Did the housing recession even start?

Posted on July 28, 2023 by grim

From the National Association of Realtors:

NAR Economist: ‘Housing Recession Is Over’

Contract signings picked up the pace last month, and home buyers are increasingly facing multiple offer situations. NAR releases its housing forecast for the remainder of the year and 2024.

Pending home sales rose slightly in June, and the latest indicators are showing a housing market on the mend. Median existing-home sales prices in June soared to their second highest on record in the last two decades, and more buyers are facing multiple offer situations once again, the latest reports from the National Association of REALTORS® shows. NAR’s Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—rose 0.3% in June, the first increase in four months.

“The recovery has not taken place, but the housing recession is over,” says Lawrence Yun, NAR’s chief economist. “The presence of multiple offers implies that housing demand is not being satisfied due to a lack of supply. Homebuilders are ramping up production and hiring workers.” 

Housing inventories remain at historical lows, down 13.6% from even last year’s low levels. “There are simply not enough homes for sale,” Yun said in a recent report. Seventy-six percent of existing homes sold in June were on the market for less than a month, NAR’s data shows.

Home buyers are faced with limited choices, higher home prices and higher mortgage rates. But they may find some relief soon: Mortgage rate increases may be mostly over, and that would bode well for home-buying, Yun says. 

“With consumer price inflation calming close to the Federal Reserve’s desired conditions, mortgage rates look to have topped out,” Yun says. “Given the ongoing job additions, any meaningful decline in mortgage rates could lead to a rush of buyers later in the year and into the next.”

NAR forecasts that the 30-year fixed-rate mortgage could reach 6.4% by the end of the year, followed by 6% in 2024. Over recent weeks, mortgage rates have been nearing 7%, far from their ultra-low 2% or 3% averages just over a year ago. 

Posted in Economics, Housing Bubble, National Real Estate | 67 Comments

I’m going where there’s no recession

Posted on July 27, 2023 by grim

From Reuters:

Fed staff drop US recession forecast, Powell says

U.S. Federal Reserve Chair Jerome Powell said on Wednesday the central bank’s staff no longer forecasts a U.S. recession, and “we do have a shot” for inflation to return to target without high levels of job losses.

Powell told a news conference after the Fed’s latest interest-rate hike that there was “a lot left to go to” see such a soft landing.

“So the staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession,” he said.

Fed staff last November introduced the notion that a recession might be “almost as likely” as their baseline outlook at the time for below-trend growth, minutes of Fed meetings show. In March, on the heels of the banking sector upheaval that had just been triggered by the collapse of Silicon Valley Bank earlier that month, they shifted to outright forecasting “a mild recession” later this year.

The shift by staff to a less pessimistic baseline outcome for the economy dovetails with outlook upgrades by a number of private-sector economists in recent weeks who have done the same in acknowledgment of the economy’s resilience in the face of Fed 5.25 percentage points of rate increases since March 2022.

Posted in Economics, National Real Estate | 33 Comments

Starting to feel a little toppy

Posted on July 26, 2023 by grim

From CNBC:

Home prices continue to climb with ‘striking’ regional differences, says S&P Case-Shiller

Home prices in May rose for the fourth straight month on the S&P CoreLogic Case-Shiller home price index, but regional differences are widening.

The gains come despite a sharp jump in mortgage interest rates during the month.

Prices nationally rose 0.7% month to month, seasonally adjusted. The index’s 10-city composite gained 1.1%, and the 20-city composite gained 1%.

Prices nationally were still down 0.5% compared with May 2022, but they are just 1% below their June 2022 peak.

The 10-city composite fell 1%, year over year, slightly less than the 1.1% decrease in the previous month. The 20-city composite dropped 1.7%, the same as the annual decline in April.

“Home prices in the U.S. began to fall after June 2022, and May’s data bolster the case that the final month of the decline was January 2023,” said Craig Lazzara, managing director at the S&P DJI. “Granted, the last four months’ price gains could be truncated by increases in mortgage rates or by general economic weakness. But the breadth and strength of May’s report are consistent with an optimistic view of future months.”

Lazzara, however, noted that “regional differences continue to be striking,” with cities in the so-called Rust Belt outperforming the rest of the nation. Prices in Chicago gained 4.6%; in Cleveland, 3.9%; and New York, 3.5% — making for the top performers. The Midwest took over the South’s reign as the strongest region.

“If this seems like an unusual occurrence to you, it seems that way to me too. It’s been five years to the month since a cold-weather city held the top spot (and that was Seattle, which isn’t all that cold),” added Lazzara.

Of the 20-city composite, 10 cities saw lower prices in the year ended May 2023 versus the year ended April 2023 and 10 saw higher prices.

Cities in the West, where prices had inflated the most, were the worst performers in May. Seattle, down 11.3%, and San Francisco, down 11%, were the worst.

Posted in Housing Bubble, National Real Estate | 57 Comments

Couldn’t help myself

Posted on July 24, 2023 by grim

From CoreLogic:

CoreLogic Unveils an Insightful Look Back at Barbie Dreamhouse Prices from 1962 to 2023

Posted in Humor, National Real Estate, New Development | 60 Comments

The crazy continues

Posted on July 21, 2023 by grim

From CNN:

US home prices stay near record high, even as sales drop in June

US home prices continued to fall in June compared to a year ago, but that may not be much comfort to home buyers. Even after falling, June’s median price hit the second-highest monthly median price on record going back to 1999, according to a National Association of Realtors report released Thursday.

The median existing home price was $410,200 last month, just 0.9% less than the all-time high from one year ago of $413,800. It marked the fifth month of year-over-year drops in median home sale prices.

Inventory of homes on the market remains historically low, as current homeowners are refusing to sell and hunkering down with their ultra-low mortgage rates that might be half or less of current rates.

“There are simply not enough homes for sale,” said Lawrence Yun, NAR chief economist. “The market can easily absorb a doubling of inventory.”

Sales of existing homes — which include single-family homes, townhomes, condominiums and co-ops — dropped below expectations and were down 3.3% from May to June. Annually, sales were down 18.9% from a year ago, and the seasonally adjusted annualized sales pace dropped from 5.13 million units a year ago to 4.16 million in June.

“Relatively high mortgage rates near 7% and historically low inventory of existing homes on market is hindering sales activity,” said Yun.

June’s sales pace was the lowest since January and the lowest pace for the month of June (typically among the busiest months of the year) since 2009.

Posted in Housing Bubble, Mortgages, National Real Estate | 65 Comments

Recession fading away?

Posted on July 18, 2023 by grim

From CNBC:

Goldman Sachs cuts odds of a U.S. recession in the next year

Goldman Sachs revised down the odds of a U.S. recession happening in the next 12 months, cutting the probability down to 20% from 25% on the back of positive economic activity.

The investment bank’s chief economist, Jan Hatzius, cited a slew of better-than-expected economic data in a research report released Monday.

“The main reason for our cut is that the recent data have reinforced our confidence that bringing inflation down to an acceptable level will not require a recession,” he said.

The chief economist cited resilient U.S. economic activity, saying second-quarter GDP growth was tracking at 2.3%. The rebound in consumer sentiment and unemployment levels falling to 3.6% in June also added to Goldman’s optimism.

The U.S. economy expanded 2% at an annualized pace in the first quarter. Last Thursday, data from the Labor Department showed that initial jobless claims fell to 239,000 for the week ended June 24, well below estimates of 264,000 and marking a 26,000 decline from the previous week.

There are also “strong fundamental reasons” to expect the easing of consumer price rises to continue after June’s core inflation, excluding food and energy, rose at the slowest pace since February 2021.

The investment bank, however, expects some deceleration in subsequent quarters as a result of sequentially slower real disposable personal income growth.

“But the easing in financial conditions, the rebound in the housing market, and the ongoing boom in factory building all suggest that the U.S. economy will continue to grow, albeit at a below-trend pace,” Hatzius said.

Posted in Economics, Employment, National Real Estate | 216 Comments

Find somewhere else to live

Posted on July 17, 2023 by grim

From CBS News:

In ‘warfare against renters,’ homeowners fight affordable housing push

At a packed City Hall meeting, one resident after another stood before the City Council of the suburban Phoenix city of Surprise pleading with officials to block the construction of an apartment complex for seniors and lower-income renters — shouting, heckling and arguing about crime and traffic congestion.  

In the crowd was Nate Pomeroy, a leader in the effort to block the apartment complex. He moved to Surprise in 2018 from Scottsdale after years in California to retire and expected it would be the last home he’d live in. 

Now, he’s not sure he’ll stay. He worries the apartment complex will increase traffic and change the character of the area, which is made up of sprawling subdivisions of Spanish-style homes selling for $500,000 to $700,000.  

The heated debate in Surprise, population 150,000, is being echoed in large and small communities across the country as local officials have pushed to increase the housing supply with small backyard bungalows to subsidized apartment complexes in response to surging rents and home prices since the start of the coronavirus pandemic.  

“It’s just going to turn this into a very high-density area. It’s going to really change the look and feel of where we are, and people aren’t happy about it,” Pomeroy said. “The City Council and city management have not listened effectively. They’re going to build and build and build, and it’s no longer going to be the last place I live.”

Vocal groups of homeowners say they are fearful of what the changes could mean for their communities. Increasingly, they are fighting back with lawsuits, referendums, appeals to state representatives and recall elections in a battle to stave off multifamily housing in their largely suburban neighborhoods.

“It’s the same buzzwords no matter where you are. Some are more veiled than others as far as whether they will flat-out say that renters are second-class citizens,” said Owen Metz, a senior vice president at Dominium, an affordable housing developer that is working on the proposed apartment complex in Surprise. “It’s not everywhere, but there seems to be this growing warfare against renters.”

Homeowners have long put up fights against new developments — the acronym NIMBY, or “not in my backyard,” has been in use for decades — but the battles have grown louder in recent years amid a wave of apartment construction stretching outside of city centers. The debates have also taken on new urgency as surging home prices drive out middle-class workers and lead to an uptick in homelessness, affordable housing advocates said. 

Posted in Crisis, Demographics, National Real Estate, New Development | 14 Comments

Congestion pricing hurts, until it helps

Posted on July 16, 2023 by grim

From ROINJ:

The next ‘Stay in N.J.’ program: Why congestion tax hurts N.J. commuters — but could ultimately help N.J. economy

New York City officials say their congestion pricing system will collect billions for mass transit — and discourage drivers from clogging up Midtown Manhattan. It’s a win-win, as it enables cities to not only raise money to fight climate change, but also help the climate while doing so.

The proposed $17-$23 fee for drivers who enter Manhattan south of 60th Street could go into effect as soon as next year.

U.S. Rep. Josh Gottheimer (D-5th Dist.) isn’t buying it.

He doesn’t think the plan will work — it will only shift traffic and pollution, he said.

He thinks its real purpose is simply as a money grab — for a failed MTA system, he said.

Most of all, he said, it violates the spirt of the Port Authority relationship New Jersey has had with New York for more than 100 years.

The two states have long worked together to determine pricing for buses, trains and cars — in whatever fashion they travel between the two states. And they have long split those fees.

Until now.

“As soon as you get into New York, they, in essence, extend the tunnel further and add another $23 onto the end of the tunnel,” he said. “It’s a total violation of the spirit of the Port Authority cooperative relationship.”

No taxation without the spirit of cooperation?

New York doesn’t seem to care.
…

The best-case scenario for New Jersey may be for people to respond with their pocketbooks.

It will be harder for companies to get their employees to return to work if it means an extra $23 a day. That reluctance can only hurt retail businesses — and commercial real estate prices — in New York City.

It may make it easier to convince NYC companies to open offices in New Jersey, which would keep more tax dollars in the state.

“I think it’s a great opportunity for New Jersey businesses to say — besides the commuting time, besides the cost of commuting, besides the fact that Jersey is just much better than New York — come here, where we support our local businesses, and get home earlier and see your kids go to their baseball game,” Gottheimer said. 

“it’s a huge argument for businesses to come here. I think it’s great that we just did tax incentives out of the state for that. We should do more.”

Posted in Demographics, Economics, Employment, New Development, New Jersey Real Estate, NYC | 24 Comments

NJ takes #2 spot for May

Posted on July 12, 2023 by grim

From CoreLogic:

CoreLogic: US Annual Home Price Growth Drops to the Lowest Rate in 11 Years in May

CoreLogic®, a leading global property information, analytics and data-enabled solutions provider, today released the CoreLogic Home Price Index (HPI™) and HPI Forecast™ for May 2023.

Annual U.S. single-family home price growth slowed for the 12th straight month in May, falling to a 1.4% increase year over year. The last time CoreLogic’s Home Price index saw annual growth fall to less than 2% was in early 2012, but U.S. appreciation still remained positive for the 136th straight month in May.

Following recent trends, a significant number of Western states saw prices decline in May from the same time in 2022, reflecting out-migration from less-urban locations where people moved during the height of the pandemic and the significant loss of affordability due to those resulting home price surges. Northeastern states and Southeastern metro areas continue to see larger home price gains compared with other areas of the country, due to both workers slowly moving back to job centers in some areas of the country and settling in relatively affordable places in others.

“After peaking in the spring of 2022, annual home price deceleration continued in May,” said Selma Hepp, chief economist at CoreLogic. “Despite slowing year-over-year price growth, the recent momentum in monthly price gains continues in the face of recent mortgage rates increases.”

“Nevertheless, following a cumulative increase of almost 4% in home prices between February and April of 2023, “Hepp continued, “elevated mortgage rates and high home prices are putting pressure on potential buyers. These dynamics are cooling recent month-over-month home price growth, which began to taper and is returning to the pre-pandemic average, with a 0.9% increase from April to May.”
…
Among states, Maine, ranked first for annual appreciation in May (up by 7.2%), followed by New Jersey (up by 7.1%) and Indiana (up by 6.9%). Eleven states and one district recorded annual home price losses: Idaho (-8%), Washington (-7.5%), Nevada (-5.6%), Montana (-5.3%), Utah (-4.3%), Arizona (-4.2%), California (-3.5%), Oregon (-3.1%), Colorado (-2.7%), South Dakota (-1.3%), New York (-0.3%) and the District of Columbia (-0.1%).

Posted in Economics, Housing Bubble, National Real Estate, New Jersey Real Estate | 152 Comments

Inflation hits NJ colleges

Posted on July 11, 2023 by grim

From the Star Ledger:

6% tuition increase approved for Rutgers, more than twice last year’s hike

Tuition and fees at Rutgers will increase by 6% in the next academic year under a budget the state university’s board of governors passed Monday.

For the typical in-state student, the tuition increase will cost an additional $774 per year, amounting to an annual tuition of $13,674, plus an additional $200 for fees. Meal plan costs willrise by 7%, and Rutgers housing will increase by 5%.

The tuition hike is twice last year’s 2.9% increase and beyond the rate of inflation, which was 4% for the year ending in May.

In 2021, tuition rose by 2.5%, and in 2020, there were no increases due to the pandemic.

Statewide last year, only five schools — Rowan, Centenary, and Seton Hall Universities, the College of New Jersey, and Pillar College – increased tuition by 4% or higher.

Rutgers officials attributed the 2023-2024 higher costs to general inflation and increases in salaries and wages, utilities and commodities, and employee benefit costs, including health insurance premiums and pension contributions.

University officials noted that the union contracts following the five-day faculty strike in April led to a nearly 8% increase in labor costs for this year and for the duration of the four-year contract. They added that in November, state health benefit costs increased by more than 22%, which cost the school $48 million.

Posted in New Jersey Real Estate, Unrest | 32 Comments

Where you shouldn’t buy

Posted on July 10, 2023 by grim

From Yahoo Finance:

These Are the 10 Most Overpriced Housing Markets in the U.S. — 5 Are in Florida

10. Nashville, Tennessee

  • Average listing price: $420,932
  • Expected home value: $296,827
  • Difference between home value and list price: 41.81%

9. Tampa, Florida

  • Average listing price: $361,065
  • Expected home value: $252,643
  • Difference between home value and list price: 42.9%

8. Deltona, Florida

  • Average listing price: $334,978
  • Expected home value: $233,050
  • Difference between home value and list price: 43.74%

7. Detroit

  • Average listing price: $226,101
  • Expected home value: $157,046
  • Difference between home value and list price: 43.97%

6. Palm Bay, Florida

  • Average listing price: $345,520
  • Expected home value: $238,308
  • Difference between home value and list price: 44.99%

5. Lakeland, Florida

  • Average listing price: $303,766
  • Expected home value: $209,260
  • Difference between home value and list price: 45.16%

4. Memphis, Tennessee

  • Average listing price: $225,958
  • Expected home value: $154,575
  • Difference between home value and list price: 46.18%

3. Charlotte, North Carolina

  • Average listing price: $355,613
  • Expected home value: $240,670
  • Difference between home value and list price: 47.76%

2. Cape Coral, Florida

  • Average listing price: $375,812
  • Expected home value: $251,100
  • Difference between home value and list price: 49.67%

1. Atlanta

  • Average listing price: $357,677
  • Expected home value: $236,627
  • Difference between home value and list price: 51.16%

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate, Where's the Beef? | 22 Comments

Mortgages still strong

Posted on July 9, 2023 by grim

From CoreLogic:

Loan Performance Insights – June 2023

30 Days or More Delinquent – National

In April 2023, 2.8% of mortgages were delinquent by at least 30 days or more including those in foreclosure. This represents a 0.1 percentage point decrease in the overall delinquency rate compared with April 2022.

Mortgage Delinquency and Foreclosure Rates Remain Near Historic Lows in April

Although almost a dozen states and more than 150 metro areas posted year-over-year increases in overall mortgage delinquency rates in April, U.S. loan performance remains resilient, with delinquencies and foreclosures continuing to hover near record lows. The national overall delinquency rate increased slightly from March to April, but this is a typical seasonal pattern, as tax bills can stretch homeowners’ budgets in the short term and result in late mortgage payments for some borrowers.

Loan Performance – National

CoreLogic examines all stages of delinquency to more comprehensively monitor mortgage performance.

The nation’s overall delinquency rate for April was 2.8%. The rate for early-stage delinquencies – defined as 30 to 59 days past due – was 1.4% in April 2023, up from April 2022. The share of mortgages 60 to 89 days past due was 0.4%, up from April 2022. The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was  1.1% down from 1.4% in April 2022.

As of April 2023, the foreclosure inventory rate was 0.3%, unchanged from April 2022.

Overall Delinquency – State

Overall delinquency is defined as 30 days or more past due including loans in foreclosure.

In April 2023, 11 states posted year-over-year increases in overall delinquency rates, while 11 states were unchanged. The states with the largest declines were Alaska (-0.7%), Hawaii (-0.5%) and New York (-0.4%).

Posted in Economics, Foreclosures, Housing Bubble, Mortgages, National Real Estate | 4 Comments

Welcome Back

Posted on July 7, 2023 by grim

From Mortgage News Daily:

Highest Mortgage Rates Since November

It seems like just last week (because it was) we were commenting on the extreme LACK of volatility in the mortgage rate landscape.  Starting last Thursday, things have changed quickly, and today was the worst of the bunch.

As is often the case, bad news for mortgage rates followed good news for the economy.  Several economic reports suggested more job growth and business activity than expected.  Since the Fed is looking for evidence of the opposite before it abandons plans to continue hiking rates, markets took this as an immediate comment on the likelihood of additional rate hikes.

The reaction in the bond market was so severe that mortgage rates made their biggest move in weeks, jumping even higher into the 7% range.  At the same time lender rates were being published for the day, Freddie Mac released its weekly survey showing 30yr fixed rates still down at 6.81%–higher than last week, but nowhere near a reflection of the move we’ve seen since then.

Posted in Economics, Mortgages, National Real Estate | 75 Comments

Room to run?

Posted on July 6, 2023 by grim

From Yahoo Finance:

Housing expert: ‘Convincing price rebound to come next year’

Home prices are expected to decline slightly this year before growing again in earnest in 2024.

“We had been among the more bullish outlooks for this year for home prices, and we’ve taken our home price growth forecast and revised it so we expect home prices to slip for the year, but less than 1%,” Danielle Hale, Realtor.com’s chief economist, told Yahoo Finance Live (video above).

“We’ll start to see home prices rebound more convincingly in 2024,” she added.

Still, the pace of growth will be nothing like sellers or buyers have seen in a while. A normal pace, that is.

For instance, 117 economists and housing experts polled by Zillow expect home prices to increase at an annual rate of 3.5% until 2027 after bottoming out this year. That would be a more stabilized trend last seen in the 1990s before the housing boom and bust of the 2000s and follows the rapid run-up in housing values during the pandemic.

“A return to more normal growth would be welcome after the rollercoaster ride that home prices have been on lately,” Jeff Tucker, Zillow’s senior economist, said in the survey release.
…
The annual return on single-family homes reached nearly 13% between 2021 and 2022 — with the median US single-family home selling at $373,700 in June of 2021 and $420,900 in June 2022, according to data tracked by the National Association of Realtors.

That’s a sharp contrast to so-called normal growth. For instance, the median price of a single-family home grew 63.5% from $85,400 in 1987 to $139,600 in 2000, or an average annual increase of 4.8% over those 13 years, according to data provided by the National Association of Realtors.

Although housing prices are declining versus last year, they have been up month over month for the last three months. For instance, the latest S&P CoreLogic Case-Shiller US National Home price index showed prices dropped 0.2% annually in April but increased by 0.5% compared with March.

Much of that increase is because of an imbalance in supply and demand. The number of previously owned homes on the market was at a record low in May, which helps to keep prices elevated, according to the National Association of Realtors.

Posted in Economics, Housing Bubble, National Real Estate | 110 Comments

How much more unaffordable can it get?

Posted on July 5, 2023 by grim

From ATTOM:

Home Affordability Worsens Across U.S. During Second Quarter Of 2023 As Home Prices Tick Upwards

ATTOM, a leading curator of land, property, and real estate data, today released its second-quarter 2023 U.S. Home Affordability Report showing that median-priced single-family homes and condos are less affordable in the second quarter of 2023 compared to historical averages in 98 percent of counties around the nation with enough data to analyze, continuing a pattern dating back to early 2022.

The report shows that affordability has worsened across the nation this quarter amid a renewed jump in home prices that has pushed the typical portion of average wages nationwide required for major home-ownership expenses up to 33 percent.

The latest portion is considered unaffordable by common lending standards, which call for a 28 percent debt-to-income ratio. It also marks the highest level since 2007 and remains well above the 25 percent figure from early in 2022, when a spike in home-mortgage rates had just begun to raise ownership costs.

The worsening picture facing home buyers reflects the second shift in the U.S. housing market in the past year, coming as the median single-family home price has shot up to a new record following three quarters of declines. Those declines strongly suggested an end to a decade-long boom period lasting from 2012 into the middle of 2022.

Nationwide, the median single-family home value has risen 10 percent from the first to the second quarter of 2023, to $350,000 – one of the biggest quarterly increases in the past decade. The second-quarter median sits 2 percent above the previous peak hit a year earlier before the market stalled and prices dropped.

This Spring’s price increases have helped to push the typical cost of major ownership expenses up far faster than wages, resulting in declining home affordability.

“The U.S. housing market has done an about-face following a downturn that threatened to usher in an extended period of flat or falling prices. With that has come another blow to how much house the average worker around the country can afford,” said Rob Barber, CEO for ATTOM. “Whether this is just a temporary blip amid this year’s peak buying season or a sign of another extended price surge is anyone’s guess. But any predictions of a market demise were certainly premature – and house hunters are feeling the pinch.”

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 60 Comments