A weekend topic starting with Business Insider. "A modest Montana house is turning heads not for its grandeur or uniqueness, but for its price tag: $1.1 million. The three-bedroom home in Whitefish — a city of about 9,000 people and the gateway to scenic Glacier National Park — doesn't look special. It has white paneling, a two-toned grass lawn, and a fence out back. On February 8, Kirk Rossiter, a real-estate agent in Whitefish, posted a video of the property — and its comparably outsize price tag — on Instagram. 'Is there $900,000 piled up in the basement?' one commenter wrote. Another said, 'Is this satire?'"

"Like numerous smaller towns across the US, Whitefish experienced a pandemic-induced homebuying boom. Redfin data shows the median sale price in Whitefish reached $750,000 in January, more than double the median price of $369,990 in January 2020. Though Heather Reddig, the listing broker, hasn't yet received any offers for the home, the home's seller, Gary Hanson, is considering increasing the property's price. 'A friend of mine from California said, 'You're too low,' Hanson told BI. 'Put it up for $2.3 million and it will sell.'"

Fox Business. "In this final part of a three-part series, take a look at the average cost of an American home from the 1940s spanning to the present day. Check out the major ups and downs of the housing market — and how inflation has impacted real estate for over 80 years. The historical Census and Federal Reserve Economic Data (FRED) have meticulously documented the ebbs and flows of housing prices. In 1940, without adjusting for inflation, the average cost of a home in the United States was $2,938, according to the United States Census Bureau. The inflation-adjusted price in 2024 dollars would make that $64,372.84. When compared to 1940, today's prices are 21.91 times as high as the average price 80 years ago."

"In the span of 10 years, from 1940 to 1950, the average cost of a home jumped to $7,354, according to Census data. That equals $93,602.08 today as adjusted for inflation, FRED reports. Housing prices in 2024 have increased 12.73 times since 1950. The housing market saw its largest spike starting in 2020 and leading into 2022. In 2020, the average cost of an American home was $374,500, FRED reported. The adjusted 2024 inflation price equals $443,860. Over the course of two years, the housing market surged by more than $175,000. By the end of 2022, the average cost of a home in the U.S. peaked at $552,600, FRED research shows. The 2024 adjusted inflation cost is equivalent to $579,205."

From Market Place. "Zillow reports that since January 2020, the monthly mortgage payment on a typical U.S. home has nearly doubled. It’s up 96% in just four years. According to Zillow, a typical buyer will now pay nearly $2,200 a month, with a 10% down payment. Meaning, homeownership now costs well above the 30% of median income that was once thought to equate to 'affordable' housing cost in America. Guy Cecala at Inside Mortgage Finance, points out that in the years before the pandemic, consumers got used to really low mortgage rates."

"'Unfortunately, a lot of people felt that was normal, and that anything above that they should just wait until they go back to the three and a half, four percent range. And that is not a realistic expectation,' said Cecala."

From Florida Today. "Looking at the January housing stats, one thing is certain: if you are looking for a house on the Space Coast, there are plenty to choose from. According to the Space Coast Association of Realtors, the months' supply of inventory was up again in January by 47.8% over January 2023 with 3.4 months available. And those numbers don't include townhomes or condominiums. Those types of units saw a spike of 74.2% year over year, climbing from 3.1 months to 5.4 months. While not as dramatic, Brevard also saw a month over month jump from December where the inventory sat at 4.9 months' supply."

"This is great news for buyers who now have a variety of options to choose from. Its an indicator that houses are staying on the market longer than they were in the summer of 2023. It is not great news for sellers who may be trying to quickly get out of a Space Coast home or get the highest dollar amount for the property."

WPBF in Florida. "Stephanie Donner, in the Boca Pointe neighborhood of Boca Raton, has a policy with Castle Key Insurance Company and says in November, her condominium insurance rate went from about $800 per year to $1,800 per year. She says not she isn't sure what to do next. 'I'm depressed,' said Donner, who is retired. 'I have to go out and get a job, even if it’s part-time… As far as moving out of the state, I have family here, so I don’t know. Every dollar I get in is going towards bills. I can’t enjoy my life. I don’t take my car out of my garage as much as I did because I don’t want to use the gas,' said Donner."

The Orange County Register. "Southern California’s housing slowdown may be bottoming out, with January home sales rising from year-ago levels for the first time in more than two years. Sales had been falling on an annual basis for 25 straight months — until now. While this past January broke that trend, its tally of 10,581 transactions still ranked as the third-lowest in records dating back 36 years, according to CoreLogic. The nearly 7% annual sales gain occurred mainly because the prior January was the all-time slowest month on record."

"January’s median price was $45,000 below the all-time high of $750,000 reached in April 2022, right before high mortgage rates combined with high prices to chill buyer demand. Prices fell month-to-month starting in May 2022, dropping $80,000 to just under $670,000 in January 2023. Then, a rapid decrease in listings revived buyer competition, with prices fluctuating between $705,000 and $740,000 since last spring."

The Mercury News in California. "A high-profile office complex of two towers in downtown San Jose has been sold for a huge loss compared with its prior price in a deal that is a fresh reminder of the feeble state of the Bay Area office sector. The property is 111 Market Square, a downtown San Jose office center that was bought for $34.2 million, according to documents filed on Feb. 29. The buyer is an entity headed by George Mersho. In recent months, Mersho led a different entity that bought a different downtown San Jose office property — also for far less than its prior purchase price."

"The just-purchased 111 Market Square office center, which totals about 325,200 square feet, was previously bought in 2019 by an affiliate of Rubicon Point Partners, which paid $141.4 million at that time, county real estate records show. The deals mean that Mersho’s group paid a jaw-dropping 77% less than the price paid about five years earlier by the latest transaction’s seller, Rubicon Point. In December 2023, a different entity headed up by Mersho paid slightly under $23.8 million for the 303 Almaden office tower, an 11-story highrise that totals 157,500 square feet. That price was about 70% below the $80.2 million that the seller paid for the tower in 2017."

"Here are other signs of a frail office market in the Bay Area: In the fall of 2023, a San Francisco office tower at 550 California Street was bought for $40 million, or a 75% discount from its prior price. Multiple other San Francisco office highrises are being offered for sale, or have been sold, for a fraction of their previous values."

The Globe and Mail in Canada. "Ottawa has discontinued its $1.25-billion program to help first-time homebuyers after struggling to attract prospective homeowners since its introduction in 2019. The First-Time Home Buyer Incentive program provided shared-equity mortgages directly from the federal government for homebuyers. It was designed to make homeownership more affordable by reducing the size of the borrower’s mortgage, as well as their monthly payments. But the requirements were considered unrealistic in the country’s most expensive markets of Vancouver and Toronto, where the typical home price is above $1-million. 'It will not be missed,' said Tuli Parubets, a mortgage agent with Mortgage Scout who works with homebuyers in the Toronto region. 'What can you buy for $1-million? Not a whole lot,' she said."

The Windsor Star. "Windsor housing prices went on a feverish tear during the COVID-19 pandemic, rising by more than double the Canadian average, based on findings in the latest Royal Bank Global Asset Management report. The average monthly sales price of a Windsor home rose 104 per cent from April 2020 to March 2022 compared to the Canadian average of 56 per cent. The Royal Bank looked at 11 major urban areas across Canada, with the Niagara region seeing prices rise the most — 77 per cent. Windsor was not part of that study, but according to the Windsor-Essex County Association of Realtors, the average monthly sales price of a Windsor area home rose $368,104 (from $352,463 in April 2020) to peak at $720,567 in March 2022. London and Waterloo were also not part of the RBC report, but London saw average residential prices jump 91 per cent while Waterloo prices rose 41 per cent."

"Windsor area prices have dropped 26 per cent from that peak, with the low point reached in December 2022 at $476,107. The current average Windsor area house listing is $534,655. The national average monthly price has dropped 12.3 per cent from its March 2022 peak. The average current cost of a home in Ontario is $821,624 and $659,395 in Canada. The housing market has been changed permanently, said Windsor-Essex County Association of Realtors president Maggie Chen. And not only will prices never return to pre-pandemic levels, she said the pandemic elevated the importance of what having a home means."

"'The pandemic changed how we look at our homes. Having a safe, secure, comfortable place to keep your family when we were all confined at one point became very important. That has stuck with us. People realized then, sometimes you can’t always travel or get out. Owning a home has become more of a focal point for families,' she said. Prices began to rise, said Chen, once investors, largely from the Toronto area, began to discover that those low prices, combined with low interest rates, allowed them to create positive cash flows after only having to put down 10 per cent to purchase property. 'We had a huge flow of investors come to town,' Chen said. 'Prices were driven up dramatically higher than they were supposed to be.'"

The Telegraph. "A typical first-time buyer in London will have to save for 31 years to raise a deposit on a home, twice as long as their parents, analysis shows. A Londoner on an average salary would need to save 10pc of their take-home pay for three decades to afford a 20pc deposit on a £438,000 property – the average price for a first-time buyer in the capital. However, in 2003 the equivalent figure was just 15 years. The generational gap reveals the extent to which wage growth has failed to keep pace with rising property prices, the dynamic fuelling Britain’s property crisis."

"House prices across Britain are now more than nine times salaries, a ratio not seen for 150 years, according to a report from the asset manager Schroders. In London, homes cost 12 times annual earnings."

From Mises.org. "The Federal Reserve intentionally created a housing bubble in the early 2000s that they busted in the Great Recession and Global Financial Crisis of 2008-2009. In response to the Tech Bust and recession of the early 2000s, then Fed Chair Alan 'The Maestro' Greenspan slashed the Federal Funds rate from nearly 7 percent in 2000 to just 1 percent in 2002. In a 2002 speech, Greenspan explained his rationale for lowering interest rates to increase housing demand and stimulate the economy as follows, 'Besides sustaining the demand for new construction, mortgage markets have also been a powerful stabilizing force over the past two years of economic distress by facilitating the extraction of some of the equity that homeowners have built up over the years.'"

"As the Federal Reserve later explained in a 2005 paper, 'Like other asset prices, house prices are influenced by interest rates, and in some countries, the housing market is a key channel of monetary policy transmission.' It sounds like the Fed had finally been reading Ludwig von Mises. In April 2005, Greenspan gave a speech praising subprime mortgage loans by saying: Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country…With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers…Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s."

"As a result of Greenspan’s aggressive money creation, the median home price soared by over 50 percent from 2000 to 2007. In a February 2004 speech, Greenspan advocated adjustable-rate mortgages. After he encouraged millions of Americans to use these mortgages, he then proceeded to raise the Federal Funds rate from 1 percent to 5.3 percent over the next two and a half years, thereby triggering the biggest housing bust in US history up to that time. As a result, the median home price collapsed by nearly 20% from 2007 to 2009, which triggered the Great Recession and Global Financial Crisis of 2008-2009."

"In response to the government-imposed lockdowns over the covid virus in 2020, the Fed and banks increased the money supply by an incredible 40% when the Fed cut the Federal Funds rate to nearly zero percent. As a result of this unprecedented money creation, inflation shot up to 9 percent by 2022, the highest level in four decades. This also caused median home prices to skyrocket nearly 50% percent from 2020 to 2022, resulting in Housing Bubble 2.0."

"The Housing Affordability Index has fallen nearly 50% in the past couple of years and is now at the low levels seen during the peak of Housing Bubble 1.0. This chart shows the housing price-to-rent ratio is still near historical highs and well above the highs seen during Housing Bubble 1.0 of the 2000s. This high ratio means house prices are very vulnerable to major declines, since people can choose to rent instead of buying at high prices. In response to the high price inflation they created, the Fed was forced to follow rapidly rising market interest rates and hike the Federal Funds rate at the most aggressive pace in 40 years."

"As a result, Housing Bubble 2.0 is busting and likely has a long way to go. Signs of a busting housing bubble abound. Demand for mortgages fell to a 30-year low in January, which is down 14 percent from last year and down over 50 percent from the covid peak. The supply of houses is now at 9 months of demand, which is a level typically only seen in recessions, as this chart shows. This excess supply of housing suggests much lower prices to come to better balance supply and demand. The US median home price is now down nearly 13 percent year-over-year. As this chart shows, that is the biggest decline in the past 60 years and even worse than the decline seen during the housing bust of 2008-2009!"

"This chart of the Federal Funds rate shows how the central planning bureaucrats at the Federal Reserve created Housing Bubble 1.0 in the early 2000s by slashing interest rates. Then they caused Housing Bust 1.0 by hiking interest rates in the mid-2000s. Then they caused Housing Bubble 2.0 by slashing interest rates in 2020. Then they caused Housing Bust 2.0 by hiking interest rates the past two years."

"As long as we continue to allow and even encourage unelected bureaucrats to try to centrally plan the economy by creating money out of thin air and manipulating interest rates, we will continue to have these boom-and-bust cycles. In addition to causing tremendous economic uncertainty and volatility, as well as bankrupting companies and individuals, this also leads to lower overall living standards by wasting scarce resources. I outlined the solution to this problem in my article “How To Prevent the Boom-Bust Business Cycle”. The sooner we solve this boom-bust problem, the better for all Americans."