Jerome Powell is NOT "Breaking The Housing Market"

Last week every real estate news source attempted to blame Federal Reserve Chair Jerome Powell for an impending housing crisis when the Fed raised rates again by 0.75%. And, yet, the housing market is still not broken. 

The truth is, NO ONE knows what WILL happen, it's a fool's errand to try to predict it.

How do I know?

Here is one of the preeminent and most often quoted pundits Lawrence Yun, the Chief Economic of the National Association of Realtors. After the latest Fed move, he wrote:

He says rates are at their high. What happens the next day, rates go up another 0.25%!!!!!!

I really don't understand how this guy has kept his job. I would think the NAR could hire the best economist in the US to help understand the market, but this guy seems to merely cheerlead. Or, perhaps that is what the NAR wants in the position? Hmmmm..

So, how is the market holding up given the rise in interest rates and the overall economic challenges? Well, its quite ordinary.

While many activities in the COVID pandemic were historic anomalies, it appears that the housing market is maintaining its demand despite the higher rates and higher prices. Prices are still higher than both 2020 and 2021 by a good margin, though they are correcting a bit.

But, when compared to the history of the housing market, this is what we call normal. Take a look at the median sales price data since 2013 and you see a consistent upward rise with almost constant and regular adjustments along the way.

So, in order to sell advertising, the housing news industry has to come up with something. So, here is Yahoo Finance AGAIN with "The Housing Market is Already Breaking in These 15 Cities."

So, what is the "evidence" of this housing market BREAKING?

Of 100 cities, 15 have higher than normal cancellation rates of contracts.

Now, the article does not tell you that the 15 is a set of 15 out of 100, you have to go to the source (Redfin) to find that. Second, the article does not state what a regular cancellation rate is, it merely lists these in order of the highest. Finally, they do not share how this cancellation rate is a sign of the market BREAKING. Sure, some buyers are backing out, but in my experience this year, every broken escrow resold almost immediately. Now, that's just me, so I don't want to pretend that's evidence. But the evidence is, and continues to be, both that inventory is still relatively tight and that the sales prices are not dropping.
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Bill Gross, The LAProbate Expert
I am a real estate broker in Los Angeles, CA focused on probate real estate and the leader of a team of over 1,100 agents nationally probate experts.

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