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The US housing market just entered an awkward phase

This is really what the Federal Reserve is raising interest rates to try to combat. Therefore, the more persistent the inflation, the more aggressive the Federal Reserve should be. It was thought they could raise interest rates by three-quarters *** of a percentage point over the next two weeks. This is almost *** almost certain. So there were recession toxics in that number. I think now the fact that the Fed has to be more aggressive in fighting it means that the likelihood of a recession is probably increased. You know, think of it this way. This is *** this is the cancer that the Federal Reserve is running. You know, chemotherapy too. And the more chemicals we have to use, the worse it is for the rest of the body. Unfortunately, monetary policy works with a *** lag. It’s believed that, you know, a *** rate hike or even a *** interest rate, really doesn’t get felt through the economy for another year, you know, or so. Hmm Well, just because the Fed started raising interest rates *** a few months ago in the face of higher inflation doesn’t necessarily mean it will ultimately have an impact. So *** a lot of what we’re seeing is actually more *** supply constraints than demand constraints. And the Fed apparently can’t pump oil and can’t grow wheat. So all they can really do is affect the demand side of that supply demand equation. I feel the pain of inflation every day, every day, everything goes up and up more than inflation, their price adjusts because even if inflation doesn’t happen, they raised the prices, I noticed. Like I go and try to get milk and like *** half a gallon of milk, it’s hard to find it for under $8. Um, which is very difficult and it’s very difficult to afford things in poor areas. Like I live up in Washington Heights you know and sometimes I have to come down here to get it for $6.50 so I can have most of my house.

The US housing market has just entered a difficult phase


Fewer people are buying houses. But that doesn’t translate to lower prices — at least not yet. Related Video Above: US Inflation Hits Highest Rate In 4 Decades Here’s the deal: Once again, for the billionth month in a row, US home prices hit an all-time high. The median price was $416,000 in June, up 13.4% from the same month last year. Meanwhile, sales fell for the fifth consecutive month, down about 14% from a year ago. Now, in simple economics, when prices go up too high, that should dampen demand — which in turn should lead to a drop in prices. But that takes time, especially when the market is as hot as it has been in the last couple of years. Right now, it’s a tough time where neither buyers nor sellers are all that happy. There are a few reasons for this: Mortgage rates are double what they were a year ago. The typical 30-year fixed-rate mortgage stood at 5.5% this week, up from 2.8% a year ago. Of course, this prompts potential buyers to wait and hope for a better deal. Inventory has improved slightly, but remains historically tight. Homebuilders are slowing building new homes, understandably wary of being caught in a glut if a recession hits and demand craters. Sellers, meanwhile, may have gotten too greedy. Think about it: How many neighbors or acquaintances do you know who sold their home for double what they paid for it within days of listing? This is the seller’s market everyone has been waiting for. Key takeaway: “Buyers can’t figure out what the right price is,” Mark Zandi, chief economist at Moody’s Analytics, told the Wall Street Journal. “Sellers are very reluctant to give up” the price they expected to sell for a few months ago. Sales are likely to continue to decline as buyers are priced out of mortgage rates, which are influenced by the Federal Reserve’s key interest rate policies. And the Fed is guaranteed to keep raising interest rates aggressively until this historically high inflation reverses course. Despite the overall decline in sales, some markets are still bullish. Miami, for example, saw median home prices jump 40 percent from a year ago. DOWN “The combination of higher prices and higher mortgage rates has clearly shifted the momentum in the housing market,” said Lawrence Yun, NAR’s chief economist. “Even people who want to buy are just being valued.” Although home sales have slowed in pace in 2019, the market remains extremely robust. The number of days a property is on the market before contract is the fastest ever at 14 days.”Maybe buyers are trying to take advantage of a lower lock-in rate… They want to sign the contract and close the deal quickly,” Yun said. But sellers should take note: This quick time to market isn’t likely to last, Yun said.

Fewer people are buying houses. But that doesn’t translate to lower prices — at least not yet.

Related video above: US inflation hits highest rate in 4 decades

Here’s the deal: Once again, for the gazillionaire in a row, American home prices hit an all-time high. The median price was $416,000 in June, up 13.4% from the same month last year.

At the same time, sales fell for the fifth straight month, down about 14% from a year ago.

Now, in simple economics, when prices get too high, that should dampen demand — which in turn will force prices down. But that takes time, especially when the market is as hot as it has been in the last couple of years.

Right now, it’s an awkward time where neither buyers nor sellers are all that happy.

There are a few reasons for this:

  • Mortgage rates are double what they were a year ago. The typical 30-year fixed-rate mortgage stood at 5.5% this week, up from 2.8% a year ago. Of course, this prompts potential buyers to wait and hope for a better deal.
  • Inventory has improved slightly, but remains historically tight. Homebuilders are slowing building new homes, understandably wary of being caught in a glut if a recession hits and demand craters.
  • Sellers, meanwhile, may have gotten too greedy. Think about it: How many neighbors or acquaintances do you know who sold their home for double what they paid for it within days of listing? This is the seller’s market everyone has been waiting for.
  • Key quote: “Buyers can’t figure out what the right price is,” Mark Zandi, chief economist at Moody’s Analytics, he told the Wall Street Journal. “Sellers are very reluctant to give up” the price they expected to sell for a few months ago.

Sales are likely to continue to decline as buyers are priced out of mortgage rates, which are influenced by the Federal Reserve’s key interest rate policies. And the Fed is guaranteed to keep raising interest rates aggressively until this historically high inflation reverses course.

Despite the overall decline in sales, some markets are still bullish. Miami, for example, saw median home prices jump 40 percent from a year ago.

CONCLUSION

“The combination of higher prices and higher mortgage rates has clearly shifted the momentum in the housing market,” said Lawrence Yun, NAR’s chief economist. “Even people who want to buy are just being punished.”

Although home sales have slowed back to a 2019 pace, the market remains extremely buoyant. The number of days a property is on the market before a contract is signed is the fastest ever at 14 days.

“Maybe buyers are trying to take advantage of a lower lock-in rate… They want to sign the contract and close the deal quickly,” Yun said.

But sellers should take note: This quick time to market isn’t likely to last, Yun said.

The US housing market just entered an awkward phase Source link The US housing market just entered an awkward phase

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