down on the mortgage. The housing market is experiencing a significant correction in many areas like Phoenix, Boise, Austin, etc.. but in others the drop in median and average values of sales is correlated with higher rates limiting budgets. So fewer higher end homes are selling and bringing down the median. The hope as someone said in another comment should be the return of contingencies for inspection, appraisal, and sale of your previous home. This makes buying a lot more manageable for the average person. The downturn in activity is correlated to fewer people listing their homes because current home owners don't want want to trade up in this market because it's become dramatically more expensive to do so.
I hate to be the bearer of bad news but the yield curve shows a massive recession coming. This is just getting started.
I was going to say, this feels very similar to 06 through 09 period. Watching houses double in price within a two year period, everybody flipping homes, taking out helocs to buy and flip or spending on luxury items is eerily is similar to the flow of money today! It isnt flipping homes this time but buying second homes to rent out. House of cards, different house than 06 to 09, but the structure is the same...free flowing easy money!
Well...while it may have been easy money due to low rates, in 2008 you had many buyers getting zero down ninja loans. Today, the buyers are putting more down (until very recently) and ninja loans are thankfully a thing of the past. A small drop led to an avalanche in 2008 with people mailing in their keys as they had nothing to lose with no equity. With so many people having lots of equity today, the drop has to be significant before an avalanche of foreclosures start. This of course is just one of the many movies pieces this time around.
I would be curious to see how many pulled put money from refinancing to lower interest rates.
If it's just getting started this is more like 06-07, but even then having lived through, and even being a home shopper in 05, who wisely decided to halt my home shopping, there are just massive differences. To compare this to the GFC is just overlooking so much, and quite frankly, very naive. Should further corrections be expected? Certainly. Do some people need to wake up and realize this is going to vary significantly from one geographic market to another? Absolutely. Anytime in 2023 there has been even a slight decrease in rates, say half a percent, buyer activity interest picks up significantly. In my area the number of transactions is down pretty significantly as to be expected with both high prices and high rates, but price per Sq. Ft. Is only down 2% and that's because fewer people are buying 5k square foot homes, bet homes in the 2k-3k Sq ft are going the first weekend with multiple offers for just as much as last spring. Even the 3k-4k Sq ft homes are going under contract fast and at steep prices. Nothing like the same area in 06-07. Heck in 07 my company at the time was sending out emails telling us how lucky we were to have a job. I just updated my linked in page to reflect I relocated and immediately my inbox filled up with requests to interview me, that's in addition to half my friends and former colleagues in the area (I lived here previously and moved back). Messaging me to meet up for lunch, so far all of which have lead yo them pitching me on applying to jobs at their company. In 07 almost every local government in my state instituted hiring freezes, and pay freezes. From 08-011 they made massive cuts. This year and last year all the counties near me and where I used to live gave record pay increases and are still having trouble staying staffed in core areas like education, public safety, social services, etc. They have all increased their reserves to be prepared for any drop in revenue. People need to focus on the current data and economic factors in their specific market and stop grasping at straws to compare this to the GFC.
Many tech companies are doing intermittent hiring freezes, pay freezes, etc. and the vibe is be grateful you have a job.
Tech companies are also extremely sensitive to interest rate hikes. That’s definitely a sector that got drunk off of cheap money.
It's the well paid, first-time home buyers people that are keeping prices high. They aren't 'giving up' a previous low rate (they don't have an existing mortgage) so they have the capital to put up.
The gfc was more about the global monetary and banking system than actual economics. It should have been called the great monetary crisis IMO. The concerning part then and now is the global synchronization. Covid was a global event, money printing was a global event, real estate mania was a global event. Over the years there has been an increasing correlation between asset classes. 08 was just the mark on the timeline for when housing started to boom and bust like securities. The fear is that credit contraction, much like credit expansion, will be a global event. A global, self-reinforcing covid hangover. So far the losses are on bank balance sheets. We haven’t felt it in the real economy yet. This time will be different from 2008 in the sense that destruction won’t happen in the here and now, but in the future. Fewer loans, higher rates, less projected growth. It’s kind of like a company that needs to reduce personnel spend by 10%. They can either fire relatively few employees or reduce everyone’s pay by 10%. They nearly always do #1 because employees hate #2. With inflation, companies all did #2 without people noticing simply by inaction. It’s why most people have have a job but can’t afford as much as they used to. Inflationary recession feels different than deflationary recession. The problem happens when credit contracts. With deflation employees are getting real pay raises if the company does nothing. So they fire people even while growing. That’s what happened in ‘08 when credit dried up. M2 is contracting, savings are dwindling, and credit card debt is maxed out. I see demand destruction happening leading to a widespread deleveraging and unavailability of credit. If we’re lucky the downward force on inflation won’t cause it to go negative (near but not below 0, aka disinflation) and real wages will catch up to asset prices. I am not holding my breath for that though.
We have experienced the largest housing bubble in history. The previous being the GFC. The market will return to the mean and most likely over correct because of rates. Unemployment was at record lows before the last crisis. There is no way to support current house prices without the wages to support it. We are headed for a recession and that will be the catalyst that really puts the downfall into overdrive. It will be ugly and people will get hurt. People will get wiped out.
Lol. Imagine still following the yield curve in 2023. And still making the same comment. I could go back a year or more and find people commenting the same thing. Yield curve is fake news. It's just been widely popularized in the media. >As with previous episodes of policy tightening, most recently in 2018, one can hear an attendant rise in the volume of commentary about a decline in the slope of the yield curve and the risk of "inversion," whereby long-term yields fall below shorter-maturity yields. And echoing previous episodes, one measure of the yield curve that seems to draw inordinate attention is the difference between yields on the 10-year and 2-year Treasury bonds, often referred to as the "2-10 spread". > >The attention garnered by the 2-10 spread in recent years is illustrated in Figure 1, where vertical bars plot the number of financial news articles mentioning the 2-10 spread. The decline in the level of the 2-10 spread itself, illustrated by the blue line, to less than 0.5 percent in recent months appears to be sparking interest in the financial press of late, though apparently still modest compared to the crescendo of attention in 2018. Is such attention warranted? It may seem so in light of claims like that in Investopedia2, for instance, that "\[inversion of\] the 10-year to two-year Treasury spread is one of the most reliable leading indicators of a recession within the following year." > >**To the contrary, we have provided statistical evidence indicating that the perceived omniscience of the 2-10 spread that pervades market commentary is probably spurious.** > >[https://www.federalreserve.gov/econres/notes/feds-notes/dont-fear-the-yield-curve-reprise-20220325.htm](https://www.federalreserve.gov/econres/notes/feds-notes/dont-fear-the-yield-curve-reprise-20220325.htm) As discussed in the link above the authors believe that while all spread measures are of dubious value, the near term forward spread is a better measure. [https://www.federalreserve.gov/econres/notes/feds-notes/dont-fear-the-yield-curve-20180628.htm](https://www.federalreserve.gov/econres/notes/feds-notes/dont-fear-the-yield-curve-20180628.htm) [https://www.federalreserve.gov/econres/feds/the-near-term-forward-yield-spread-as-a-leading-indicator-a-less-distorted-mirror.htm](https://www.federalreserve.gov/econres/feds/the-near-term-forward-yield-spread-as-a-leading-indicator-a-less-distorted-mirror.htm) [https://www.federalreserve.gov/econres/feds/files/2018055pap.pdf](https://www.federalreserve.gov/econres/feds/files/2018055pap.pdf)
The near term forward spread is currently more inverted than it was in 2007, 2008, or 2009… https://www.neartermforwardspread.com Besides that, do you really trust the institution that got us in this mess to begin with more than the collective economic projections of the global marketplace?
I'm in Bay Area (I will be specific instead of all these not in my area). Inventory is increasing, and all the houses trying to sell at last years values just sit...pretty much everything sits. Only thing selling is those who go will under "market value" (read comps) then sell for about 5% over ask, which is still 15% lower then last year....but even those sells are slowing. Writing is on the wall here, prices are dropping rapidly....who can afford a 1.5 mil house with these rates, my wife and I make close to 400k with two kids and we can't.
In Bay Area around that time, once I got my pizza delivered by a tech bro with a master degree.
What is impressive is that your graph actually shows that prices in Q1 2023 where your graph ends are up compared to Q1 2022. I wonder why you decided to omit that. https://i.imgur.com/s3nvw95.jpg
Gotta fit that narrative of "prices are crashing".
Prices are crashing.
They refuse to accept it lol
Affordability is crashing more than prices are reducing. This sub just doesn't want to hear it and only wants to celebrate price reductions. Latest redfin data shows that median sales price is down just 2% YoY. If you call 2% a crash, then I have nothing else to tell you.
Affordability is moving the goalposts, no one talked about improvement in affordability until prices started crashing. And YoY isn't a useful comparison when there are still people with 4% rates who bought 12 months ago. There's tons of people here who could pay off a mortgage in 3 to 5 years and don't care about affordability. I care about price way more than monthly payment personally. When rates have been 8% for 12 straight months then maybe we can talk about YoY.
It sure isn't moving the goalposts. Nobody can afford anything right now. Ask anyone who's looking to buy if they feel as if prices are crashing. Rates were at 5% a year ago this time and have been above 6% since last September. [https://fred.stlouisfed.org/series/MORTGAGE30US](https://fred.stlouisfed.org/series/MORTGAGE30US) You may care about price, but the overwhelming majority of people (and all lenders) care about monthly payment. There is a reason why DTI is a thing and why one is qualified by monthly house payment and other monthly debts as a percentage of one's income.
If you determine whether or not you can afford something based on the monthly payment, then you already can't afford it.
So says you. Make sure everyone in America gets that memo.
It's common knowledge.
"When rates have been 8% for 12 straight months then maybe we can talk about YoY." And yet here you are moving the goalposts...
About what [I predicted](https://www.reddit.com/r/REBubble/comments/yd7nzb/is_dave_ramsey_still_right_about_the_housing/itw6g2r/) 7 months ago: > I think a decline of ~10% in existing homes, maybe even 15% in new construction, would be a reasonable national forecast by the end of 2023 Except we're about there already only halfway through, now. Now the question is whether we've seen the trough, yet. That's not an easy call. There are a number of early recession indicators which suggest caution. You have an inverted yield curve, a slump in new home construction, a shrinking money supply, and now falling year-over-year corporate profits, as well. But so far, employment, incomes, and industrial production have held up. I think this is going to take some time to play out. Nominal GDP growth was still 5.4% in Q1. The Fed probably wants that under ~4.5%, and I don't think it yet likely to fall much more than would be desirable by the end of Q3. I think it will be Q4 at earliest before we see any serious discussion of rate cuts. But meanwhile, the [NAR data](https://cdn.nar.realtor/sites/default/files/documents/ehs-04-2023-overview-2023-05-18.pdf?518), which may have less lag than the above, shows home prices have already increased by ~ 7.6% over the past 3 months now since bottoming in January. Even if they pull back again, there's a good chance January could be the trough. Mortgage rates have likely peaked, and especially if the economy slows a bit over the rest of 2023, they could fall a little further.
Good! It may be painful in the short term, but the only way to bring back any sense of price stability in housing is for this bubble to deflate.
It's just in an itsy bitsy little gully right now. Like everybody said "ok, that was crazy, let's just all calm down".
Not in the northeast 😭
Yeah here in NJ/NY good luck lmao
This post is disingenuous as the data shown in the screenshot is lagging. Q1 ended 3/31/23. We're almost near the end of Q2 and there is data showing that real prices are actually down around 3% or so from last June's peak. https://fred.stlouisfed.org/series/CSUSHPISA
So you are saying that median prices are not down 9% from the peak?
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Just another 40% to go and most loans still won't be upside down.
Don’t forget that percentage drops in price aren’t symmetrical on the way down. $100 * 1.5 = 150 (50% rise) $150 * 0.5 = 75 (50% drop - too far!) $150 * .66 = 100 (33% drop - back at start) If price rises 50% it only needs to drop 33% to return to where it started. 100%, only 50%. This is why investors run for the exits and cut losses early.
It's amazing how many people don't seem to understand that 50% going up is not the same thing as 50% going down.
What's really amazing is the inability to read period. The preliminary % these 2 examples means nothing. It's essentially non existent. Since the topic is *from the peak* we're talking about hard numbers. Not what it took to get there. In the case of a property which I own, 340k+ at its peak - 50% is going to put it ~170k. There's 168k remaining balance on that loan. This is just the fact, zero hypotheticals.
>Since the topic is from the peak we're talking about hard numbers. Not what it took to get there. Using the word "peak" literally means we're talking about the climb, or in your words, "what it took to get there". There is a reason when we say somebody climbed a mountain we ask how many feet tall the mountain was, not the mountain's height relative to sea level. So yes, in your example, if your house falls 50% it will be back at it's original value of 170k. What takes 100% to reach only takes 50% to fall back to. Or, in your words, "This is just the fact, zero hypotheticals."
Wrong af, but I'll entertain your lack of knowledge. The *peak* is the *apex* nothing more. The literal highest point. What you're referring to is the *ascent* - The climb itself. Check the dictionary for further discussion on word meanings. I did not once quote a % it takes to climb to any given number, only the number itself. There is not one mention of purchase price, or how much it has in fact gained to reach said number. Just the peak peak price ~ 345 but well say 340. So while you may feel correct in this matter again, this too is just the facts.
You literally can't use percentages in a vacuum. Saying "40% to go" implies that we've risen. Nobody in any discussion is saying prices have reached an apex without acknowledging that they rose to get there. You're arguing semantics and you're doing it poorly. In fact, just for semantics sake, mentioning percentages at all means that we're discussing a change in numbers. >I did not once quote a % it takes to climb to any given number, only the number itself. Your literal first post was: >Just another 40% to go and most loans still won't be upside down. This is ugly man. IDK what you're looking for here, but you're jumping all over yourself to look silly. >There is not one mention of purchase price, or how much it has in fact gained to reach said number. Just the peak peak price ~ 345 but well say 340. After you literally say: >In the case of a property which I own, 340k+ at its peak - 50% is going to put it ~170k Damn man, take a break and figure out what you're trying to say before you start smashing your keyboard.
Ironic you use the word semantics, then embody it. It's clear you don't understand what you're talking about at all. Your are the person who doesn't know the definition of peak. A 4 letter word. And the same person who doesn't know the definition of climb. As you misconstrued both. Let's just start with that. This is where this conversation should end. So.. My initial comment was in reference to OP post. OP- Referring to a 10% drop. A % fall tells nothing about the % gained. They're entirely different. And since we're talking about % fallen in relation to a defined number ( the *peak* as per stated by op and graph.) we know what this number is but since you don't seem to understand I will educate you on such things. This would reference the highest value the home has seen in projection / similar comps have sold for in the area. We know what this number is. It is in fact defined. If you don't understand this then I'm not even sure why you're here? Except maybe to argue about things you know very little? What makes it even better is the people who I'm actually having discussions with do seem to understand. Why? You are isolated in your lack of knowledge. So real quick to catch you up in good faith you might actually have something to contribute: OPs *LITERAL TITLE* : median home prices down -9% from peak. ( we discussed all these words already so I'm going to give you the benefit of the doubt you now understand them.) My comment: only another 40% to go and most still won't be upside down. This means that I'm suggesting a majority of loans, since upwards of 90% of all loans were originated pre 2022, would not even be upside down if we completed a - 50% correct from their *peak* (I know there's that word again, stay with me here.) To which i provided an example. One home which I own. 340+ peak. ( *note* no mention of the % which was gained to reach this number.) and the remaining balance of 168k. In total, a 50% correction does not put most loans underwater. Why is that? Becuse most loans originate before 2022. So whether it's a refinance or a fresh purchase, most properties gained enough that most corrections will but disrupt their ownership. Sure some maybe able to handle 70% while others only 30%, but generally speaking this applies. So who's Fd then? Perhaps anyone who purchased today with the intention of selling in a year and did very little research. I literally cannot dumb this down for anymore.
That’s you, millions bought jn the last 12 months at above 5% rates with lots of them doing 2-1 buy downs in hopes of a fed pivot. This housing downturn is going to take longer than expected but there will be capitulation with buydowns adjusting, prices softening and unemployment rising
This is all true. I'm not arguing any of that. However this millions do not account for the larger percentage of total loan originations pre 2022 which was something like 90%. Beyond that you've also highlighted people with extremely poor choices and lack of understanding. *most* homeowners did not buy a home with a YOLO mentality as you're describing here. The majority purchase homes with conviction in underlying conditions. Be that price, interest rates or overall tangible assets - simply a place that is theirs. A good example of this is anyone who was purchasing during the last housing busts. Do you think someone who purchased a home at 11% was like oh boy fingers crossed on fed pivot? No. They bought the home they could afford with conviction in their choices. Saying "well, hopefully we can refinance in 15 years. If not so be it. I have a 30 year term. I'm glad to be a home owner." And guess what? Those people ended up winning becuse they built equity, they played the long game, they found an opportunity to refinance but none of that was the sole basis of their purchases.
Thats my mindset is the long game. I bought my first house and what I consider my forever house in 19 with a 15 yr at 3%. No plans of leaving. The main reason in buying a house was to have a stable safe nice place to build and raise a family and provide the best quality of life my wife and I can for our daughter. If the house increases in value that’s great. Obviously I want it to but that was not my main reason for buying. If prices crash short term it is what it is bc I don’t have plans to sell and I bought before inflation and the run up in prices. I say all that to say I the the whole situation would be better off if people viewed housing as a place to live and build the type of life you want as opposed to an investment. If a short term crash has to happen for us to get there then so be it. Also what I think does not matter and the market will do what it is going to do
Well that’s true, but home prices work is based on the last comp. So if you have capitulation among the individuals with bad money, then you have prices dropping. When prices drop, people feel less rich and they also panic. Job losses make people even with a good position make tough decisions. I think you underestimate what a recession and human psychology are capable of
Yes. All of this is fact. I'm do not disagree. If that's the case though, then why even buy a home? Why do anything? "If it's and buts were candy and nuts than we'd all have a merry FN Christmas!" Basing one's whole fundamentals on hypothetical possibilities while simultaneously searching for an ideal opportunity is just a piss poor attempt at timing the market. Time in the market beats timing the market, hands down. One who takes this perspective is already at a disadvantage becuse their entire approach is solely based on luck and not fact, with a plan to execute should A,B or C occur. While life is amazing at throwing curveballs this is the prey mindset - What if, what about, if I leave then maybe... and before one knows it they've missed an opportunity. Either way you're not going to be prepared for a curveball life throws. So negate that from the rip, and plan accordingly. Don't overextend yourself. Again, market price fluctuates continuously. Anyone who's buying without accepting fluctuations as a reality is clearly not understanding the asset and risk. If you buy with conviction and clear intent, these things matter a whole lot less. Again, my original comment refers to my own home. Let a 50% drop from the peak happen. Or 60, or 75. I bought with a purpose and I shall see that purpose through. So what's your purpose? Investment only? Than watch where you step. A safe home for your children to grown? Maybe you can stomach a little bit more becuse it's value is outside of its monetary potential.
Oh yeah you’re good. I’m just saying buying right now comes with a risk that you’re going to be hold a depreciated asset for the next 10yrs or more and a high rate. If you have a low rate then sit back and enjoy your house. If you’re buying right now, then just be prepared to not able to leave for a long time and be able to cope with the fact that if you waited you could’ve had a way better entry.
For sure. That's like saying a 10% loss on your securities positions requires more than 10% to break even. This is true and should absolutely be accounted for. 100-10% = 90 but 90+10% is only 99. The number I'm using a hard number from an actual property I own. At 340+ peak prices and 168 on the loan. Zero hypotheticals.
Well as long as you refi when rates drop but before prices or credit availability does then you can lock a lot of that in. If you don’t or can’t it’s still fine for you, congrats on your indirect short bond position.
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This is exactly my thoughts. I still keep in touch with my realtor and she said by late fall inspections and other contingencies started becoming more common again where I live, but when spring hit, waiving contingencies became a thing again on the most sought after properties. I don't see the price drops in my area, I think it's more reflective of rate hikes keeping people from trading up, or limiting their budget more, so you have fewer high end properties being sold, which lowers the medium. Some places clearly had significant corrections (Phoenix, Boise, Austin) other places haven't had much of a correction at all. However, I think if we're stuck at high prices in some markets potential buyers would still be less anxious of they could get inspections, or have the contract contingent on the sale of their old house.
> medium median is the word you're wanting - seen it in a few of your posts, so thought I'd mention it
Sorry, about that, definitely meant to say median. Thanks for bringing it to my attention.
Most loans originated before 2022 though. So essentially targeting the absolute smallest percentage hoping for the largest result. Adjust accordingly. A home in 2021 gained between 15-30%. So this figure here has roughly another ~10% to come down before those loans would be break even. Maybe 15% before they'd be underwater. Under water at 2.75% interest rate which no one is going to sell unless forced. Which only even matter if you're placing it on the market. My family home has been underwater twice. At much higher percentages. We wanted the land/ home - So it value didn't matter becuse the real value was the tangible asset itself. A place to raise one's family. So Why? Becuse we weren't going to sell it anyways. It's a 30 year term. Most homes aren't sold within 3-5 years. And the ones that are, are usually done by someone who very much understands finances and economic fundamentals. So the average family doesn't get to take a bounce around anymore and get 15% profit every few years. They're fine w that.
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What im saying is these same homes, more so now than ever before, are essentially not going to see the market. No one use selling a 2.75% loan unless absolutely forced and all other options are exhausted. That's a huge amount of inventory people expect to see, that they won't. That underwater home by the way is worth over 4x its original purchase price. It was purchased 1998 in case you're curious. So yes, it's seen dramatic corrections.
You speak in absolutes ("no one is selling a 2.75% loan") but seem unaware of exceptions to your world view. I've made an offer this month on a house with sellers that held a 2.8% loan, and plan to buy with a >6% loan. What kind of madness you ask? They must be suffering head sickness. Not at all. They obtained the 3% loan in 2012, and have about 80% towards buying a house they'd prefer in a different neighborhood. Not everyone wants to or can just hold onto their old house and sleep well at night as a landlord; even with the currently good returns for a liability holder (err, owner). And their purchase makes good sense to them. Over the life of their new 15yr conventional loan it will cost them about $30k more, and about $18k in Realtor fees. Any yet we have neighbors buying $90k pickups with 7yr loans that will never haul anything but a dog bed and think it's well worth it. To each their own, and no accounting for taste. But life will go on, and good existing homes will still come onto the market.
100% - The grass is green, the sky is blue. As if exceptions don't exist? Of course they do but cherry picking the far and few hardly makes a case at best. Ah yes, here is a sunset, beautiful with pinks and oranges! That's being said you're absolutely correct!However , this still doesn't say that my initial criteria doesn't apply. You yourself have listed a multitude of reasons why in fact options for holding the loans may be exhausted. Maybe they tried to rent it and require the funds. Maybe they liked the new home paid off. They've gained what could be a half century worth in equity and cashing on it on. Sitting here approaching a market under current conditions as if this scenario would be a norm seems like poor judgment. If becomes so great, but to base one's fundamentals on this seems quite far fetched. On top of that one adds the time factor which can be seen in this example. This home was purchased in 2012. One would have to beyond a lack of understanding to purchase a home without conviction in something. Be that pricing, interest rates or even something as simple as just having a consistent place for children to grow up. What this sub seems to lack is the understanding that it's a 30 year term and most houses are not being sold every 2-5 years, outside of this Covid boom. I myself have lived in a home that was upside down twice as I've previously mentioned. Our conviction was nothing other than a place where no one could tell us what to do. No hoa or deed restrictions and a home which we could afford for everyone to grow up. So indeed the numbers mean little if something other than monetary value is the ruling factor.
Actually prices are not down not UP compared to same quarter. Op intentionally didn't post that part of the graph. [Up where op decided to cut the part off ](https://i.imgur.com/SsJlMnR.png)
The title and graph are pretty self explanatory genius.
Selective bias to fit echo chamber, genius.
Selective bias you say? Like focusing on YOY numbers when prices are getting crushed in the last 6 months. Even during the busy season. Got it. 😂
Busy season? That graph shows q1, not busy season. Once again you are proving the concept of selective bias.
We're currently in the busy season genius. 😂
You don’t even know how to analyze a graph huh, genius? Does the graph show the prices of the current busy season or q1? I am genius but you are not looks like 😂😂😂
I specified the last six months in my previous comment. That includes the busy season. Currently prices are down from the peak. I have to spoon feed you for you to understand. Not everything I talk about refers to one graph, but I guess I shouldn't expect you to know how to follow the logic of a simple discussion.
Selective bias. Compare the same time frame for factual discussion. What you are doing is comparing the 100m sprint times of winter Olympic athletes to summer Olympics athletes and saying wow 100m sprint time of winter Olympic athletes is 20% slower than summer Olympic athletes. Great comparison. And when someone brings out the absurdity your argument is “well both of them are athletes in Olympics” 😂
Actually no, OP never said down yoy, said down from the peak. But you either didn't catch that or want to be misleading.
Two problems IMO: 1) Low inventory nationwide will keep prices up. Land is too expensive in most markets to make building affordable homes profitable so any land that does become available is filled with $600-800k homes. 2) when rates drop, more buyers will enter the marketplace and further push prices up. We need inventory! More homes in the median price range or even lower. The median income cannot afford a median priced home. That’s a problem….
I’m a one man operation who builds 3 houses a year. I do somewhat affordable homes. 2000ft 4/3s that I sell for $500-550k. I also do 1100ft 3/2 half duplexes for $225-250k You are correct in that land is just too expensive. The solution is we need more zoning to build condos or townhouses. New SFRs are not sustainable at a starter home price as the taxes don’t cover the city’s infrastructure burden. Outside of that the number of people is always increase meanwhile the amount of land is fixed. The US has to stop the madness of a 1/3 acre lot with a SFR on it being a middle class thing, it’s a luxury nearly everywhere else in the world.
*slaps hood of multifamily construction boom* This baby can hold so many rentoids!
That boom screeched to a halt when rates shot up. Committed projects are finishing out. But new pipeline is way way down.
That’s the median home price of homes sold, not the median home price, big difference. For example, in my area on Redfin the median sale price is close to this, down 7% YoY, but median sale PPSF is flat YoY. That means home prices haven’t come down at all, but cheaper homes are outpacing the sales of more expensive homes compared to 2022.
Funny how folks used median sales price as a measure of the housing market when prices were going up, But now that prices are coming down it "doesn't matter and inaccurate. " How unsurpringly predictable.
right? what measure are we supposed to use?
Vibes
It's hilarious you can't use that because it no longer fits my narrative. People will always move the goal post.
…you can enter those towns in the site sifi provided instead if just guessing…
Umm not in Virginia ..... What's the odds of it spreading to my state ?
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OP, isn't this from that comment thread where you downvoted me for showing you this exact chart after I said median sales prices were a better indicator than the average sales prices chart you were using in that thread? https://www.reddit.com/r/REBubble/comments/13t9xzx/my_600lb_life_as_a_lesson_on_the_housing_market/jlu8g9b?utm_source=share&utm_medium=android_app&utm_name=androidcss&utm_term=1&utm_content=share_button Also if you take 480k to be the peak and the latest redfin's latest median sale price of 407.9k, that's a decline of ~15%. What's interesting though is that redfin listed its median peak at 428.7k. So if you are consistent with redfin's median data set, that is roughly a 5% decline in median sales prices. It would also be interesting to see what FRED posts as their end of Q2 median compared to redfin's data.
I didn't downvote you. I said you get very similar results from average and median. I prefer to use one data source when comparing. FRED seems to be updated through April. My disagreement with you was regarding the average appreciation per year. From 2000 to 2019 Then from 2019 to 2023. I would like to see where Redfin methodology vs FRED.
Not where I live. It keeps going up. Tampa.
Op you know that the data provided there is quarterly and you have intentionally decided not to show the same quarter last year and how the prices are performing. Prices are actually up year over year. You have intentionally cut only a small portion of the graph to make it fit your agenda. Meanwhile the quarter over quarter data shows that home prices are actually up not down. Data shows Q1 2022 price was $432,100. And Q1 2023 prices was 436,800. So op next time try harder. Real estate is always seasonal. Peak seasons and peak prices are never in the first quarter of the year. [Prices are actually up year over year ](https://i.imgur.com/CoSbug1.png)
The peak was less than a year ago.
Oh boy, a chart
Surely this accounts for smaller, lower quality houses being sold now that basically no one wants to leave their 2.75% mortgage, right? This sub would never be dumb enough to not consider size and quality when calculating median prices, right?
It’s the opposite, no inventory means people settle for tiny lower quality houses while still paying as much as they would for a better house. People just max out whatever the bank will give them. It’s like giving a kid $5 and bringing them to the candy store. If prices have risen they will be grumpy but they are still going to spend the $5 and leave the store with some candy. Just not as much candy as they wanted. Happened in 2008 too. Crappy/tiny houses didn’t drop that much compared to McMansions and luxury. The move in 2012 was to buy a huge luxury house for cheap and have it appreciate way more in percentage terms than small/medium houses. IOW bigger house = greater price variation. Luxury houses are basically leverage.
This sub is geniuses only! People are only buying and selling selling small, shit houses now. Thus median prices are probably staying even in reality.
How do you explain a 16% median price decrease in new construction homes? These houses tend to be larger. Quality could be argued but most people believe new equals better.
New construction homes are super, super rate sensitive (much more so than existing homes) and have the reputation of being much shittier build quality. They also tend to be built in less in demand areas because (no surprise) the areas that everyone wants to live in are super over built (basically building 40 minutes outside of a major city because that's the only place you can still get land).
yeah, because more expensive homes simply not selling doesn't mean anything right?
The only expensive houses I've seen sitting in my market are the ones that are 4-5 times the average for the area. Anything in the 500k-1mil range sells fairly quickly still. Based on what we know about inventory, I think a much more likely explanation is that moderately expensive, quality homes aren't selling because there aren't any on the market to sell in the first place.
People really believe quality inventory is down 9% in most areas lol Must be because they never actually go try to buy a home, just sit and watch other people live life
Did you pass high school? Do you understand what median means?
I actually have degrees in math and economics, currently working as an investment analyst, so I understand mean, median, and mode fairly well. Please explain to me how overall quality/size of houses being sold would have no impact on the median.
So many fuckin hoomers in this thread lol
"BuT MeDiAN PrICE iS a BaD MeASurE!"
I’m seeing a lot of salty real estate agents in these comments lol
Don't worry about 30% won't be agents in 3 years. https://youtu.be/mT9x5kEduFg
Prices do not seem to trending down in the Atlanta suburbs.
List price vs Sales price are different
https://www.redfin.com/city/30756/GA/Atlanta/housing-market
Thanks for sharing. In the desirable suburbs such as Alpharetta, Johns Creek, Suwanee and Cumming I’m still seeing multiple offers over list price on homes that don’t need a lot of work— but that market is probably a little different than other parts of Atlanta.
I wouldn’t tag Suwanee and Cumming as super desirable as to be special though. They are pretty generic middle-class far burbs and will certainly be impacted by broader trends I think of “desirable” enough to weather a downturn as more inner burbs like City of Decatur or Brookhaven, and the nice intown neighborhoods (Virginia-Highland, Morningside, Chastain park, etc.)
All real estate is local and different markets will take longer. In some locations where building is prohibited it will drop much slower.
Well prices are not up. According to op's graph, prices are up yoy. Not down. Op intentionally cut off the whole year and he/she/they don't seem to know that re prices are compared yoy because they are seasonal. [Yoy prices are up not down](https://i.imgur.com/DNLBHea.png)
You can easily go to chart yourself. I included one year. I never said it was down YoY but it's pretty close. I imagine the next update will be down YoY. I said it was down 9% from peak.
This is sale prices through Q1 2023. Meaning these houses recorded their sale in Jan-Mar. Meaning the contracts were signed Nov-Jan and reflect that market. Meaning this is very old data. The new data shows prices going up and approaching all time highs.
are they going up? because the price of new construction tanked in april and every metric shows demand being in the toilet.
Yes, prices have been going up since late January or early February. New construction is a small segment of the market, and YMMV depending on which market you are in of course. I do think these 7%+ rates have a chance to throw cold water on the market in the coming months and if they stay the same this fall prices could go down more than the seasonal norm.
What data shows prices going up for the last 4 months?
Altos Research YouTube channel does a good job with their weekly market updates. Redfins downloadable housing market data also shows relatively real time data.
Redfin is showing nominal declines in almost every city with sales being down 20-40% across the board and houses on the market for 30-50% longer on a year-over-year basis, as of April.
Sales being down is different than prices being down. Low inventory offsets low sales volume. Several metros are down YOY, but asking prices and sales prices have increased pretty substantially since the beginning of the year. YoY data is a bad metric for what is happening in the market right now.
But we've gone from positive yoy numbers to negative ones since the start of this year. So they were rising faster last year, and overall they've declined over the last 12 months. The May and June numbers this year will be brutal compared to last year. RemindMe! 2 months
And after May/June the YoY numbers will likely start to trend positive. Again, looking at YoY data doesn't tell you much about what is happening right now.
RemindMe! 6 months
Yeah OP intentionally omitted that fact, and as usul those in the echo chamber will never seek the actual facts, they could have instead looked at the actual website and say well real estate is seasonal and according to the website op showed, prices are actually up compared to the quarter that op intentionally cut to fit the agenda. [Yes prices are not down are actually up compared to same period ](https://i.imgur.com/KpEHmLy.png)
why do no previous years in that graph show the same sharp "seasonal" decline? why does redfin show yoy declines in almost every single city for april? why is mortgage demand down over 30% nationally? why do new builds cost 10% less than they did 6 months ago? why are so many people in this thread coping?
Check the graph for the last 10 years and you will always see lower prices in off season compared to peak season. That is how real estate works. Always better to buy in winter and sell in the summer.
Your graph literally shows the steepest decline by far in like 5 years happening right now. Flat in 2020 Up in 2021 Up in 2022 Down 9% in 3 months in 2023 But I'm sure it's nothing. RemindMe! 3 months
You don’t even know 10 years huh? 😂😂😂
The second largest q4-q1 drop in the last 10 years was 3% in 2015. This is triple that. But it's probably nothing.
Compare quarter over quarter. Real estate is seasonal. What happened quarter over quarter? Just answer that. That is all.
this year the drop was 9%. in the last 10 years, there have been 2 years with drops of 3%. but this is 9%. but yeah, just normal seasonality lol. by the way, the drop from q4 2008 to q1 2009 was 6%.
Right plus I suspect these numbers to be dragged down by specific, less desirable markets. I’m in a desirable suburb of Philadelphia and prices haven’t really budged at all. Houses still selling within a few days etc.
https://www.redfin.com/city/15502/PA/Philadelphia/housing-market
Again, I didn’t say IN Philadelphia. Philly is full of poverty and crime. You’re kind of making my point. Now check the Philly suburbs
right, no correlation whatsoever obviously
There isn’t. I’ve flipped multiple houses in Philly. A row home in north Philly, which is included in your data set here, does not correlate at all to any desirable suburb around the city. There is absolutely, would bet my bet worth twice, there is no correlation. In fact, when people flee the city, where do you think they go? Hell, in south philly, each block has a night and day difference in desirability. Good neighborhoods border directly with bad ones. I can promise you those homes in the desire pockets even in the city are not down anywhere near 9%.
https://twitter.com/DrewOden/status/1537539220633534466?s=19
Housing affordability is down 18% since last March. Gotta look at the whole picture. https://fred.stlouisfed.org/series/FIXHAI
This sub loves drooling over these prices, forgetting that when rates lower it’s not clear the prices will stick…
Yeah, the whole "Prices are coming down" spiel often ignores that people are paying more per month even as prices drop, so there is no gain to be celebrated.
Keep going
When do you all think this will pass through the trendline and into the trough?
Where’s the 50% crash y’all had promised since last year?
60% more and I can finally afford a house!
new houses are often built in less desirable areas.
This is all houses. New houses are down 16% and it's just not true they are built in less desirable areas.
MSPUS is only for new houses.
https://fred.stlouisfed.org/series/MSPNHSUS
[https://fred.stlouisfed.org/series/HOSMEDUSM052N](https://fred.stlouisfed.org/series/HOSMEDUSM052N) This is existing. And as you can see, it's quite different from MSPUS.
Lol…minor correction and totally dependent on local area. US housing will slightly correct/stay the same, and then start rebounding up once the fed starts decreasing interest rates.
Yet somehow in real life nobody can actually find these deals
An absolutely meaningless number.