US Home Prices Rise Most In Recorded History
Surprise! Home prices rose more than expected in April, data out Tuesday showed.
The near 15% jump in the S&P CoreLogic Case-Shiller 20-City Index came in slightly ahead of an expected 14.7% increase. It was the largest gain since December of 2005 (figure below).
That was enough on its own to warrant a bombastic headline, but even more conducive to hyperbole was the 14.6% YoY gain on the national index, because that counted as the single largest advance in recorded history (the available
“(Fortunately, the US has never experienced a housing crisis brought on by speculation, irresponsible lending and a willfully blind central bank.)”
That’s right! It was irresponsible home buyers who didn’t read their contracts that were at fault, that’s why the poor banks and credit agencies were completely let off the hook and bailed out while regular people moved into tents. 😉
Would changing the duration of mortgages qualify as relaxing standards? 30 year is basically the go to now as opposed to 15 or 20. 50 year or interest only loans anyone?
The real question is becoming… will anyone ever build more first time homes? Homes in the $150-250k range. 100% of the new homes being built in my area are $375+ with the average being around $450k. I’m talking the entire greater Minneapolis/Twin Cities Metro area. They sit empty if nobody is buying but they do not get discounted. That seems to be anchoring prices unlike in the GFC when you had tons of new construction going on at lower price points. The “cheap” houses are going for $300-350k and are 40-100+ years old and in need of repairs generally.
What feels different this time is also the location aspect. Assuming remote does not become long term ubiquitous then there is going to be growing premiums on proximity to work and community. There is only so much land that is within a 30 minute drive of any downtown metro area and more and more cities are going to be hitting the limitations of surface area without lots of high density residential housing which… it turns out many voters, especially home owners really dislike.
The suburbs and second/third tier metro areas are having their day. It will last awhile longer. Then the younger folks will start streaming back to the larger metro areas for more opportunity/fun. It is already happening in NYC- such churn is typical for NYC. Best bet for NYC is a bottoming for two more years then a major upswing in about 3 years time. It happened after 9/11. It will probably happen again in a somewhat elongated form since covid problems will linger a bit longer than a terrorist strike. Work from home is vastly overated. I have done it for 10 years- and will probably do it for the rest of my career. But it is far from a panacea. The workforce will want more flexibility- but the glory of remote work will burn out fast.
I’ve been remote working for 10 years, I think it holds up quite well.
I think remote work is likely to change over time but given what I know of my generation that grew up as cell phones and the internet became mainstream we’re a lot more comfortable than the guys sitting in the VP and directors offices today. It may well contract but it will expand again and flexibility will become normal. Give it another decade and virtual telepresence will be on par with anything you’d expect in person today. This last year was the massive test case that gave every product manager a gold mine of end user experience data as non-first adopters jumped in with both feet. 100% remote work is already the norm in a lot of remote offices with only occasional in person trips to corporate HQ. I doubt very much many in my generation will care about what empty cubicles look like when we can check IT stats and see people are engaged.