The inventory jump was the largest quarterly improvement in three years and could be signaling a slight thaw in today’s housing market. But it is just a start
Among these unaffordable metros, San Diego posted the largest inventory growth—22 percent year-over-year,” wrote Lee. “Compare that with the same quarter last year, when that Southern California metro registered a 28 percent inventory decrease.”
Mortgage applications to purchase a newly built home plummeted nearly 9 percent in June compared with June 2017, according to the Mortgage Bankers Association. This suggests lower new home sales going forward, despite higher price
Too high pricing is leading to slackening of demand which is leading to higher inventory. One quarter worth of data to prove that.
How was summer and late 2007? I was too busy in other things then but I heard that RE started to stabilize after couple of years of very good run (which led to sub-prime bust later). Are we between Summer of 2007 and Spring of 2008 kinda situation?
yup, i have seen a house in santa clara where the owner was willing to credit all of HOA for a year, but he was asking too mcuh, so there’s that
another credit thing:
Still, not many yet in the bay area. Now houses are just standing and one or two house sells at a deep discount compared to their closest comp, but it’s also not super frequent. Mostly 10% or so dip.
So inventory today is lower than 2 years ago when Trump and Hillary were fighting for election? That’s when almost everyone thought Hillary will be the next president and supposedly bullish on market?
Zero Hedge… They have been saying the sky is falling since 2008… and like a clock they will be right sometime, but I’m sure they themselves don’t know when.
It’s just ebbs around the trend line. Trend change requires many more months of data.
Fundamentally there’s no reason for crash. But there are tons of reasons for slowdown. So this slowdown is real, but zero signs of crash, no crack yet.
I am looking this as purely as normal market with demand/supply driven dynamics with price reaching a point where demand slackens. Do you think this can happen?
Is this the same situation as 2007/2008. The bust that came later in 2008 was caused by slowdown in housing prices and falling demand. What caused the slowdown in the prices and demand?
No idea what could have caused 2007/2008. Oh wait, maybe it was a global financial crisis caused by banks issuing high-risk mortgages at an insane rate and then using shenanigans to mask their potential liability.
We may very well be due for a slowdown. But if it is a slowdown, it will be for different reasons. Most likely are rising rates and changes to tax policy. But I don’t think it’s clear at all that this is a slowdown versus typical seasonality.
Falling demand was due to lenders tightening standards. Once mortgages became very difficult to get prices crashed. You can observe this today when a HOA goes into litigation. Mortgages aren’t available, and the price of units drops 30-40% due to cash only sales.
Lending standards are still tight by historical standards. There aren’t a bunch of low quality mortgages out there where people will start to default in high numbers.
It used to be when a first-time home buyer is ready to upgrade to a bigger house, he would sell the primary and buy a new one. Nowadays, we keep hearing these guys turn into landlords by renting their primary and buy a new house with a big mortgage. Question is how steady are these landlords?
Is a good thing. Forces those guys not to turn into landlords.
The existing conditions (low 30 years fixed, prop 13, etc) induce many to turn into landlords which lead to low inventory. We only need to figure out how steady are these landlords should the economy turns sour or there are signs that prices might not be increasing.
Inventory is still historically low in a state that rarely has a 6month inventory aka buyers market.
We now have a legislature that is incapable of voting to allow increased supply. Demand continues, supply is constricted. Jackpot for continued high prices until a national recession in maybe 2021. Meanwhile prices will continue up at a min 5% a year.
Sure there are always deals. But usally they are on property nobody wants. Busy street, incurable defects, bad floor plan, fixers… good luck
They are pretty strict on DTI ratio. I guess if rents drop a lot, then it might be an issue. If someone can make the DTI work, then they probably have a lot of equity in the rental property. That makes the risk pretty low.
Last housing recession was caused by bad loans. It will be a while before bankers try that trick again. ZeroHedge is a loser website and it’s a trap for people who want to believe the world is ending. They can keep waiting on the sidelines and hoping.
