Soaring home prices and plunging home sales. Sounds like the best time to buy. How many people in this country can afford to buy a median priced house of $296,900? With one of those 3% down FHA loans, a family would have a monthly tab of at least $1,800 to cover principal, interest, property taxes and home owners insurance. The median household income is $54,000. The monthly nut for a median priced home would equal 50% of their monthly take home pay. I wonder why new home sales suck and continue to linger at 1991 levels? Of course, this could all be cured with a modest 40% collapse in housing prices. 🙂
Submitted by Tyler Durden on 10/26/2015 10:11 -0400
Homebuilders were exuberant, The Fed was confident, and stock markets have recovered… so why did New Home Sales collapse 11.5% in September (missing a 0.6% drop expectation by a proverbial mile)? This is the largest MoM drop since July 2013. Worst still, the excitement of July and August data has been notably revised lower to press the current New Home Sales SAAR to 468k – its lowest since November 2014. At the same time, median home prices surged to $296,900 – the highest in 2015. Time to hike rates?
Biggest MoM drop since July 2013… (and weakest YoY growth +2.0% since Nov 2014)
It seems Homebuilders really don’t know anything after all…
Chart: BBG
One possible culprit: the raging housing bubble, as the median new home sales price rises to the highest in 2015 and just why of its all time high at $296,900.
Dragging the SAAR to its lowest since Nov 2014…
Who could have seen that coming? Home Sales collapse as the ongoing bubble push to drive asset prices higher crushes affordability.
RE is as dead as Lincoln and Kennedy here.
But..but…. but, marketwatch had this to say just a few days ago:
“Say what you want about stock market uncertainty as we approach 2016, but these seven data points seem to add up to a pretty certain outlook for housing in the near future — and that outlook is bright.”
I live on a lake in Minneapolis. All higher end homes. These homes do sell. I’d say the average price is $425,000.
My wife and I go the the Realtor’s open houses – just to see what the house looks like, and the price. Most of these homes were built in the 30’s and 40’s. Some of the homes have been slightly updated (cheaply) new appliances (cheap GE crap), wood work / cabinets painted with white latex paint, ranges without exhaust, 9 x 12 bedrooms, 1950’s bathrooms.
I’ve come to the conclusion that the people buying these homes have more money than brains.
Here we go again, this is the height of insanity, we’ve been here before and apparently some have already forgotten the lessons learned. Unsustainable is unsustainable, this cannot last.
When a couple, both making damn good salaries are priced out of the housing market then it can’t continue. And when this type of market ends it doesn’t end by leveling off, it ends in a collapse.
I began studying economics and economic cycles in the 70s and I’ve seen this happen again and again. I’ve also taken advantage of that knowledge by buying real estate at the bottom of the cycles and selling at the top. After selling at the top I rent till the next bottom. I’ve done this a number of times. The point isn’t to brag but to support my claim that I know what I’m seeing because I’ve seen it many times before.
This real estate market in the bay area is about to collapse simply because it’s unsustainable.
Good news for housing;
1. Story on thedailysheeple that US Bond Dumping by foreigners highest since 1978.
2. Another story that there may be a coup in Saudi Arabia
3. Same story as above says the Sauds may be running out of money.
“Their government is on the road to financial ruin. According to the IMF, they may run out of money within the next 5 years if they stay on their current course. The wars they are fighting, coupled with lavish public works projects, have driven their expenses to record levels. Meanwhile, the slump in oil prices (which they contributed to so they could bankrupt their competition) has left them with their lowest revenue levels in decades.
Overall, their revenue has declined by about $360 billion in the past year. Their deficit was projected to be $39 billion by the end of 2015, but has instead ballooned to over $107 billion. Considering that Saudi Arabia’s bank is worth over $700 billion, at this rate they could easily burn through it in the next 5 years.
You may be wondering why they can’t just go into debt like most countries would do in that situation. Nations like Britain, the United States, and Japan, have all had massive debt burdens for decades, and they’re all still kicking (at least for now). What’s stopping Saudi Arabia from doing the same?
If they tried, it would have a devastating effect on the global economy, and the dollar in particular. Some would say that the whole point of creating the petrodollar, was so that the Saudis could absorb our inflationary currency in exchange for oil. If they spend all that money, it would effectively put an end to the petrodollar, which has been the foundation of global commerce since the end of World War Two.
If King Salman maintains his seat on the throne, this economic cataclysm could become a reality in the very near future. On the other hand, a palace coup could have unforeseen consequences as well. One way or another, Saudi Arabia is stepping into uncharted waters, and it’s hard to predict what the results will be.
So pay close attention to what’s happening in this country in the weeks and months ahead. This isn’t some faraway land that is of little consequence to you. If anything crazy happens in Saudi Arabia, you’re going to feel it. “
Half of Millennials live at home with parents-28 million Millennials are not enrolled in school and are making less than $10,000 a year at their jobs. In other words, they are in poverty.