by jsor@businessinsider.com
https://www.msn.com/en-us/money/realestate/ar-AA1opg2E
- Home prices are being cut at the fastest pace in two years.
- The share of home listings that saw a price cut rose to 18.9% in July, up 3.4% from last year.
- Demand is cooling as buyers wait for mortgage rates to ease, Realtor.com said.
Homebuyers are finally starting to see the housing market shift in their favor, with home prices being slashed at the fastest pace in two years, according to Realtor.com.
The share of available listings that saw a price cut in July rose to 18.9%, up 3.4% compared with levels recorded in July last year. Those cuts have helped push down home prices across the country, with the median US home price dropping from $445,000 to $439,950 last month, the real-estate-listings site said in a recent report.
Price cuts have largely been driven by lower demand, alleviating some of the imbalances that pushed prices to record highs over the past year.
“First, rates remain higher than expected, which means there is less buyer activity,” Ralph McLaughlin, a senior economist at Realtor.com, said in a statement. “Second, the prospect of lower mortgage rates coming this fall may have induced some buyers to wait. This combo has led sellers to lower their prices in order to attract more buyers.”
Was listening to Mike Parrott who pointed out that we learned ABSOLUTELY NOTHING in 2008, except that Big Gov will bail out Big Finance.
(Biden)/Harris will oversee the next massive crash.
And Harris will STILL “win” the selection.
Not saying they can’t steal it, we all know they can. But we’re witnessing the fakest manufactured enthusiasm campaign ever witnessed in American politics, accompanied by a massive shock & awe demoralization campaign. A huge chunk of that $300 million is being spent on online trolls right now, like nothing we’ve ever seen before.
Besides the kind of wine moms who still use TiVo to record The View, and childless millennial emo girls who’ll vote for whoever Bon Iver tells them to vote for, nobody is excited about this woman or her pervy freak-show running mate. They really are the worst pair of candidates any party has ever put forward in a national election.
But yeah, they steal real good. There’s always that.
I’ve been living this for several years now. My condo in Philadelphia is worth $100K less than I paid for it back in 2017. I expect it to go even lower, especially with all of the ugly, poorly-constructed “luxury” apartments going up all over the place, despite no demand for them. The alarming rise in crime here hasn’t helped either. It sucks but Heaven is my true home and this is just the valley of tears we have to pass through.
Same near me in commie Maryland. They build stack and pack “luxury” apartments every where with astronomical rents. Tear out normal affordable human scale garden apartments. Increased supply does not seem to lower prices.
My cousin was a real estate agent in NJ in 2007-2008. He said that there was a massive collapse in the Sparta/Vernon areas because people would buy 1/4 acre plots and build these expensive, poor quality “luxury” McMansions. The decrease in home values was so drastic, that very few owners could sell their “new home” (which generally wasn’t completed) to recoup what they lost. A $700k mortgage is VERY steep when you can’t sell the place for more than $350K. It was cheaper for these people to rent in Bergen County for $3k-4k a month than stay in those places…
So before, everything sucked for home buyers because prices were too high. Now prices are plummeting and home sellers are upset. Jeeze, sounds like a normal market to me…
There is always a “buyer’s market” and a “seller’s market”. However, when your small, 1400 sq ft home is being appraised at nearly $200k in an area where such homes averaged $140k for 20 years, you know there is an issue. Such a price is unsupported by the income available to those who would live in a small home like that.
Imo, the only metric that matters in the housing market is home price/median income ratio.
Home prices in a region should reflect 2.5-4 times annual income.
The disconnect of one from the other is caused by artificially suppressed interest rates, non-reflective of market realities. Consumers take out loans to purchase improperly priced homes because dishonest interest rates encourage purchase decisions not reflective of underlying economic reality – cash flow and savings rate.
I believe the market will correct, eventually, to reflect that ratio.
Under normal market conditions, with a proper home price/income ratio, Jumbo loan programs would not be necessary to purchase such an asset. In fact, cash purchases would be much more common, when the asset is properly connected to income.
Home price/income ratio is the most sensible parameter to consider when buying a home as well. We bought way under what we could afford (fifteen years ago) because we were and are insecure about the future. Not the prospect of losing income, the prospect of the economic and political future. If we go full blown socialist under this woman, will we even be allowed to keep the home we are literally four months away from having paid off? My husband and I are worried.
“Political danger stress” is a real thing.
Precisely why, although better to move to an off-grid lifestyle, we’re staying in the suburbs. Because we can afford it. I think we may be too late to uproot before it gets ugly anyway.
Phoenix seems impervious to this reality. It’s also impervious to the reality that water is necessary to sustain life. Prices keep climbing, building and expansion keep going, and the California license plates keep pouring in.
Damn shame. We used to love it here.
CJ
I used to live in Phoenix, back in my military day. I loved the area for what it was, the desert vibe, especially loved Northern Arizona as a place to escape to and explore during hot summer days … what an awesome State!
But the water situation – the future sources of dwindling supply paired with huge influx of demand – even back in the ‘80’s caused me great concern as a place to settle down.
There is plenty of water here, and a 100 year plan to keep it that way. So much so that 70% of all the water goes to agriculture.
Mark,
From the Salt River Project Utility (a community-based, not-for-profit organization providing reliable, affordable and sustainable water and energy to more than 2 million people in central Arizona) web site:
“Unlike most U.S. cities, Greater Phoenix has access to four sources of water.
Water from in-state rivers and streams – SRP manages seven reservoirs that store water from the Salt and Verde rivers and the East Clear Creek watershed. Over half of the water supply in the Phoenix metro area comes from the SRP water system.
Colorado River water – The Central Arizona Project (CAP) delivers Colorado River water to the Valley. This represents the area’s second-largest water supply.
Reclaimed water – SRP delivers fresh water to cities and towns throughout the Valley. They then treat the water and deliver it to homes and businesses – but that’s just the beginning. “Waste water” gets a second useful life when it’s recaptured, treated and recycled. This recycled water – called reclaimed water – can be used for farming non-edible crops, landscaping and more.
Groundwater – SRP utilizes a vast ground water pumping system that includes 270 high-capacity wells. Additionally, Valley cities operate large groundwater supply systems.”
I wish them, and you, and all their customers the best. American ingenuity usually prevails in the end.
*American ingenuity usually prevails in the end.*
It once did. But now, everything is Boeing.
CJ,
Yes, as one who grew up in a family of (almost entirely) Boeing technicians, engineers and executives (and pilots), In the PNW, I am well familiar with what happened to Boeing – what has also happened to America … trading technical excellence for paper “profits”.
But, hope springs eternal that in the end the American ethos will prevail.
Isn’t that part of their 100 year plan? Replacing farms with subdivisions that use less than a third of the water? So more population growth, more cars, more road construction (which is already insane), and more power for Maricopa County to completely rule the state politically.
Sounds like we’re on our way to becoming Los Angeles-East.
CJ,
I remember “back in the day”, driving to work in SE Mesa and the rule was vast fields of crops (cotton and alfalfa and citrus as I recall) and the pervasive odor of cow manure; crop duster planes were a standard sight, like bees buzzing around above and below the power lines; canals full of water criss-crossing in a grid. And at night … pure darkness and galaxies of stars.
But, during my time there until the late ‘80’s, those fields were constantly being transformed into commercial-residential developments. It definitely made me appreciate more the times I had there, knowing how much change was in store for the vast valley.
It makes me feel old to talk that way, but it is what it is.
North Phoenix is what I was referring to. North Scottsdale, Desert Hills, and New River in particular. A number of people I know have had their wells run dry, I know of others who’ve dumped over $30K+ into new drilling and came up empty… and the new construction never stops. I hear the same kind of stories from friends out in Apache Junction. And the cost of hauled water is going through the roof.
But the bigger problem for me is how the California invasion has completely changed the place, politically, culturally, in just about every way. Texas is so big it can withstand them for a while, but they’re quickly overwhelming AZ (Maricopa County mostly). I wanted to believe they were the sane ones escaping the madness (like we did 15 years ago), but they’re not. They’re just cashing out from the real estate bubble in CA, buying McMansions here with cash, and they’re bringing all of their terrible voting and driving habits with them. A little piece of me dies every time I see another California license plate on the freeways, because I know it means it’s almost time to go.
We have two years before our last high schooler graduates, then we’ll be fleeing for redder pastures. It bums me out, because I loved the Old West vibe in North Phoenix. It was by far the coolest place I’ve ever lived before the Californication happened.
I would say all that is accurate.
An interesting news item, on the ongoing housing affordability crisis – the disconnect of asset price from its true value, which is directly tied to income.
https://finance.yahoo.com/news/1-million-starter-homes-are-common-in-more-than-100-towns-in-america-zillow-data-shows-123042215.html