[March 13, 2023]In this episode, we will take a look at the national housing market. What new changes occurred in February? Which cities have the biggest price cuts? Which cities are the most valuable? Of course, there is also the current performance of interest rates.
The current economic performance is really confusing, with both good and bad data. There are layoffs and jobs. There is both inflation and consumption. Housing sales are sluggish, but prices remain high. The manufacturing index slipped, but the services sector drove the economy. Treasury yields have inverted, but the economy has not seen a significant recession. These data confuse economists, whether the US economy is in a soft landing or a hard landing! Well, some economists say that this is a rolling recession (Rolling Recession).
In fact, according to my observation, the U.S. economy is in a recession amidst tough conditions. The performance of the real estate market is that interest rates continue to rise, which hits the hot real estate sales. But the people’s economy has not been hit too hard. Therefore, the proportion of foreclosed houses is very low, and there are very few properties sold, so there is no wave of foreclosed houses similar to that after the subprime mortgage crisis, so there is no collapse in house prices.
However, the public still has a lot of money. Although the technology industry has suffered major layoffs, other industries have maintained a certain intensity of recruitment. Therefore, at the beginning of this year, the 30-year fixed mortgage rate once fell, and the buying momentum in the housing market immediately picked up (this is also related to seasonality). However, since February, the interest rate has continued to rise, once again breaking through 7%, which immediately scared away many buyers and investors, and the number of mortgage applications reached a freezing point.
How high will the mortgage interest rate be?
And mortgage rates, already unpredictable, are even more elusive. When we talked about mortgage interest rates last year, many experts said. It reached 7% in November last year, which is already the highest, and it will not go higher. It is even expected that it will drop below 6% this year.
As a result, interest rates have been rising since February this year, and have basically remained above 7% since March 2. Just my personal judgment. Before inflation is effectively controlled, it is difficult for interest rates to fall further. Especially on March 7, Federal Reserve Chairman Powell also pointed out that the pace of interest rate hikes should be accelerated to combat high inflation. So, how high will interest rates be this year? It’s really unimaginable.
“Mortgage rates continue to rise as the Fed signals a more aggressive stance on monetary policy,” said Sam Khater, Freddie Mac’s chief economist. Spending in certain sectors, such as dining out. However, rates-sensitive sectors, such as real estate, continue to be adversely affected. As a result, potential homebuyers continue to face the compounding challenges of affordability and low inventory.”
February US housing marketdata performance
The performance of the US real estate market in February this year:(It is recommended to watch the video instructions)
First of all, in the first Redfin sales median price chart, it can be seen that in the four weeks to February 26, the median price finally showed a year-on-year performance of -0.6% in February, which is the same as in 2012. Since February, the year-on-year price growth has been negative for the first time, and the median sales price has reached $350,246. But for such a decline, not enough to make buyers chuckle. Because at the same time. Mortgage interest rates have reached 7%.
Let’s look at the performance of the median listing price, a year-on-year increase of 0.6%, to $382,225. According to the current trend, it is very likely that in the next month, we will see negative growth in listing prices, which will also be the first negative growth in many years.
clean world:U.S. house prices 11 years finally…｜US housing market Affect Taiwan’s housing market? ! ｜California｜Florida｜Mortgage｜House Price｜Interest｜Loan｜【American real estateHot spot]
The third is the buyer’s monthly mortgage payment, the curve in 2023 is much higher than other years. So as I said just now, buyers cannot be optimistic about the negative growth of sales prices. Even San Francisco, where prices have fallen the most, cannot offset the high cost of buying a house brought about by interest rates.
The fourth is the performance of pending transfer sales. We can see that in 2022, which represents the red line, sales have been declining month by month, connecting to the orange curve in 2023. Sales began to pick up in January, but they were still far below the previous three years, except for the gray curve in 2020, which saw a sharp drop in March when the epidemic just broke out.
The fifth is the number of newly listed houses in February, which is also behind the other three years. The reason is that many sellers are unwilling or unable to sell their houses and instead buy properties with higher interest rates, resulting in a very low number of new listings. Although there is an upward trend, there are signs of slowing down. Although the number of salable houses can be seen in the sixth place, which is higher than that in 2022 and basically overlaps with that in 2021, it is still far below the number in 2020 and before the epidemic. The current increase in inventory is only due to the accumulation of inventory caused by the sluggish buying sentiment of buyers and the slowdown in sales.
Therefore, we see that the supply performance of the seventh inventory has soared upwards at the beginning of the year, which was caused by the sluggish sales from December to January last year. However, after sales picked up in January, the inventory has dropped sharply. As of February 26, only 3.5 months of supply remained. Next, if we look at the sales volume signed within two weeks, there is still about 45% of the sales volume. However, we have not seen the performance of sales signing within a week. Representative buyers have slowed down considerably.
On the 9th, we saw that the median number of days of sales has reached 50 days, which is still faster than in 2020. However, the economic uncertainty and rising interest rates will follow. Should make the buyer take longer to find the target, or even abandon the purchase.
The above is the housing market data in February from redfin statistics. In addition, we can also look at the data of realtor.com. Its median listing price has increased by a large margin, reaching 7.8%. Its price is also relatively high, close to $415,000. The number of newly listed houses fell by nearly 16%, the number of salable houses surged by nearly 68%, and sales pending transfer fell by 24.7%. The above two data are for your reference. (see table below for comparison)
In addition, Realtor.com also provides an overview of the housing market in the four major regions of the United States. In terms of the number of houses available for sale, the southern region has increased by 141%, which is the largest increase among the four regions, and the western region has increased by 83%. In terms of the number of new listings, all of them showed negative growth, with the West experiencing the largest decline, with a decrease of 31.4%, followed by the Midwest, with a decrease of 17.7%. Median listing price increased the most in the Midwest at 12 percent and the least in the West at 1.4 percent. Looking at the listing price per square foot, only the west is -0.4%, and the other areas still have growth. Median days on market, compared with last year, increased the most in the West and South.
When comparing the price reduction ratio of sellers, all regions have increased compared with last year, and the largest increase is still in the southern and western regions, showing that the decline in these two regions is relatively large, especially in the western region, where almost all data are at the bottom .
Changes in million-dollar properties
Because nowU.S. house prices, the first year-on-year decline in more than a decade, so million-dollar properties. There have also been changes. In January of this year, the proportion of properties worth at least $1 million or more had fallen to 7%, compared with 8.6% in June last year and 4.2% before the epidemic.
YouTube: U.S. house prices finally 11 years…｜U.S. housing market affects Taiwan’s housing market? ! ｜California｜Florida｜Mortgage｜House Price｜Interest｜Loan｜【American real estateHot Spot]Episode 107
From the perspective of cities, San Francisco and Oakland in California, as well as Seattle and New York, are the cities with the fastest loss of million-dollar properties. San Francisco, which had 86.3 percent of million-dollar-plus properties a year ago, had dropped to 80.3 percent in January. Auckland dropped from 50 per cent to 44.8 per cent. Seattle dropped from 30.9 to 27.5, and New York dropped from 32.5 to 29.8. San Jose in Northern California dropped to 79.2 from 81.7.
at the same time. The median sales price in San Francisco also fell by 9.4% year-on-year in January, the largest decline among U.S. cities. However, this cannot offset the cost of buying a house brought about by the sharp rise in mortgage interest rates. Let’s do the math. With a 20% down payment on an $800,000 property, you’ll be paying $5,240 per month at a 6.6% mortgage rate. But at a rate of 3.5% starting in early 2022, you’d only pay $5,034 for a $1 million property.
So the rising interest rate is really a serious blow to the affordability of buyers. Unless interest rates can fall, a 20% drop in house prices will not be enough to offset the increased costs of today’s high interest rates.
The so-called ebb and flow,FloridaMiami owns more million-dollar properties than a year ago, up from 11.5 percent to 14.4 percent. Northport rose to 11.3 from 9.1. Anaheim, Calif., rose to 54.2 from 52.2. Nashville, Tennessee, from 6.4 to 8.4. West Palm Beach, Fla., from 11.1 to 12.8. These are the cities with the largest increases in the proportion of million-dollar properties.
Although Florida is the most vulnerable state in the United States to hurricanes, Florida’s relatively affordable housing prices, beautiful beaches, warm weather, income tax exemption, and various policies of the state government that are friendly to the people and free, Therefore, in recent years, it has been continuously absorbing residents from other states, especially New York from the north.
Overall, due to the continuous rise in housing prices in the United States in recent years, among the 99 most populous metropolises, the proportion of million-dollar properties has increased in 70 compared with a year ago, and 11 have remained unchanged. change, and the remaining 18 are declining.
Affordable housing in the U.S. falls sharply
Affordable real estate in the U.S. is shrinking considerably relative to million-dollar high-end properties. The so-called affordable housing is that the monthly mortgage payment does not exceed 30% of the local median income. In 2022, the number of affordable housing will be only 1/5, which is much lower than 2/5 in 2021. But now, more than ever, affordability is more important to American buyers.
In order to solve the burden of buying a house for many low-income or first-time home buyers. The Biden administration has recently announced that starting March 20, homebuyers with FHA-backed mortgages will lower their mortgage insurance rates, saving an estimated 850,000 homebuyers an average of $800 a year . However, for this small subsidy. I would like to suggest that the California government under the Democratic Party should quickly relax the number and permits for building new houses in order to fundamentally alleviate the long-term housing crisis. ◇
Responsible editor: Li Yaoyu