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The Difficulty Facing Housing May Be Too-High Price Increases

A report from Market Watch. “The S&P CoreLogic Case-Shiller 20-city index rose a seasonally adjusted 0.1% in March, compared to February, and was 2.7% higher compared to a year ago. That was the slowest pace of annual growth since August 2012.”

“‘Given the broader economic picture, housing should be doing better,’ said David Blitzer, chairman of the index committee. ‘Mortgage rates are at 4% for a 30-year fixed-rate loan, unemployment is close to a 50-year low, low inflation and moderate increases in real incomes would be expected to support a strong housing market. Measures of household debt service do not reveal any problems and consumer sentiment surveys are upbeat. The difficulty facing housing may be too-high price increases.'”

The Wall Street Journal. “‘Compared with previous snapback in mortgage rates, it hasn’t been nearly the impact or the response by buyers or sellers that we would have expected,’ said Zillow economic analyst Matthew Speakman. ‘It’s a bit perplexing given the strength of the economy.'”

From Inman News. “‘Home price gains continue to slow,’ David M. Blitzer, chairman of the index committee said. ‘The patterns seen in the last year or more continue: year-over-year price gains in most cities are consistently shrinking. Double-digit annual gains have vanished. The shift to smaller price increases is broad-based and not limited to one or two cities where large price increases collapsed.'”

“‘House prices have risen consistently over the last 31 quarters,’ Dr. William Doerner, supervisory economist at FHFA said. Although price growth is still positive, the upward pace is softening across the country, especially among states with the largest supplies of housing.'”

From Realtor.com. “A federal crackdown on certain no-money-down home loan programs may hurt thousands of cash-strapped home buyers. Concerned about risky mortgages reminiscent of the housing bust, the U.S. Department of Housing and Urban Development recently called for national groups to stop lending down payments to home buyers seeking Federal Housing Administration loans.”

“Buyers who don’t pony up a down payment are more likely to default on their loans, and FHA loans require qualified buyers to put down as little as 3.5% of the purchase price. In April, home list prices reached a record median $310,000 nationally, according to realtor.com® data. That’s led about 30% of buyers today to tap into some sort of down-payment assistance program, according to the Urban Institute policy research group.”

“Former FHA head Ed Golding, now an adviser to the Urban Institute, says HUD is correct to rein in national down-payment groups. He and the feds aren’t as concerned with community-based housing programs that provide assistance to much smaller numbers of local buyers. After all, the housing crisis a decade ago was set off when buyers who weren’t able to afford their loans began defaulting on them.”

“‘You don’t want the allow the riskier part of the market to hurt what is important,'” says Golding.”

This Post Has 42 Comments
  1. ‘In April, home list prices reached a record median $310,000 nationally, according to realtor.com® data. That’s led about 30% of buyers today to tap into some sort of down-payment assistance program’

    Well, pulling the rug out from under 30% of the market could have an effect.

    Here’s the headline from the UHS.com article:

    You Won’t Believe What Trump Is Doing to Mortgage Assistance Programs

      1. The “ housing should be doing better” Case-Shiller index spokesman comment really struck me somehow in indicating how the experts have come so fully to treat housing as any other equity-type investment vehicle instead of as an expense /cost center for individuals who have to be able to AFFORD it. Oh look the delta is less positive that would be indicated by these market factors ; how come?! We have to get housing divorced from speculative markets and recognize that whatever else the debt systems are doing, it is a giant part of the problem for the 99% in the US and globally that systems are encouraging even increased speculation in this realm instead of allowing price and demand determination to be set on the ground by actual consumers and product purveyors

    1. Whos gonna buy all those houses on sale from iBuyers??? Or should I call them iSellers? Or just iAm*ucked?

      1. The Chinese are coming back to revive the market duh. IPO millionaires will also be returning from celebration vacations and ready to empty there gucci briefcases full of cash to purchase the high end market.

    2. “The difficulty facing housing may be too-high price increases.”

      That’s why these guys pull down those tall dollars!

  2. ‘Given the broader economic picture, housing should be doing better’

    Has anyone heard of a recession in NYC or Miami? Cuz their prices have been sinking like a turd in a well for years.

    ‘The difficulty facing housing may be too-high price increases’

    Wa? How can prices go too high? And if they’re too high, doesn’t that suggest, (gulp) lower prices ahead? Good thing everybody has been putting 20% down.

    1. The “broader economic picture” is only benefitting a sliver of the folks in this country, and they’ve all already bought houses.

  3. ‘Compared with previous snapback in mortgage rates, it hasn’t been nearly the impact or the response by buyers or sellers that we would have expected’

    Bad news for venture capital shack flipping Matt. You know what they say about assuming.

  4. Well what is the the nationwide buy vs rent decision look like? Where I live renting is about half the cost. No chance of appreciation, but no chance of depreciation either,

  5. In spite of a huge segment of the population being priced out of the market , the press seems to be cheerleaders for higher prices.

    Than the equity locust raise the rents so they can sustain their bubble price investment.

    The hard working middle class average wages segment of the population can’t obtain the AMerican dream when they can barely afford rent prices . The whole situation is just a nightmare to me.

  6. boots

    Went on a long walk on Saturday in a ritzy nabe in Bethesda.
    Lots of inventory for sale, ~800K – $2M. Looked it up on Z.
    Most were on the market more than 90 days.
    Many had laughable price cuts of 5-10%.
    There were more teardowns/new construction for sale than there were existing housing.
    Teardown/rebuilds are utter trash. Example: https://www.zillow.com/homes/for_sale/Bethesda-MD/fsbo,fore,new,cmsn_lt/37182281_zpid/37406_rid/globalrelevanceex_sort/38.993255,-77.110634,38.969702,-77.147842_rect/14_zm/0_mmm/?

    The “street view” in the pix show that house that was torn down to build this crap. The old house isn’t great, but at least it looks like it was built with some love and care. This new stuff is obviously fake.

    1. Same thing here — overpriced teardown-flips gathering dust on the market. One flipper here has actually been raising their prices in response to the lack of offers.

      A glut of luxury housing no one can realistically afford.

    2. Trying to determine whether my wife’s cuz cashed out in time (Bthsda home went on the market earlier this year). Will look into it further…

  7. “One flipper here has actually been raising their prices in response to the lack of offers”

    hmm… guess that makes sense when you compare revenues in companies and stock prices. perhaps the more potential crater a shack has would be the level set for the list price. Wasnt some doomed realtor on here promoting Lyfts IPO? Bet he would agree on the theory of higher pricing for these unwanted shacks. btw, i the zildo estimates for next year in my area are .7 higher than last time i looked. i better get in before i am priced out FOREVER!

  8. What I thought made America great in the past was that the majority middle class had reasonable pricing on almost everything.

    Does the average wages earner have any power today in terms of sitting prices? I don’t think so. It’s all a rigged deck in terms of pricing of almost anything.

    1. “the majority middle class had rea$onable pricing on almost everything.”

      Well, what is the value of a “digital device” ?

      PHENOMENAL CAMERA IN A $400 PHONE
      At $399 and $479, respectively, the Pixel 3A and 3A XL are great deals
      By Dieter Bohn, Verge

      1. A roam anywhere (mostly) phone communications (actual real voice)
      2. A great camera
      3. A decent computer (compared to 1999)
      4. A word processor
      5. A calculator
      6. A instant delivery mail messaging tool without postage per item.
      7. A video game
      8. A handheld movie theater with films @ instant demand
      9. A voice & visual recording device
      10. A financial execution$ tool
      11. A credit card
      12. …

      Well, eye think ya get the idea, now go back to 1995 & purchase each one of those attribute$ in separate device$.

      Like the .0004 oz of ink in printer cartridge$, it’$ “Thee $ervice Fee$” that is killing it for Profit$!

      1. PHENOMENAL CAMERA IN A $400 PHONE
        At $399 and $479, respectively, the Pixel 3A and 3A XL are great deals

        By Dieter Bohn

  9. Man. I have given hope. I am so sick of this bullsh!te housing and situations. Expensive houses and high rents. I almost wish we got nuked by Iran or china… hell, it would put us out of this misery of life.

    A life where you work, work, work and traffic and crap… just to have No money left at the end of the month… housing, health care, taxes… it’s vomiting.

    Yeah. I not putting 120K down for a starter home for the privilege of commuting for 1 hr + and make 3K+ payments for 30 years.

  10. My assessment of the zeitgeist of comments here is aligned with both U.S. and Europe: Elites + financialization a la central banks + corp. cronyism have strip-mined the real economy; transferring and concentrating wealth at the top. This gave U.S. Trump and the Eurozone Brexit+Itexit+Frexit (IMHO). Populism is on the rise. “The peasants are revolting.” – Wizard of Id. You reap what you sow…

      1. So the bottom line of the article is that we should cut our standard of living. That is exactly what every globalist since Reagan has been inflicting on the US so the world will have more level wealth. Japan ate our lunch under Carter just like China ate our lunch under Obama. Trump’s deficits are lower than the average under Obama and we are finally making progress against China. I am glad Trump is using the same expert that helped prevent Japan from becoming the dominant economy in the 1980s which the globalists back then said was inevitable.

        1. That is exactly what every globalist since Reagan has been inflicting on the US so the world will have more level wealth.

          The question is “why”? You would think they would each want to concentrate the most wealth in their country just to make themselves as wealthy as possible. Unless wealth isn’t that fun if you don’t have lots of desperate complaint servant applicants.

          1. The rich are not cutting their standard of living they are increasingly their profits using overseas labor and bringing in illegals to be their maids and gardeners.

        2. $ad.

          ” … Without raising national $aving — highly unlikely under the current U.S. budget trajectory — trade will simply be shifted away from China to America’s other trading partners.

          With this trade diver$ion likely to migrate to higher-co$t platform$ around the world, American consumer$ will be hit with the functional equivalent of a tax hike.

          Lighthizer as cluele$$ today as he was then
          Ironically, Trump has summoned the same Robert Lighthizer, veteran of the Japan trade battles of the 1980s, to lead the charge against China. Unfortunately, Lighthizer seems as clueless about the macro argument today as he was back then.

          In both episodes, the U.$. was in denial, bordering on delu$ion.

          Basking in the warm glow of untested $upply-$ide economic$ — especially the theory that tax cut$ would be $elf-financing — the Reagan administration failed to appreciate the links between mounting budget and trade deficit$.

          Today, the seductive power of low intere$t rate$, coupled with the latest $train of voodoo economic$ — Modern Monetary Theory — is equally alluring for the Trump administration and a bipartisan consensus of China bashers in the Congress.

          The tough macroeconomic constraints facing a $aving-$hort U.$. economy are ignored for good reason: there is no U.S. political con$tituency for reducing trade deficit$ by cutting budget deficit$ and thereby boo$ting dome$tic $aving$.

          America wants to have its cake and eat it, with a health-care system that swallow$ 18% of its GDP, defen$e $pending that exceed$ the combined sum of the world’s next $even large$t military budget$, and tax cut$ that have reduced federal government revenue to 16.5% of GDP, well below the 17.4% average of the past 50 years. “

      1. The elites have always found the peasants revolting but now they have cause to fear them

        1. It’s the circle of life. The problem is not being an elite most of the time and then being confused for an elite at the wrong time.

  11. “Julian Assange is a dick. It’s important you understand that.

    Assange and WikiLeaks revealed the American military’s war crimes, the American government’s corruption and the American corporate media’s pathetic servile flattery to the power elite. So, if you’re a member of our ruling class, you would view those as textbook examples of dickery.

    In a moment I’m going to list all the ways Julian Assange changed the world by being a dick.”

    https://www.zerohedge.com/news/2019-05-28/18-ways-julian-assange-changed-world

    P.S. Seth Rich was murdered by the DNC and Clinton machine (posting this statement would likely get you banned from Facebook and Twitter).

    1. I think that the necessity defense should apply to Assange. Yes he committed crimes but he exposed and prevented bigger crimes.

      1. But what did he do that was actually a crime if the first amendment means what we’ve said it means all this time?

        1. that was actually a crime if the first amendment

          Does that apply if he is not a US citizen?

          1. That occurred to me after I posted. I don’t think our bill of rights necessarily applies to foreigners in the same way it applies to our own citizens. But I guess I wasn’t thinking about that because I assume if it was me they would be doing the same thing to me that they are doing to him. But since it’s him that does make it a little murkier. As a country we’re probably not all on the same page about how we feel about a foreigner telling us the truth about ourselves.

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