Home Sales Decelerate
S&P Dow Jones Indices (S&P DJI) today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices.
Data released today for August 2022, shows that home price gains decelerated across the United States.
Home Sales Decelerate
Home price growth peaked in the spring of 2022 and declined ever since then, according to the S&P Corelogic Case-Shiller Home Price Index.
The S&P CoreLogic Case-Shiller 20-city house-price index fell 1.3% in August, its second consecutive monthly decline.
Year-over-year price appreciation rose 13.1%, but that reflects the stronger conditions in 2021. The figure is down from 16% in July.
The rate of year-over-year price increases has sharply slowed since reaching a peak of 21.2% in April.
Housing is priced by the marginal buyer and seller completing a transaction. Prices are going down after they peaked in May/June. Its just the data. I don’t see the Fed cutting rates for at least a year and backtracking on all measures.
2nd home sales have essentially stopped. Airbnb bookings have fallen off a cliff, many of these are investment properties and second homes. Many large property buyers such as Redfin have a ton of inventory and are burning cash.
Then you have people with equity wanting to preserve it so they will sell, especially when we start seeing year over year home price declines. I’m looking at a 20%-40% cut in home prices, maybe even more.
Lots of homeowners are gonna be underwater next year. Especially those who couldn’t afford a significant down payment… as if significant inflation is not enough of a body blow to the working class, they get to be victims of the Fed’s reckless stupidity twice over!
This is not going to be a hyper warp speed housing crash that will be over in a few months – these are slow-motion crashes, that take a year or so to develop, a year or so to perhaps bottom out, and than three to six years to climb out of the wreckage. I’ve lived through this before. Also, a good indicator of the bottom is the number of real estate agents still in the business.
Homeowners should understand, that just because you don’t have to sell at any time in the near future, you’re going to escape this downturn. Just like many didn’t sell their homes as prices escalated, yet their homes became worth more because of demand. In today’s market, the same is true, now lower sold prices turn into depreciation for existing homes.
Always keep in mind, that purchasing or selling a home is a major lifestyle decision, and as such, should not be rushed into. So, by all means, if you’re considering purchasing or selling real estate in today’s market, do your own homework and draw your own conclusions! But, also consult with your legal & financial advisors prior to making your moves.
My opinions here are just that, opinions! The fact that I’ve been in the residential real estate market for over three decades, does not mean that my opinions are going to be any more accurate then your mother-in-law’s opinion, though I sure hope they are!
Home Sales Decelerate
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