What are your housing bubble predictions half way through the year? Six months ago: 'Here is my stopped clock recession prediction from a couple of days back: Was recession permanently avoided in 2023, or merely postponed? I predict the debate will continue until at least one of these three doors is entered: 1) recession begins. 2) inflation drops below 2%. 3) the Treasury yield curve normalizes.'"

Another said: "Because Biden wants to be re elected the democrats will pressure the FED to lower interest rates. I predict the stock market will continue to make gains for a few months and they will fake inflation numbers. Second half of 2024 IDK but I think 2025 will be bad. 2024 Sell in May and go away."

One year ago: 'Mid-year prediction: I will complete above ground demolition on the teardown house in Southern Colorado. I may or may not hire someone to come scoop out the pit and demo the damaged foundation, that might not happen until next year. Prediction for Denver: things there will only get worse. More homeless, more crime, more road rage. NOTHING will improve under Mayor-elect Johnston. Denver will not escape the 'doom loop' that it voted upon itself."

Another: 'I predict we have not heard the last of the banking crisis that erupted this spring, then mysteriously disappeared. The underlying fundamental reality of underwater balance sheets, due to rising rates hammering the value of long term bonds in banks’ asset portfolios, didn’t magically go away. At some point, this financial volcano will erupt again, accompanied by proclamations that, “Nobody could have seen it coming!”

From Bankrate. "Prices hit a new all-time high in May, according to the National Association of Realtors (NAR), which reports that median existing-home prices were up 5.8 percent over last year — the 11th month in a row of year-over-year jumps. 'Prices will remain firm and will not decline on a national level.' — Lawrence Yun, Chief Economist, National Association of Realtors."

The Wall Street Journal. "Historically, once the unemployment rate has drifted up by a half-point from its recent low over the past year, it has gone on to rise a lot more, and the economy is in recession. 'This is what the economy looks like when it is at a sustainable simmer,' said Ernie Tedeschi, a former Biden administration economist who is now at Yale University’s Budget Lab. 'This time really may be different. The unemployment rate may be drifting higher because it is settling into its natural rate.' By the same token, 'the Fed needs to take seriously that while the labor market isn’t deteriorating quickly, it’s not as robust as it might seem on paper.'"

Banker & Tradesman in Massachusetts. "The real estate market recovery was sluggish at first, but by 2020, home prices had handily recovered from the Great Recession and were hitting new highs. But then came the pandemic. Home prices over the past four years have gone absolutely bananas, both around the country but especially in Greater Boston, where the median price for a home is now approaching $1 million within the Interstate 495 belt, according to Banker & Tradesman’s publisher The Warren Group. Statewide, the median home price hit $590,000 during the first five months of 2024, the company also said. That, in and of itself, is an astounding number given it covers everything from Back Bay mansions to modest homes in small towns well outside of the Boston area’s orbit."

"Jeremy Grantham, co-founder of Boston-based investment powerhouse GMO LLC, has been direct and dire in his prediction of where the real estate market is headed. Earlier this year Grantham warned not just of trouble ahead for real estate in the U.S., but globally as well. 'In real estate, everything everywhere is in a dangerous bubble,' Grantham said. Sheila Blair, who headed the FDIC before, during and after the Great Recession, when home prices fell by more than 30 percent, used the 'B' word herself in an interview late last year. 'Talk about a bubble. That’s a classic supply-demand imbalance,' Blair told CNN of the big rise in the median price of a home in the U.S."

Business Insider. "The US housing market has officially entered bizzaro world. The law of supply and demand is a basic principle of any free market, and right now, it's being subverted by strange happenings in the real estate market. The supply of homes for sale is rising while demand for homes is falling. And yet housing prices continue to hit record highs. But the dynamic of falling demand, rising supply, and rising home prices can't last forever. Market strategist Chris Vermeulen highlighted a plateau in home builder activity as a reason to believe that the housing market could experience a major 'leg down.' 'The reality is that I think we're going to see this collapse,' Vermeulen said."

NPR on Florida. "State Rep. Vicki Lopez has a recommendation for prospective homebuyers in her district: 'I'm telling people not to buy a condominium now.' Lopez, who represents part of Miami-Dade County, said only a handful of condo associations in her district have completed their structural integrity reserve study. Others are still trying to find a company to do it prior to the December deadline. She noted the state won’t penalize associations as long as they try to fulfill the requirements. Lopez said the reforms are playing a role in the slowdown of condo sales. 'We know that banks and mortgage brokers are not giving mortgages to buildings who don't have reserves, adequate reserves. They just don't want to take the risk,' Lopez said. 'The other side is that people are trying to dump their condos because they can't afford the assessments.'"

From CNN. "Last year, when Jennifer Hernandez received notice that the mortgage payments on her Houston home would jump about $2,000 per month, she was stunned. Hernandez refinanced her home loan in 2016 using an adjustable-rate mortgage loan, which has a low introductory rate for a fixed initial period. When mortgage rates increase, many ARM loan holders, like Hernandez, experience the unpleasant shock of significantly higher monthly home payments. For thousands of Americans like Hernandez who took out ARM loans five years ago, before interest rates shot up to a four-decade high, that shock is coming this year."

"According to data from Intercontinental Exchange, 1.7 million homeowners have bought homes with adjustable-rate mortgages since 2019. Many buyers who bought 5-year ARMs – one of the more popular offerings – will graduate into significantly higher monthly payments this year. Hernandez, who is herself a loan officer, had misremembered the terms of her $1.1 million loan: rather than a 10/1 ARM, which has a fixed rate for the first ten years and resets every year after that, Hernandez had taken out a 7/1 loan. 'I just got caught blindsided,' she said. This coming October, she suspects her monthly payments will adjust higher. 'I’ve made it work, but now I’m going to have to figure out how to make it work again this October,' she said. 'It’s stressful having to worry about it. I’m just praying that when my October adjustment comes around, rates have come down a little bit.'"

From Moneywise. "The national office vacancy rate hit a record 19.8% in the first quarter of 2024, according to a preliminary report from Moody’s Analytics. And it could get worse, as companies continue to lease substantial space despite a decline in the in-office footprint. 'The doomsday scenario has yet to play out,' wrote Moody’s experts. 'With significant lease rollovers and shifting interest rate expectations, uncertainty remains over exactly when office vacancy rates will truly peak.' In New York City, office vacancy levels have topped 20% since the COVID-19 pandemic began in 2020, reports CNN, citing data from the NYC Comptroller. Census Bureau data shows the city’s estimated population slumped from 8.80 million to 8.34 million between April 2020 and July 2022, a drop of roughly 468,000 residents — which represented nearly 5.3% of the city’s total population."

York Region in Canada. "Once word got out that rates were pretty much a sure thing to come down, nobody was making the first move. Buyers wanted that lower rate before committing to a purchase. Sellers weren’t going to take a hit on price knowing full well lower rates bring more buyers into the marketplace. So for the last two weeks of May all we heard was, 'After you — no, no, after you.' OK, I’ve been on this soapbox before. I recognize the view. Forgive me, there’s a moral to this story. I came across this quote 'the best prophet of the future is the past.' It is being forecasted that there will be another two to three rate decreases before the end of the year."

"So if you’re a buyer are you going to wait until the end of the year to purchase? No you’re not! It will be too late. Now is the time to 'marry the house, date the rate.' Get in the market now when inventory levels are probably at their highest. Choosing a variable rate is exactly what dating the rate is about."

The Globe and Mail in Canada. "A flood of condo units are being listed in Toronto. At the end of May, there were 6,350 active condo listings in the city, an increase of 94 per cent from the previous May, according to Toronto Regional Real Estate Board figures compiled by realtor Scott Ingram. Condo inventory is nearly 70 per cent higher than the 10-year average for last month. Mr. Ingram said that investors – of which there are plenty in the condo market – are likely facing pressure from variable-rate mortgages that are poised to renew at higher interest rates. Others may be looking to realize their gains in the property market, which has less upside for price appreciation amid steeper borrowing costs. 'The thing that exacerbates all this is you don’t have investors buying right now, because the prospects don’t look pretty,' he said."

"At this time of year, condo inventory typically peaks. But listings have continued to rise in June, according to Mr. Ingram’s tracking of the numbers. He expects more growth, but perhaps at a weaker rate. In a world with higher interest rates, where investors can earn risk-free returns of 5 per cent, 'it does make being a landlord less attractive,' Mr. Ingram said. 'Appreciation is not happening. Things aren’t going up 10 per cent a year' like before."

From News.com.au. "Despite tens of billions of dollars being spent to address Australia’s crippling housing crisis, a top economist has delivered a stark assessment of how long it will take to turn the tide. And it’s not good news for those battling skyrocketing rents and runaway home prices. Shanker Ramakrishan is an economist and finance consulting who has worked at the front lines of Sydney’s real estate sector for decades. Mr Ramakrishan said he’s never seen things quite this bad. 'Things are really tough out there, whether someone is trying to buy their first home or struggling with the cost of renting a home,' he said. 'Unfortunately, I don’t see an end in sight – not for at least another 10 years.'"

The Sydney Morning Herald. "'This will take decades to sort out,' says Michael Fotheringham, managing director of the Australian Housing and Urban Research Institute. 'Trying to fix housing in three or five years is just not going to happen. We need to think longer, and we need to have a stable, long-term plan to make it work.'"

"What role does negative gearing play? Negative gearing, in a nutshell, is when expenses on an investment property (such as mortgage payments) outweigh the rental income being earned, and the owner incurs a loss. But under Australia’s tax system, people who are 'negatively geared' in property can deduct their rental losses from other taxable income, such as salary and wages, resulting in a lower overall tax bill. Combined with a capital gains tax discount, negative gearing is the most contentious issue in housing policy. Many, including the Greens and the Grattan Institute, want to wind it back or get rid of it entirely. The government has not flagged any plan to change current policy and the Coalition supports keeping it."

"Running an investment property at a loss might seem silly. Yet plenty of people have been keen to do it – and simultaneously with multiple properties. This is at least partly because of the generous way we tax capital gains today."

Interest New Zealand. "So, what's 2024 to be? A game of two halves? Or just one rather soggy (w)hole? Well, while it would be nice to think 'the best is yet to come' for this year, it looks like it would be wishful thinking. Very wishful thinking. As I write this about halfway through the year, we appear as a country to have descended into something of a funk. The previous mental resilience that we saw in the face of high interest rates seems, all of a sudden, to have crumpled rather quickly. The economy is down. People appear to be down. We are in, well, a soggy hole."

"In very simplistic terms, we need the following chain reaction: Inflation comes down, the Reserve Bank cuts the Official Cash Rate, retail interest rates (mortgages etc) come down, people feel wealthier and start spending more money again, businesses start to pick up with the increased spending, more jobs are created. Somewhere in the midst of this the housing market will perk up (this could happen at any stage in the chain reaction; remember this is a country that added 40% to its house prices during a pandemic - there's no bad time for a housing market surge in New Zealand)."

"I think the economy has in the past three months, and even more so perhaps in the last six weeks, shown signs of really buckling under. Spending has dried up, the signs are the job market is tightening quickly, the economy is as flat as a pancake. Some economists are already forecasting that GDP will have gone backwards again in the June quarter 2024. And, yes, house prices have gone backwards again and economists are quickly slashing forecasts of future price growth."

"However, I guess if we want to be the ultimate in glass-half-empty pessimists we could also ask, yes, okay - but what if inflation DOES in any case stay somewhat stubbornly high? Well, that would be when we could really start to worry, I think. And that's why the second half of this year is so important, kicking off with those inflation figures on July 17. If, particularly the domestic inflation figures, stay still quite resiliently high then we are in trouble. Have no doubt. Because the RBNZ would feel compelled to hold the OCR high and the economy would - based on what we are seeing now - start to be squeezed beyond pain."