A Half-Million Dollar Home Is Where The Heart Is
Don't count the "bubble" burst just yet.
While some recent evidence (both anecdotal and otherwise) suggests rising prices are beginning to curtail demand in the flaming-hot US housing market, it may be too early to call the top.
New home sales in January rose 4.3% to a 923,000 annual rate. That was far better than consensus expected. The market was looking for 856,000. The range, from more than five-dozen economists, was 750,000 to 940,000.
Prices were sharply higher versus 2020. The median
I wonder if there is a gene that could help predict if, later in life, one is so inclined to be comfortable with debt. Kind of like the gene for myopia.
If so, this is perhaps among the best times in history for those genetically pre-disposed to be debtors. Brilliant for those taking out a 3.68% 30-year on a Toll Brothers in some desolate ex-urb in the flats, outside some over-heating, Sunbelt city. Much more so if the over-expected hyperinflation materializes. Those with the vision purchase the option for the second, 3-ton air conditioner.
It’s interesting to run across pandemic friendly trends & imminent return to normal stories, sort of like spring fever. Who can blame Pollyanna for tuning out where we all were a year ago!
Today, we still have tons of people infected and spreading Covid at a rate not too different than a year ago — before 500,000+ deaths. Vaccinating a small percent of our population at this point isn’t a great success story, but it’s hopeful. Disturbingly, for many months, it’s been suggested that far, far less PCR testing is being done — basically because it’s too expensive for all the hospitals, labs and medical folks that aren’t reimbursed (at profitable rates). Thus, we basically have inaccurate sketchy virus data in most of our communities. Sadly, the virus is adapting rapidly — while humans play profit games — not to mention the inability to sequence unfolding genetic threats. It also probably doesn’t help that our herd is in denial and burned out from 12 months of chaos. Who’s to say how Covid will play out in the next year …
In terms of future inflation, GDP, asset bubbles and home values spiking — we still haven’t seen too much economic damage from a year ago. We’ve watched the Fed buying time, investing in denial and laying the groundwork for optimism, and so far, most everyone is positive. Stocks up, homes up, all is well! That’s fine, hopefully people will have a reasonable path forward.
Nonetheless, risk and volatility are very much in play, even as the all clear flags are flapping in the wind.
Here’s a FRED chart looking at assets and liabilities — and just a dumb reminder that the massive elephant in the room (under the rug) is still very much in the room:
https://fred.stlouisfed.org/graph/?g=BlzW
Toll Brothers is raking in the money in my area. You can’t find a new home for under 6 figures and and homes that are over 40 years old and only 1200-1300 square feet sell for $500,000 and up. That makes it hard for the average person to get out of what was their starter home. (“.Average” meaning those who make under a combined income of $120,000). Those who make less don’t stand a chance of getting into a single family home. Condos are expensive as well when you include monthly condo dues into the mix