« prev   random   next »

3
0

Economists sound the alarm on housing affordability

By ad follow ad   2020 Dec 15, 10:06am 413 views   23 comments   watch   nsfw   quote   share    


.

https://www.marketwatch.com/articles/economists-are-ringing-alarms-about-home-affordability-what-to-know-51608031800

Amid an economic crisis, high unemployment, and calls for the continuation of mortgage forbearance and foreclosure protections, home sales have been remarkably strong, and prices have continued to rise. Now some economists are saying home prices have grown so far, so fast that further sales growth may be hindered as affordability becomes a concern.

The price of an existing single-family home rose to $313,000 in October, the National Association of Realtors reported last month, a 16% increase on a year-over-year basis. That’s more than double the home price growth seen the same month a year prior. The rate of price growth will likely remain strong, as the inventory of homes for sale—which was low before the pandemic—now lingers at historic lows.

While home price growth shows little sign of slowing, sales are another story. The number of existing homes in contract dipped for the second month in a row in October, according to a National Association of Realtors report released last month, though it remained elevated compared to last year. “There’s no question that the market is still extremely robust, but to sustain where it had been is just not realistic,” says Ivy Zelman, CEO of housing research firm Zelman & Associates.

The high levels of homebuyer demand and faster sales pace seen in recent months have been attributed to a myriad of very 2020 reasons: More people working from home, millennials buying their first house, and the chaos spurred by the pandemic. Persistently low mortgage rates have facilitated all this buying, tempering home prices.

Low mortgage rates, which dipped below 3% in July, the first time ever, canceled out rising home prices earlier this year. If supply remains low and demand remains high, home prices will continue to rise—meaning already-low mortgage rates would need to fall even further to offset the cost.

Recent pending sales data prompted industry economists to warn about rising unaffordability. “The housing market is still hot, but we may be starting to see rising home prices hurting affordability,” Lawrence Yun, the National Association of Realtors’ chief economist said in a release in late November. That same day, the Mortgage Bankers Association similarly warned that fast home price growth made it more difficult for first-time buyers to afford a home, while Freddie Mac chief economist Sam Khater wrote in early December that rapidly escalating home prices are “eroding the benefits of the low mortgage rate environment.”

Higher home prices could soften sales further in the coming year as a result of sticker shock, Zelman says. As home prices climb, prospective buyers could feel that they missed their chance to buy. “If we continue to see that upward pressure [on home prices] because inventories are so tight, you’ll start to see pushback by consumers,” she says.

Mortgage access is another hurdle. Credit availability fell sharply in the wake of the pandemic and remains 30% below pre-Covid levels, according to the Mortgage Bankers Association, restricting access further. Credit will likely remain tight through the end of the crisis, says Joel Kan, the organization’s vice president of economic and industry forecasting. “The recovery is proceeding along very differently for different parts of the population,” Kan adds. The rising bar of homeownership could contribute to an increasingly unequal recovery as those who lost jobs during the pandemic are unable to build equity during a period of rapidly appreciating home values.

Rising prices are unlikely to lead to a housing market crash, even if sales cool. “It’s not a market that’s [so] stratospheric it’s going to come crashing back down to earth,” said Mark Zandi, chief economist at Moody’s. “For that to happen, the economy would have to crater, or interest rates would have to spike.” While a crash isn’t likely, expect unaffordability to become a greater issue in 2021.

.
1   ad   ignore (0)   2020 Dec 15, 10:06am     ↓ dislike (0)   quote   flag      

.

The median house price to income ratio was 4.63 when housing bubble peaked in 2005.

Today because interest rates are at least 50% of what they were back then, the banks do not have to engage in as much gimmicks like offer adjustable rate mortgages (ARMs) and interest-only mortgages, or no money down mortgages (unless it's a Veteran Affairs mortgage). Think of the movie the Big Short.

So there may be more room to grow for the price to income ratio because of mortgage rates at 3%.

https://www.longtermtrends.net/home-price-median-annual-income-ratio/

.
2   WineHorror1   ignore (2)   2020 Dec 15, 11:41am     ↓ dislike (0)   quote   flag      

Are we in for low interest rates for the foreseeable future? What will cause them to rise?
3   Misc   ignore (0)   2020 Dec 16, 2:04am     ↓ dislike (0)   quote   flag      

I heard that in one European country, they had negative interest rates for mortgages. --- Don't ask how that's going, cause I dunno
4   WookieMan   ignore (7)   2020 Dec 16, 3:47am     ↓ dislike (0)   quote   flag      

WineHorror1 says
Are we in for low interest rates for the foreseeable future? What will cause them to rise?

There's nothing in the foreseeable future that I can tell that would make them rise. We had roughly a doubling of the DOW over 4 years. We're in one of the longest stretches without a major correction. Outside of housing, health and education inflation, everything has remained relatively flat. Gas is as cheap as can be considering we've gotten at high as $4/gallon here in IL at one point.

If the economy is soft or turns down, which one or both are likely during a Biden Presidency. Rates will stay low. Could actually drop which would just increase prices or hold them level. I think we're at a point where housing just goes sideways for a while. I have noticed a decent sized uptick in active listings in my town and usually right now is not an optimal time to sell. I'm out of the industry now, so hard to see how Covid plays into this as more people have time to dick around and look at houses without the boss looking over their shoulder.

Don't know them well, but I could see some coastal areas with some modest price drops. Flyover country seems to be fine, and with current interest rates, prices (payments) are relatively balanced to the incomes.
5   HunterTits   ignore (4)   2020 Dec 16, 10:44am     ↓ dislike (0)   quote   flag      

WineHorror1 says
What will cause them to rise?


Massive retirement by the Boomers. Oh it has only just begun. The later Boomers are still working.

When the effect hit, they will start to draw down their savings and investments like crazy. Then interest rates will start to rise. Some of that will be mitigated as capital from abroad will still be flooding in. But in general, national savings will start to go down.
6   ad   ignore (0)   2020 Dec 16, 10:50am     ↓ dislike (0)   quote   flag      

WookieMan says
Gas is as cheap as can be considering we've gotten at high as $4/gallon here in IL at one point.


Yes, Obama was at least smart enough to realize not to totally fuck with fracking. If he did, then gas prices would be over $4 a gallon and he'd lose the 2012 election. I think a lot of his decision not to fuck with it was because of his ego and desire to win reelection more than helping the working and middle class.

Working class continue to get squeezed (besides Elon Musk sending out email to Tesla engineers, techs and factory workers to continue to squeeze out profits).

Yet, the working class stiffs (i.e., do not own homes and stocks) help increase productivity yet they only get about a 2% annual raise while housing (i.e., rents) goes up at least 3%.

.
7   ad   ignore (0)   2020 Dec 16, 10:53am     ↓ dislike (0)   quote   flag      

TrumpingTits says
WineHorror1 says
What will cause them to rise?


Interest rates are fucking stuck low because if they go up, then the payment on the federal government's debt interest will be greater than 10% of the annual budget :-/

We are in a trap because Debt to GDP ratio rose from 60% to 101% during Obama's presidency, and now it sits around 125% because of the Chinese flu pandemic.

The Fed can't raise rates and I doubt that there will ever be inflation based on how the federal government and federal reserve operate.

Did you see inflation above 3% annually from 2009 to present day ? No, because the money was mostly given to asset holders (i.e., the rich who own stocks and buy multiple homes).

Let alone too many people are addicted to low interest rates such as housing developers and companies that want to borrow cheap.

....
8   Bitcoin   ignore (14)   2020 Dec 16, 10:56am     ↓ dislike (0)   quote   flag      

housing affordability??? If you cant afford a single house, invest in Bitcoin and buy two houses.
9   ad   ignore (0)   2020 Dec 16, 11:00am     ↓ dislike (0)   quote   flag      

G36 says
housing affordability??? If you cant afford a single house, invest in Bitcoin and buy two houses.


Stop pumping Bitcoin. Where the fuck do you sit ? At some cubicle in the Kremlin ?
10   Bitcoin   ignore (14)   2020 Dec 16, 11:05am     ↓ dislike (0)   quote   flag      

ad says
G36 says
housing affordability??? If you cant afford a single house, invest in Bitcoin and buy two houses.


Stop pumping Bitcoin. Where the fuck do you sit ? At some cubicle in the Kremlin ?


In my beautiful house. Well, to be accurate, in my home office....they dont let us go back to the office yet. Which I like. No commute. My dog loves it too. I def. take him out more often. Perfect weather here!

"pumping Bitcoin" ? Maybe you missed the news....Bitcoin hit all time highs today....it wasnt me! I didnt buy today!

https://finance.yahoo.com/news/bitcoin-tops-20-k-breakthrough-price-milestone-for-the-largest-digital-asset-135308475.html#:~:text=The%20price%20of%20bitcoin%20surged,market%20cap%20to%20%24384%20billion

Ad, you seem a little bitter about Bitcoin at over 20k.....were you shorting it or telling people it will go to zero?
11   HunterTits   ignore (4)   2020 Dec 16, 5:33pm     ↓ dislike (0)   quote   flag      

ad says
Let alone too many people are addicted to low interest rates such as housing developers and companies that want to borrow cheap.


They won't get a choice in the matter.
12   BayArea   ignore (1)   2020 Dec 17, 4:12am     ↓ dislike (0)   quote   flag      

TrumpingTits says
Massive retirement by the Boomers. Oh it has only just begun. The later Boomers are still working.


This always gets thrown around but the truth is that millennial buyers will far exceed boomers selling
13   WookieMan   ignore (7)   2020 Dec 17, 6:56am     ↓ dislike (0)   quote   flag      

G36 says
they dont let us go back to the office yet.

Freudian slip if I've ever seen one. lol. We'll see if it gets corrected.

Either way, I'm glad that I'm not someone else's bitch and can work for myself. Stick to the BTC threads. Living with mom and dad doesn't qualify you to talk about housing.
14   Shaman   ignore (2)   2020 Dec 17, 7:53am     ↓ dislike (0)   quote   flag      

This housing “boom” is just the Rule of Ten at work. It’s a perfect textbook example of prices rising ten percent when rates drop a point or more.
15   Bitcoin   ignore (14)   2020 Dec 17, 7:56am     ↓ dislike (0)   quote   flag      

Shaman says
This housing “boom” is just the Rule of Ten at work. It’s a perfect textbook example of prices rising ten percent when rates drop a point or more.


yep, and then combine that with historic low inventory.
16   Bitcoin   ignore (14)   2020 Dec 17, 8:21am     ↓ dislike (0)   quote   flag      

DF, apparently you are working nights....some service industry job?
Don't be jealous I get to work from home. We know you are pissed about Bitcoin hitting new ATH's since you predicted 1k. Should have bought some instead of bitching about it all these years.
17   WookieMan   ignore (7)   2020 Dec 17, 8:55am     ↓ dislike (0)   quote   flag      

G36 says
Don't be jealous I get to work from home.

Cute. I don't work. lol. You have to. Called a business on auto pilot.

G36 says
We know you are pissed about Bitcoin hitting new ATH's

I don't care. I just care about shit financial advice that people might take seriously. Could be BTC or penny stocks.

G36 says
Should have bought some instead of bitching about it all these years.

Lol, I have plenty of money and don't need to chase get rich quick schemes. Keep up. Reading.

I'm not a pussy and function on 2-3 hours of sleep. Is that so hard to comprehend? I sit on my ass making more than $30k in a month. Actual money. Unless you've sold like Cash said he/she did, you've made nothing. You can tout the price all you want, if you haven't sold, you've made dick. You know this. I like my position in life much more than yours. lol.
18   NDrLoR   ignore (1)   2020 Dec 17, 9:00am     ↓ dislike (0)   quote   flag      

WineHorror1 says
Are we in for low interest rates for the foreseeable future?
From here to eternity with Janet Yellen in charge again. People want more hair of the dog that bit them.
19   Bitcoin   ignore (14)   2020 Dec 17, 10:45am     ↓ dislike (0)   quote   flag      

my guess is DF works the night shift in the service industry. It would at least explain why he keeps contradicting himself and why he doesnt know what he writes. Lack of sleep can do that to you. Unless he really is that dumb. He posts day and night on Bitcoin threads and sounds like a Biden speech. (and still, after all these years of trying to bash Bitcoin he doesnt own a single Bitcoin). poor DF.

Here are some of his dumb comments:

"I dont trade. Its a losers game"
"I'd actually consider trading BTC"
"Fuck no on holding though"
"8k by year end"
"its going to land in the 1000-2500 range"
"is worthless"
"Would have sold everything at 18k"
"I am good with 9%"
20   WookieMan   ignore (7)   2020 Dec 17, 11:07am     ↓ dislike (0)   quote   flag      

G36 says
works the night shift in the service industry.

You cannot read. I've literally said I don't work. lol. I've said it in other posts months and even years ago. I'll fuck around with side gigs and that's it. Hobbies that pay, some big time. My income is secure. Not inherited. Not stock (mostly) or crypto based (at all).

I almost want to dox myself at this point because you live a world where you're chasing bull shit. And you try to get others to follow. Grow up dude. There are smarter people in the room. Unfortunately you want to take advantage of the people that are as dumb as you. So I call it out. You haven't answered a fucking question in any thread. Shit, just lie. Answer a fucking question. lol.
21   WookieMan   ignore (7)   2020 Dec 17, 11:08am     ↓ dislike (0)   quote   flag      

Oh, and go like your own comment now. You forgot #19 here. lol.
22   zzyzzx   ignore (2)   2020 Dec 17, 11:12am     ↓ dislike (0)   quote   flag      

WineHorror1 says
Are we in for low interest rates for the foreseeable future? What will cause them to rise?


Even more massive money printing? By printing, I really mean mostly electronic money printing by the fed.
23   Bitcoin   ignore (14)   2020 Dec 17, 11:20am     ↓ dislike (0)   quote   flag      

DF, at least you know you are being addressed. I give you that....at least you know who is meant by DF :)

Since you contradict yourself so often and dont know what you write we cant really take anything your posts seriously. Since you work nights my guess is you work the night shift in the service industry.

What else can you expect from a guy that says so much garbage:

"I dont trade. Its a losers game"
"I'd actually consider trading BTC"
"Fuck no on holding though"
"8k by year end"
"its going to land in the 1000-2500 range"
"is worthless"
"no x axis"......DF is too dumb to open up the source thats listed on the chart. I guess he really is too fuckin dumb to get that the x axis is the timeline.
"Wait, wait, wait. I thought it was 9,000,000%. Is it 17,918.98% or 9,000,000%?"
"Basic index funds have outperformed BTC"
>>>>REALLY? missed the fact that its up by 9,000,000%? Not a surprise, DF.
"an unregulated market"
"roulette"
"Nuclear EMP goes off"
"Would have sold everything at 18k"
"I am good with 9%"
"Bitcoin is not backed by anything"
"artificial scarcity"
"I only care about 6 figure gains"
"wake up at 6am and your money is all gone"
>>>>REALLY? missed the fact that its up by 9,000,000%? Not a surprise, DF.

about   best comments   contact   one year ago   suggestions