Homes are not affordable anywhere, with some places still rising.
The Wall Street Journal has an interesting article See Where Home Prices Are Rising and Falling the Most. That’s a free link for those who want a closer look.
The spring home-buying season is off to a slow start—but not everywhere.
Buyers are still competing against each other for homes in the Northeast and Midwest, where new supply has been limited and attractive listings can draw crowds.
Home prices in parts of the South have been flat or falling. Even with prices starting to come down, however, buyers are still struggling to afford purchases in places such as Texas and Florida, after prices skyrocketed during the pandemic-era housing boom. Home builders built aggressively in those areas during that time, and now many are sitting on unsold homes after mortgage rates doubled from their lows and relocations to these states slowed down.
Overall, the U.S. housing market is far less active than it was a few years ago, when mortgage rates were low and remote work allowed people to move farther from their offices. Just over four million existing homes were sold last year, down about one-third from the more than six million homes that sold in 2021.
Change in Home Prices vs Change in Inventory
Migrating South
During the pandemic, when home-buying demand soared, many Americans relocated to the South. They wanted a lower cost of living, warmer weather or fewer pandemic restrictions compared with other parts of the country. Many also got new jobs in those fast-growing markets.
From 2020 to 2024, the South’s population grew 5.1%, with Florida and Texas benefiting the most from population growth, according to Census Bureau data.
Home builders responded to the surge in demand by aggressively building new homes. New-home prices climbed as buyers moving from high-cost coastal markets could afford to pay cash for homes.
But the migration to Southern markets has slowed since the height of the pandemic home-buying boom, because those markets got more expensive and some companies ended their remote-work policies. Higher mortgage rates and high home prices have also pushed many buyers out of the market. That has left some Texas and Florida markets with a surplus of newly built homes, leading to price declines.
Share of Mortgages Lower than 4 Percent
One signal of what’s going on in the West is that more sellers in those markets are offering concessions to buyers. That is a sign that even though prices are rising in those markets, buyers have more negotiating leverage than they used to. In Seattle, for example, 71% of home sellers offered some form of concession in the first quarter of this year, up from 36% a year earlier, according to Redfin.
High concession rates show that sellers and buyers are far apart in their negotiations. If demand gets weaker in these markets, more sellers could be forced to cut prices to close a deal.
On What Measure Are Prices Changing?
Unfortunately, the article did not even say.
I suspect it’s median price, a poor measure of price changes, because it does not include number of rooms, size of rooms, lot size, or amenities.
I don’t know, but most sites are addicted to median price.
Case Shiller Home Prices Year-Over-Year
Case-Shiller, a measure of the same house over time, presents a much better way of looking at prices.
It’s drawback is lag. Data is through February, and that represents the market for December, January, and February.
So Case-Shiller is lagging by about four months.
10-City and National Year-Over-Year Prices
- Boston: 5.93
- Chicago: 6.97
- Denver: 1.60
- Las Vegas: 4.93
- Los Angeles: 4.44
- Miami: 2.96
- New York: 7.75
- San Diego: 2.77
- San Francisco: 3.09
- D.C. : 4.57
- National: 3.89
- 10-City: 5.21
Case-Shiller Home Price Index National and Top 10 Metro
Case-Shiller National, Top 10 Metro, CPI, Rent
That’s the chart that best shows the squeeze on zoomers and millennials who want to buy a home but cannot afford one.
Price Change Since January 2020
- Case-Shiller National: 50.6 Percent
- 10-City: 53.5 Percent
- Rent of Primary Residence: +27.1 Percent
- Owners’ Equivalent Rent: +33.8 Percent
- CPI: +23.3 Percent
Home prices since January of 2020 are up more then double the CPI and nearly double the price of primary rent.
It is meaningless that prices in Dallas and Phoenix are down one percent, 2.6 percent in Austin, or even 7.5 percent in Cape Coral, Florida where everyone is struggling with rapidly rising hurricane insurance.
Homes are not affordable anywhere.
Thank the Fed and Congress
Thank Congress for “affordable home” programs such as Fannie Mae and Freddie Mack programs pushing homes and placing upward pressure on prices.
But more importantly, thank the Fed for asinine QE policies suppressing long-term interest rates below 3 percent enabling those who owned houses prior to 2020 to refinance at or below 3 percent.
Fed policies sent asset prices soaring while screwing everyone hoping to but a house but couldn’t.
But hey, look on the bright side. Prices are down 7.5 percent in Cape Coral, Florida (assuming you can afford hurricane insurance).
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