America’s Housing Bubble Flies South For The Spring
A government gauge of national home prices in the US unexpectedly rose at the beginning of the year, defying all estimates from a dozen economists who ventured a guess. The FHFA index rose 0.2% in January from December, data released on Tuesday showed. It was the first gain since October, and the largest since September. The increase came on the heels of a sharp decline in mortgage rates from last year's highs, which precipitated a two-month recovery in pending home sales. The range of forecas
7 thoughts on “America’s Housing Bubble Flies South For The Spring”
Since we’re sharing anecdotes, a friend of mine is trying to buy a house in Bucks county PA, an affluent suburban area outside Philadelphia. Every offer he has put in has been outbid by no contingency inspections-waved offers. My friend is a doctor, and his wife is a pharmacist, so they can afford to pay up, but even they haven’t managed to land a place. One house they considered was built in 1979, so they insisted on a lead inspection (lead paint was banned in 1978, but there was still some inventory on the market in 1979. If you’re raising kids in a house, you don’t want to take even the slimmest chance of lead risk). The realtor was mystified. She said no one else had asked for a lead inspection. “Nobody does that.” Needless to say, they didn’t get the house.
I was lucky to find a place that was unlisted before the spring rush here in Ann Arbor Michigan. The mortgage broker mentioned that there was no lack of applications heading into the Spring rush.
H> continued weakness in home prices on
H> the West Coast, as San Diego and Portland
H> joined San Francisco and Seattle
What does the homeless population look like in Atlanta, Philadelphia, Ann Arbor? It’s so bad on the west coast, I can understand if the real estate market is weak there. (We live in Portland, OR. Don’t get me started…)
I’d be more inclined to suspect it’s just a matter of prices looking cheap to out-of-town money. I mean, you have to remember: Other than Atlanta and Charlotte, we’re talking about some pretty obscure cities. Certainly not “obscure” to SEC football fans (for example) or to people who live in those states, but, again with the exception of Atlanta, we’re talking about places that nobody outside of the US has ever even heard of. So, even though property prices in those places now look astronomical to locals (which is terribly sad), it’s nothing to people with real money. Although I was astounded last year to learn that $1.2-$1.5 million doesn’t necessarily give you carte blanche anymore in some very small towns, $5 million (for example) still gets you pretty much anything you want in a lot of Southeast cities. And to some of these out-of-town buyers, $5 million is pennies. So I think that’s really what it is, and then you start building some momentum in some of these places and it becomes self-fulfilling. I mean, I saw online a few months ago a veritable mansion right above Spartanburg, S.C. that was listed at $4.5 million. It was astounding. I wouldn’t live in it because I’d get lost by myself in there and I’d have to furnish a bunch of rooms I’d never use, but the point is that if it were in L.A. or, say, Denver, you’d need to be an A-list celebrity or some kind of pro sports star to afford it. My guess is that’s what’s bringing people in. They can live like a pro athlete for pennies on the dollar.
on a per capita basis, Philly has a fairly low number of homeless for its size but that number has been increasing since Covid, partly due to all the known issues with service sector employment through the pandemic (a lot of folks are just one paycheck away from eviction at any given time) and the opioid crisis (which unfortunately seems to be impact younger and younger people) which is hihgly visible in certain areas of the city – though not all addicts are counted as homeless.
Thats post pandemic work mobility for ya. I live in Geneva and almost everything in tier 2 US/Candian cities look dirt cheap to me
Geneva, CH? I lived in Nyon about a decade ago and my experience there has permanently altered what I consider to be expensive.