Premium Only Content
Its a Miracle that the Housing Market is NOT Crashing!
As I prepare this email week I review the real estate industry news, and I am constantly disappointed with the dishonest attempts to scare the market into a depression. It has been almost nonstop bad news in the headlines for over 6 months, and yet at most, we are experiencing a modest correction.
It is amazing that with all the craziness in our economy that the housing market is NOT crashing. We have the adjustment to a post-pandemic economy, a huge crypto scam affecting so much of our economy, an economy that seems to be eliminating or trying to eliminate fossil fuels, conflicts in Europe and Asia, a global recession/depression, and the housing market is NOT crashing.
That should be the headline.
Why? I am not sure, but let's check it out.
Before that, however, as always, let's check the data to see where we are.Â
The two most important data points are the inventory of unsold homes and the mortgage interest rates, and both have been uneventful.
Inventory: 2023 starts almost exactly where last year was, which although higher than 2021 but lower than every other year in history.
Clearly, the drop in inventory of homes, like the drop in inventory of toilet paper, was a function of the global pandemic, not merely abnormalities in the housing market. And as long as there is a tight supply of homes for sale, home prices cannot crash as there is too much competition which keeps the price from dropping.
Mortgage rates have started the year declining by almost 0.5% from 6.5% to just over 6.0%.
When mortgage rates jumped from under 3% to over 6.5%, there was an expectation not only that rates HAD increased but WOULD CONTINUE to increase, which has, to date, turned out to be false. Now, you can create a scenario where rates resume an increase, but so far this year, that scenario has not come to be. In fact, the drop in rates has caused buyers that were looking at homes now can afford a higher-priced home with the drop in rates.
While the combination of rates higher than last year and the increased prices has lowered the affordability for many buyers, by historical standards, homes still remain affordable in most markets. Here is a graph by Fannie Mae that projects affordability dropping dramatically, but still remaining at rates higher than at any time since 2008.
So, what does the real estate news industry do? Well, I would say it takes a piece of data and manipulates it into a scary story.
For example, here is Realtor.com with a headline:Â Â There were 54.7% more homes for sale in December compared to the same time in 2021. This means that there were 244,000 more homes available to buy this past month compared to one year ago.Â
Well, that is true enough, but last year was the lowest in history BY FAR! As I showed when we started reviewing the inventory, the global pandemic created many inefficiencies, but at present, the inventory is still below any year other than during the global pandemic. This is the equivalent of saying that the toilet paper inventory is higher than 2 years ago, and we all remember what that was like.
-
34:32
Standpoint with Gabe Groisman
18 hours agoGovt. Workers AREN’T Working Says DOGE Chair Sen. Joni Ernst
313 -
LIVE
Savanah Hernandez
2 hours agoMASS DEPORTATIONS ARE HERE AND THEY ARE GLORIOUS
1,097 watching -
21:12
Clownfish TV
14 hours agoThe Video Game Industry LITERALLY Wants You Dead?!
7144 -
1:35:44
Right Side Broadcasting Network
4 hours agoLIVE REPLAY: First Press Briefing by White House Press Secretary Karoline Leavitt - 1/28/25
79.9K72 -
DVR
vivafrei
6 hours agoJan. 6 Injustices! Jeremy Brown STILL IN JAIL! Untold Story of Ashli Babbitt Killer Michael Byrd!
43K12 -
3:09:52
Benny Johnson
4 hours ago🚨 First Trump White House Press Briefing LIVE Right Now! New Press Secretary With the FLAMETHROWER
121K158 -
44:12
Ben Shapiro
3 hours agoEp. 2126 - Did China Just DRINK OUR MILKSHAKE?!
40.1K21 -
1:11:08
Russell Brand
3 hours agoTrump’s Deportation Wave Begins – SF527
66.2K128 -
2:57:07
The Charlie Kirk Show
3 hours agoThe Big Pause + ICE in Chicago + The Birthright Citizenship Scam | Glenn, Hammer, Eastman | 1.28.25
99.7K22 -
LIVE
Scammer Payback
2 hours agoCalling Scammers Live
423 watching