Remember that robust housing market that was going to life the U. S. economy out of the doldrums it’s been trapped in for the last four years? Maybe not so much:
Though it may have largely been lost in the shuffle of Middle East headlines, sales of new homes fell 13.4% in July to 394,000, which was a far cry from the 487,000 forecast by the consensus and the biggest variance from expectations in more than five years. In addition, sales in June were revised down to 455,000 from 497,000.
Those numbers are proof that whatever logic the real estate Pollyannas, who said mortgage rates weren’t going to affect demand for new homes, were using is totally false.
The disparity in new home vs existing home sales change %’s gives credence to rates. It’s still unclear to me the issue of personal incomes.
But imaging if its primarily rates………a whoopin’ for savers all for this?
A large portion of sales seem to be cash transactions. That means INVESTORS primarily. Not the household formation that is the (prior) hallmark of robust recoveries. Which is no surprise given low employment rates, especially amongst the younger generation, and low wages generally.
Locally I know a couple have been trying to buy a house for months now, and keep getting beat out by the investors. Foreign investors are part of it, and apparently some institutional investors. But also all the local hard money lenders have pooled their monies and are snatching up everything at a certain price range and above. And a few hardy types are buying up the cheapest stuff, fixing it up and then trying to sell up the money foodchain.
Really hard for families with mortgage offerings to compete with cash investors looking to become renter-class.
Two months back or so I heard that local prices were so 23% y-o-y. That’s just like in the bubble years. At least with all the cash transactions the financial institutions should be less exposed.
That logic likely doesn’t account for the possibility of alien attack either.
Sarcasm translation: obviously the logic is something like ” all other factors being equal, lower rates will tend to boost asking prices above a baseline with higher rates via easier debt serviceability”.
Does military intervention in Syria prove that statement wrong??
geez. It seems I totally misread that quote 🙂