OT: Home prices fell for first time in 3 years.. Here it comes?

[fishwater99]

https://www.cnbc.com/2022/08/24/hom...e-in-three-years-biggest-drop-since-2011.html

Will housing prices continue down or is this just a bump in the road?


"Home prices declined 0.77% from June to July, the first monthly fall in nearly three years, according to Black Knight, a mortgage software, data and analytics firm.
While the drop may seem small, it is the largest single-month decline in prices since January 2011.
It is also the second-worst July performance dating back to 1991, behind the 0.9% decline in July 2010, during the Great Recession.
Now, housing affordability is at its lowest level in 30 years. It requires 32.7% of the median household income to purchase the average home using a 20% down payment on a 30-year mortgage, according to Black Knight. That is about 13 percentage points more than it did entering the pandemic and significantly more than both the years before and after the Great Recession. The 25-year average is 23.5%."

 

[HotMop]

I just purchased a used car from a dealership below Kelly Blue Book. Clean Carfax as well with pristine service records. Take that for what it's worth.

 

[Smoked Toag]

But But But JLSocks said.....

lumber....rabble rabble

 

[patdog]

View attachment 24943

 

[Cooterpoot]

Considering HPA is up incredibly since 2011 (coming out of the housing crisis) .77% is nil.
Even with home sales falling, the median days on the market is still at only 14 days because there's still a shortage of housing. You aren't going to see values collapse I don't believe.

 

[GloryDawg]

the whole purpose of the Feds raising interest rates was to bring prices down. I just wish gas would go back to the level before Biden took office and food would go down. Gas and food is what killing a lot of families. Homes, cars and many other big ticket purchase's is out of reach for millions in the United States right now. They just worried about putting food on the table and paying bills.

 

[johnson86-1]

Considering HPA is up incredibly since 2011 (coming out of the housing crisis) .77% is nil.
Even with home sales falling, the median days on the market is still at only 14 days because there's still a shortage of housing. You aren't going to see values collapse I don't believe.

As long as you are in an area with growing population, there's not really any way for prices to collapse. Houses in our area are definitely less affordable than they were, but basically everybody that has gotten into a house more than 6 months ago is in at a price that is cheaper than the cost to build. There's already a huge price difference between new construction and still relatively new housing in our area. Certainly the cost of commodity building materials could drop a good bit, but labor's not getting cheaper and a lot of your finished products can't really get much cheaper. If the cost to build can't drop more than say 4 or 5%, I'm just not sure how the gap between new construction and existing construction could get wider than it is right now, which I think puts a floor on how much the pricing of existing housing stock can drop.

 

[Maroonthirteen]

Burn baby burn.

I'll want a Starkville condo on the cheep in just a few years.

 

[wdawg44]

Also most of the produce on the shelf is on the verge or already rotten. So not only is it expensive as 17 you throw away a quarter of it.

 

[GloryDawg]

Also most of the produce on the shelf is on the verge or already rotten. So not only is it expensive as 17 you throw away a quarter of it.

I wish I could go to Kroger and buy the ham my family likes. They seldom have it and it cost twice as much as it did two years ago when they do. You go to Kroger in Brandon on Monday or Tuesday it is empty shelves on every isle. Everything is way too expensive.

 

[aTotal360]

Another 60-90 days of sellers not getting any showings because they are priced at Feb 2022 prices will drive it down even further.

It's actually not a bad time to buy. Instead of there being 25 offers, there are only 5.

 

[Trojanbulldog19]

Things are slowing down due to interest rates snd inflation. But inventory is still very very low. If house is priced right it will still sale quickly. It's not still on the crazy ride it was on. I still hope I can sell for more than I bought next year to move towns to the suburb area we really wanted to be. We had to buy last September due to move for jobs. House appraises for more than we paid and several in our neighborhood have sold in last year at a high $/sqft. Same builder and designer and similar age and sq ft. I'm still hoping it will be higher than what we paid by next September so I can avoid the capital gains and also not be under what we paid. We hope maybe building will pick up and we can build in the area we want next year

 

[johnson86-1]

Burn baby burn.

I'll want a Starkville condo on the cheep in just a few years.

NIL will probably take care of that for you.*

Just a half sarcasterisk because I'm not sure it's not true. I wanted to buy a Starkville condo just to rent until the kids needed it, but it's one of the few places I could actually see being flat for a good while.

 

[Go Budaw]

https://www.cnbc.com/2022/08/24/hom...e-in-three-years-biggest-drop-since-2011.html

Will housing prices continue down or is this just a bump in the road?


"Home prices declined 0.77% from June to July, the first monthly fall in nearly three years, according to Black Knight, a mortgage software, data and analytics firm.
While the drop may seem small, it is the largest single-month decline in prices since January 2011.
It is also the second-worst July performance dating back to 1991, behind the 0.9% decline in July 2010, during the Great Recession.
Now, housing affordability is at its lowest level in 30 years. It requires 32.7% of the median household income to purchase the average home using a 20% down payment on a 30-year mortgage, according to Black Knight. That is about 13 percentage points more than it did entering the pandemic and significantly more than both the years before and after the Great Recession. The 25-year average is 23.5%."

What exactly do you think the Fed was trying to do with all these rate increases?

There’s no path to getting out of the woods on inflation without home prices having to go through a correction.

 

[mstateglfr]

I wish I could go to Kroger and buy the ham my family likes. They seldom have it and it cost twice as much as it did two years ago when they do. You go to Kroger in Brandon on Monday or Tuesday it is empty shelves on every isle. Everything is way too expensive.

Are the Brandon Kroger shelves empty because people have bought everything on the shelves or are they empty because Kroger cant fill their shelves? Either way, that isnt an example of stuff being too expensive.

...and I am not arguing that grocery prices are low. I spent $415 on Sunday for groceries and we have a family of 4. Thats insane.

 

[PooPopsBaldHead]

Really bad article. Terrible data interpretation from the writer. Home listing prices fall every summer before school starts back up due to seasonality. ****... They fall every fall for months until Jan/Feb.. Ask any realtor. As does inventory since fewer people list, because they know prices drop. This year it started in June versus July thats it. You have to look at year over year data, not month to month.

Here is what home prices are actually doing. Real time data, published list prices every week of every US MLS listing. Look at the seasonality of median list prices... It goes down for half the 17ing year, every year like clockwork.

View attachment 24944

Up 15% year over year. Home prices are not declining yet. Home price growth is hardly even slowing. We need inventory for prices to decline. There is still not enough inventory, though it is finally building. Up to 50% or so of normal.

View attachment 24945

It's supply and demand still. Yes demand is way down over the last 4 months. But supply is still near historic lows. I would guess next spring will be the first shot we have at actual year over year home price declines or maybe even just being flat.


Special shout out to Goat, the housing crash expert.

So yes, home prices are down .77% in July from June. But look at the data it, does that every year. I pointed this out when I recommended you buy in the fall/winter and sell in the spring if you are able to swing that somehow. I stand by my original recommendations. If you bought a "median" home last year when I recommended it, you would have locked in a sub 3% interest rate and got a price 15.1% less than it is today.

Median home last August with 3% 30 year mortgage = $1315 per month payment.
Median home today with 5.2% 30 year mortgage = $1972 per month payment

The mortgage payment is 50% higher in 12 months. As I said back then, if you didn't already own a home, I doubt your will ever have a chance to buy one for as cheap again. We would have to have a bigger housing crash than ever in history while the FED cuts rates in half to get back to last year's prices.

 

[fishwater99]

Prices are down her in the Denver metro by more than 4%, that is unheard of. A correction is coming, but how big of one?

 

[HRMSU]

As long as you are in an area with growing population, there's not really any way for prices to collapse. Houses in our area are definitely less affordable than they were, but basically everybody that has gotten into a house more than 6 months ago is in at a price that is cheaper than the cost to build. There's already a huge price difference between new construction and still relatively new housing in our area. Certainly the cost of commodity building materials could drop a good bit, but labor's not getting cheaper and a lot of your finished products can't really get much cheaper. If the cost to build can't drop more than say 4 or 5%, I'm just not sure how the gap between new construction and existing construction could get wider than it is right now, which I think puts a floor on how much the pricing of existing housing stock can drop.

If building slows don't you think labor will adjust down? More contractors chasing fewer jobs = more competitive bids?

 

[PooPopsBaldHead]

Prices are down her in the Denver metro by more than 4%, that is unheard of. A correction is coming, but how big of one?

Where are you getting that data? Is it year over year? According to Redfin, in July Denver prices were still up 4.9% over July 21'. And homes were selling in 8 days vs 6 days last July, which is hardly the anatomy of a crash. The seasonality is like this, every spring housing list prices reach a high water mark and every fall/winter they hit a low. The high's could come in April, May or June and the lows could come in October, November, or December... That part is variable every year. I tend to think nationally it evens out, but on a local level, you could have an early winter or late winter that push seasonality out, amongst other local factors.

View attachment 24946

What I am seeing in the markets I watch (Boise and DFW) is that the August-September seasonal price drop has come faster and a little sooner than last year. That is likely the case in Denver as well. I personally wouldn't put a ton of concern into until you get real inventory building in the spring when the buyers and sellers actually come out. I expect my Boise market to be a good barometer for other high flying markets. The median price there is still up 42% in the last 24 months. It should give back at least 10% or so over the next year. But inventory is still tight historically so we'll see.


To keep up with your market to get all of the seasonality stuff out of the way and look for real declines, you can use Redfin to identify year over year lower lows and lower highs. So if you look at the graph below, the yellow circles represent last winter's low and this spring's high. I could certainly see high flying market like Denver, Boise, and DFW that had massive gains definitely putting in a lower low this fall with recession fears and high rates, but I am still not 100% certain you will put in a lower high next spring unless jobs really become an issue. I just don't see many people putting homes on the market willingly if they have a sub 3% rate locked in right now.

View attachment 24947

 

[fishwater99]

From that article, which you don't like, lol.


I just did a google search and got something similar, it's a month to month drop not A year to year drop.


https://www.noradarealestate.com/blog/denver-real-estate-market/

https://www.denverpost.com/2022/08/03/metro-denver-housing-market-second-half-2022-start/

Let's wait and see what unfolds this fall.

 

[Go Budaw]

Somebody’s data is not accurate. The article states it’s the first month to month drop in 3 years, your MLS data says it’s not.

If the article’s source data is inaccurate, that’s a lot more than just “bad data interpretation”, it’s straight up lying.

Its interesting that two supposedly reputable data sources could reach vastly different conclusions, unless one really isn’t that reputable.

 

[ronpolk]

I wish I could go to Kroger and buy the ham my family likes. They seldom have it and it cost twice as much as it did two years ago when they do. You go to Kroger in Brandon on Monday or Tuesday it is empty shelves on every isle. Everything is way too expensive.

Everything is expensive as hell for sure but I’ve not noticed shelves being empty in the Kroger I go to. I usually go to one in Madison or Ridgeland

 

[johnson86-1]

If building slows don't you think labor will adjust down? More contractors chasing fewer jobs = more competitive bids?

Labor costs are pretty sticky. Our starting pay went up $3 an hour compared to pre-pandemic. We might could cut back our starting pay on new offers, but we're not just covered up with good applicants at the current wages. Don't think we could cut back much.

Now for residential construction crews, you probably do have less sticky wages. Lots of non-legal workers and some people that can't work anywhere with drug testing. But if you cut pay much, there are still plenty of entry level jobs available. And while new home construction is about to slow, there's probably a decent amount of pent up demand for rehab work. I know plenty of people that want to do work on their house but just know they can't get workers right now. Plus there are going to be plenty fo people unwilling to give up a 3% or less interest rate to move up that will probably remodel and/or add on when they otherwise might move. So I think there is probably some need for those workers outside of new construction that is going to make it hard to cut much.

 

[PooPopsBaldHead]

Yeah, month to month is pretty hard to judge by. When you look at the big boy data from the Fed and Case Schiller, they just completely remove seasonality and smooth the data quarterly or annually.

I personally like the Altos Research data because he removes the ********. Here's an example. You would see lots of articles claiming crazy high inventory levels as early as last summer. Well, MLS data includes new construction. These homes aren't for sale, not really, because they aren't built. Hell, half the time, the lot hasn't even been cleared. A home should not enter into "inventory" until it is built and has a CO. in 2019 that took 6 months on average start to finish, in 2022.. More like 10-12 months.

Here's an example. Frisco, TX. A market I know well.

Zillow currently says 621 homes for sale.

View attachment 24948

If I unclick the new construction tab, the actual homes for sale that you can occupy are 399.

View attachment 24949

So with Altos, they exclude all of the new construction. That helps in 2 ways. It gives the picture of real inventory, but it also removes the bait and switch prices from the dataset. In new construction, the builders put a base price on the MLS. When you actually go to buy the damn thing you have lot premiums, upgrades, add-ons, and now material escalation clauses that take the price up an additional 20% or more in most cases. That's just one example of why I love Altos.

I encourage anyone truly interested in housing to watch this video. Mike Simonsen, CEO of Altos, puts out a video every Monday. He's at least a month ahead of everyone else and looks at the data from great angles. Again. Take 15 minutes to watch the video below and he explains all kinds of good stuff based off this week's data.

https://www.youtube.com/watch?v=hYDJYwIn5oY

 

[GloryDawg]

Are the Brandon Kroger shelves empty because people have bought everything on the shelves or are they empty because Kroger cant fill their shelves? Either way, that isnt an example of stuff being too expensive.

...and I am not arguing that grocery prices are low. I spent $415 on Sunday for groceries and we have a family of 4. Thats insane.

Combination on both. Plenty of things on shelves you can do with out but things you need are hard to come by on Monday and Tuesday. It takes them several days to replenish but some of the shelves stay empty. I don't think people are buying to hoard.

 

[archdog]

Everyone wants gas to go down, unfortunately the price at around 3.20 per gallon for 89 octane is about where it always should be with increases yearly for inflation. It will not go down to Trump 2020 levels because we will never be that low on consumption again, until the electric car market takes over 30% of the overall.
I am putting in the infrastructure at my house now for two charging stations. I am also going to take the tax advantage of a home solar system with a battery storage device. My 20kW system will store enough power to charge my vehicles every night and run part of my house. The system will have a total of around 180kwh produced daily, my truck would require 133 kwh daily to charge up to 400 miles.
Now I only travel 400 miles maybe once for the entire week. Sometimes around 600 miles a week. So.... the other 6 days, that poduction is offsetting my entire house's energy use.

 

[mcdawg22]

Everything is expensive as hell for sure but I’ve not noticed shelves being empty in the Kroger I go to. I usually go to one in Madison or Ridgeland

It’s funny because we have a group text and 2 of the people in Brandon and Vicksburg are always saying that Kroger is out of something. It’s been produce, pork, peanut butter, and other things. The friend from Birmingham and I never have issues finding these things. I shop at Walmart, Publix, or Winn Dixie. The only thing I have had a problem finding sometimes is Kings Hawaiian Rolls, and that has been going on for 2 years, and a specific Oscar Mayer Natural Applewood Turkey deli meat that my wife likes.

 

[johnson86-1]

It’s funny because we have a group text and 2 of the people in Brandon and Vicksburg are always saying that Kroger is out of something. It’s been produce, pork, peanut butter, and other things. The friend from Birmingham and I never have issues finding these things. I shop at Walmart, Publix, or Winn Dixie. The only thing I have had a problem finding sometimes is Kings Hawaiian Rolls, and that has been going on for 2 years, and a specific Oscar Mayer Natural Applewood Turkey deli meat that my wife likes.

Same for us. There are some particular types of product we can't get, either because we can't still get a particular brand or because a particular size/packaging or flavor is no longer available, but we can pretty much get what we want. Still have a lot of substitutions when we do walmart pickup and occasionally an item will be listed as unavailable with no substitution, but usually we can walk in and get it if we want it. Not sure if pickers are working out of the back and have limited inventory or they just have an incentive structure where they're better off skipping something than looking for the exact product, but it doesn't appear to be supply chain issue.

 

[Trojanbulldog19]

He thinks he is an expert at every topic. He has extended degrees and experience with everything.

 

[Trojanbulldog19]

In Louisiana last year they told us 7 months to build in the neighborhood we bought another house in that was 2 years old. Same developer is telling us about the same right now to build one 25 miles west of us same plan.

Housing was so nuts last year we had to move on something quickly between our two favorite areas. After some things have changed, we want to move to another other area that was our favorite. Our luck same developer building in that area also. Right now it's just trying to find the sweet spot to sell to get highest value and not to have to pay the capital gains tax either if we do make profit.

 

[GloryDawg]

Everyone wants gas to go down, unfortunately the price at around 3.20 per gallon for 89 octane is about where it always should be with increases yearly for inflation. It will not go down to Trump 2020 levels because we will never be that low on consumption again, until the electric car market takes over 30% of the overall.
I am putting in the infrastructure at my house now for two charging stations. I am also going to take the tax advantage of a home solar system with a battery storage device. My 20kW system will store enough power to charge my vehicles every night and run part of my house. The system will have a total of around 180kwh produced daily, my truck would require 133 kwh daily to charge up to 400 miles.
Now I only travel 400 miles maybe once for the entire week. Sometimes around 600 miles a week. So.... the other 6 days, that poduction is offsetting my entire house's energy use.

Consumption in 2019 before the pandemic was more than 2021 and 2022 but average gas price was 2.64.

 

[onewoof]

I wish I could go to Kroger and buy the ham my family likes. They seldom have it and it cost twice as much as it did two years ago when they do. You go to Kroger in Brandon on Monday or Tuesday it is empty shelves on every isle. Everything is way too expensive.

Have not purchased meat from Kroger in 3 years, don't plan to ever again.

 

[BoDawg.sixpack]

Macron just used the phrase "the end of abundance" ...pretty strong words

that he is using to condition the French on what the winter is going to be like. I think it will apply to most of Europe and America too if natural gas prices don't ease in time for winter here. Just saw where 1 in 6 Americans are now behind on their energy bills which was a new record.

https://www.france24.com/en/video/20220824-macron-warns-sacrifices-ahead-after-end-of-abundance

 

[turkish]

Why dont they just get a money printer?

 

[Leeshouldveflanked]

We have an easy 75-100 years of Natural Gas available in the US but our Government wants to make its citizens suffer financial hardships just to push an agenda.

 

[Requiem For A Dawg]

Another 60-90 days of sellers not getting any showings because they are priced at Feb 2022 prices will drive it down even further.

It's actually not a bad time to buy. Instead of there being 25 offers, there are only 5.

Where do you live? I’m on the coast and anything halfway decent hitting the market is gone within 48 hours with multiple offers higher than asking price.

My brother lives in rural Lincoln County and 2 weeks ago he put in an offer over asking price plus all closing costs and was outbid by $25k. The house was on the market for one day.

I’m not sure where you live but I’m not seeing or hearing of this anywhere.

 

[CochiseCowbell]

https://www.yourprops.com/movieprops/default/yp_5fd0f55008d986.16899729/Beverly-Hills-Cop-3-Wonderworld-Bill-Kiss-My-***-1.jpg

 

[turkish]

And far less than that once CCS becomes more widespread.

 

[horshack.sixpack]

I have an interest in the Nashville market. Large builders there that I know of have recently slowed down and stopped just tossing up spec homes as fast as they can. They are still building plenty, but instead of just pushing forward without buyers lined up they are slowing down enough to let buyers pick their own colors/flooring/fixtures, etc. They are still adding staff and going strong, just slowed on the more speculative stuff and building houses in take it or leave it mode.

ETA: I realize Nashville is not a "normal" market.

 

[aTotal360]

"Good" properties at a fair price always sell quickly. No matter the market.

All of asking and covering closing cost is the starting point in my market. I'm putting in offers of 100k over and still not getting them. It only takes one determined (or desperate) person.

I've always said that if a property sells in 48 hours, you underpriced it and may have left money on the table.