- Jul 29, 2014
- 22,269
- 23,586
That makes sense to me, but I think we had a 40% increase in median home sales price over a 2-year period from 2020 to 2022. To me it only makes sense that like with most other value driven asset bubbles(not tech or crypto) a 50% retracement over the next 2 years would be likely and like you mentioned some areas could see most or all of those gains wiped out completely. I think at this point there would likely be stabilization in the housing market brought on by monetary policy(think 2012-2016)due to a fallout in corporate/junk bond debt piling up and the US not being able to service it's debt at higher interest rates over a long period of time. In fact, I think this happens sooner(April-June 2023) but the FED being behind the curve takes several more months to enact the policy and it takes several more months beyond that to take effect.It seems a little like what I began saying over a year ago, but clearly this is going to be a regional location thing. There are so few existing homes for sale but the new home inventory is flooded. Just this week I saw listings for rentals of a brand new development that was slated as homes for sale. The project has started but clearly the homes are not selling. I think that 20% down number comes from places like near me that are having price drops and then sales down from 10-40%, because the previous sales price was just obscene, way way way way above the 2006 peaks. Then you have other areas nationally that had big increases, but nothing like FL or TN or TX etc. So you will have huge price declines there, but still high prices and small decreases in the remainder of the country and that is how you get to 15-20%. I think I said it would be a slow slow slow drip of 1% here 2% there over a very long period of time. Keep us posted Crete on the lending arena. I am sure December will be a quiet month but interested in first of year when people's bloated credit card bills start coming due from their holiday spending and the 20+% interest rates start compounding.
From there I believe boomers dying off and millies moving out starting families will keep a more balanced inventory level and along with reasonable mortgage interest rates somewhere in the 5% area will in turn lead to a mostly flat long term outlook of say 5-8 years say like a mid 80's to mid 90's scenario.