USA Today's Real Estate News is Not About the USA and Not Today

USA Today's Real Estate is NOT about the USA housing market and NOT about today.

USA Today represents itself as "USA Today is an American daily middle-market newspaper" but its real estate reporting is clearly not.

Before we get into that, let's, as always, start with the data.

Mortgage rates were a sea of calm compared to the bond market drama, with rates staying between 6.5% and 6.75% and ending the week at 6.55%. It seems to be a trend that rates drop at the end of the week so traders can feel safe over the weekend.

Inventory: nationally, housing stock continues at record lows for periods other than during the Pandemic, and has declined to match the rates of 2021. As I have repeatedly said, as long as inventory is low prices cannot go down much.

Locally, in Los Angeles, the market continues to be a seller's market, holding at a market action index of 41, slightly more of a seller's market rating than last month's 40.

So, where are housing prices headed?

First, as I have said for 2 years now, as long as mortgage rates remain low by historical standards, there will be demand to keep prices from falling overall nationally, And that's been true.

Second, as I have repeated every week since the talk of a housing crash began, as long as inventory remains tight, there will not be enough sellers to turn a downturn into a crash, and it is.

But there are a few additional factors.

For example, with the inflation in our economy forcing prices up on everything, the cost of new homes or remodeled homes goes up with the prices of materials and labor, driving up the value of homes already built. And the prices of services for housing continue to rise, as this chart from Calculated Risk shows.

Additionally, like any market with limited supply, prices are held up by the lack of alternate housing. As these two charts show, while the US population rose from 1970 to now from 207 million to 332 million (over 50% increase)...

...the housing stock has remained almost flat, with only 752,000 units under construction and leaving a shortfall of over 1 year's sales.

Another factor that will push housing prices up faster is the recent Fed action of pouring $300 billion into the economy just this week. That reverses over 4 months of monetary policy, and it's alone 10% of the increase we had over the 3 months in 2020 as COVID started.

To show the jolt we are about to feel, take a look at this week-over-week analysis, and you see last week's jolt was bigger than any during either the 2008 global financial crisis or the 2020 COVID pandemic.

So, and this is the fun part, what does the real estate industry news report on?

Well, Redfin reports that seller concessions rise to a new record. That sounds ominous, almost as if sellers are giving away homes. Maybe I should call Redfin and buy a home now that sellers are up against it.

But notice that they only compare data to the period starting with the GLOBAL PANDEMIC, as if that's a coincidence, 3 years ago the market changed. Actually, these numbers are what real estate professionals would call normal, in that it is not abnormal for sellers to get an offer a little higher than the market value into escrow, and as the buyer determines there are defects, asks for concessions. While during the last 3 years that was rare, historically that has always been part of a normal market. So, Redfin could report "post-COVID market is similar to normal markets" but I guess that would not generate as many sales.

Zillow tries a different trick called past-posting in criminal circles. They report "Silicon Valley Bank Response May Bring Down Mortgage Rates and Chill Tech-Dominated Housing Markets" which I am sure they tested to get lots of clicks for their advertisers and generate lots of private data they can call.

But, in fact, when they reported this on March 14 rates had already gone down in response to the Silicon Valley Bank debacle. On March 10, rates were over 7%, and on March 14 they had dropped 0.25% to 6.76% and have continued to drop to 6.5%. So, at best, Zillow reported the news as their prediction.
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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 national probate experts.

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