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US Housing Still Plagued By Acute Dearth Of Resale Inventory
Existing home sales in the US continue to be constrained by a lack of resale inventory, but figures for May, released on Thursday, nevertheless managed to top estimates.
Sales rose slightly to a 4.3 million annual rate, snapping a two-month streak of declines. Thanks to an acute supply shortage and affordability constraints, sales fell in 14 of 15 months through April. On a YoY basis, sales fell 20.4% last month.
May's pace counted as fairly anemic, even as NAR Chief Economist Lawrence Yun des
What market has income levels near $150k and the average home is $320k? I live in a second tier major market, we have a lot of people with $150k+ incomes, but the average home is 4-5 times $320k, a small 2 bedroom is min $900k.
The crash in prices is coming, income levels are not able to support the current levels. I would not be surprised if the end of the student loan moratorium starts the household “formation” contraction, which will then tip all the dominoes toward more significant price contraction.
Almost 24% of the cost of new homes are regulatory fees.
If the government wanted more affordable housing, just reduce the fees.
https://www.nahb.org/-/media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2021/special-study-government-regulation-in-the-price-of-a-new-home-may-2021.pdf
No. New homes are priced based on comparable existing homes adjusted for the fact all is new but the existing might be closer to amenities, etc. Take that price, deduct costs of the home, lot services and all those taxes, and what is left is the price of the raw land. Reduce those taxes and almost all goes to the owner of the raw land.
Correct. A builder is currently making sufficient profit to justify building, then lowering costs does not incentivize the builder to construct affordable housing, it merely increases builder profits for market-rate housing. Which the NAHB would like, obviously, so it pushes this “lower fees/costs and we’ll build you affordable housing” line.
My state is deep into this NAHB belief system, lubricated with developer political contributions, and has been furiously cutting fees and liberalizing zoning. Yet affordable housing is only being built by the existing affordable housing developers with government (taxpayer) money. The market rate developers are building the same non-affordable housing that they were before, just making more money at it, and land values have also jumped.
Without a significant economic downturn in the US I don’t see a major decline YoY in housing prices, supply of existing homes will remain constrained for as long as mortgage rates remain at current levels, we have a good old fashioned supply shock right now, more buyers than sellers = prices remain high.
Are more homebuyers using ARMS as opposed to fixed mortgages to deal with high rates? It would, at least temporarily, solve one of the two issues (rates, the other being prices) facing buyers to lower monthly costs.