The National Association of Realtors reports an Annualized Sales Rate of 6 Million in August, the highest since December of 2006.
Key Points
- Median Price: The median existing-home price for all housing types in August was $310,600, up 11.4% from August 2019 ($278,800), as prices rose in every region. August’s national price increase marks 102 straight months of year-over-year gains.
- Lumber: “Over recent months, we have seen lumber prices surge dramatically,” Yun said. “This has already led to an increase in the cost of multifamily housing and an even higher increase for single-family homes.”
- Inventory Total housing inventory at the end of August totaled 1.49 million units, down 0.7% from July and down 18.6% from one year ago (1.83 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, down from 3.1 months in July and down from the 4.0-month figure recorded in August 2019.
- Fire Impact: Yun, says the inventory issue has worsened in the past month due to the dramatic surge in lumber prices and the dearth of lumber resulting from California wildfires.
- Sales Time: Properties typically remained on the market for 22 days in August, seasonally equal to the number of days in July and down from 31 days in August 2019. Sixty-nine percent of homes sold in August 2020 were on the market for less than a month.
Regional Sales Breakdown
- Northeast: Existing-home sales in the Northeast jumped 13.8%, recording an annual rate of 740,000, a 5.7% increase from a year ago. The median price in the Northeast was $349,500, up 10.4% from August 2019.
- Midwest: Existing-home sales increased 1.4% in the Midwest to an annual rate of 1,410,000 in August, up 9.3% from a year ago. The median price in the Midwest was $246,300, a 10.7% increase from August 2019.
- South: Existing-home sales in the South rose 0.8% to an annual rate of 2.60 million in August, up 13.0% from the same time one year ago. The median price in the South was $269,200, a 12.3% increase from a year ago.
- West: Existing-home sales in the West inched up 0.8% to an annual rate of 1,250,000 in August, a 9.6% increase from a year ago. The median price in the West was $456,100, up 11.8% from August 2019.
Existing Home Sales Median Price
Fed Bubble Blowing
If you don’t want to see evidence of Fed bubble blowing, then please don’t look at a chart of median sales prices.
Also recall that The Fed Now Owns Nearly One Third of All US Mortgages.
Mish
I wrote Friday that there is a party house full of 20 somethings that the parties ended mysteriously the same time the PUA ended early August. Then I was excited because the house had a for sale sign out front. I looked it up and they want $260K for it. It is 3 bed 2 bath 2 car garage with pool and lanai and just less than 1/3 acre.
Does anyone remember that, did anyone read it?
Well a couple weeks ago the lawn sprouted a Remax for sale sign so I looked it up on the MLS and sure enough it is a party house. Painted in garish colors and with a great pool and hot tub, a outdoor BBQ space, and ping pong table, wired for music outside and the house had a few other items that were listed as sales pluses like stone counters.
Well my house is a three bed three bath two car garage, with extra shop space. It is over a third acre, and my lanai is not aluminum and screen but real beams and the whole house is architect designed and built, it has 17 foot ceilings in the garage, master and living/dining rooms. Living and dining room are one big room, but at 40 feet it does not seem like they are one room, and it would be hard to describe all the things about my house that made me want it, like the fireplace on the end of the living room wing that soars 17 feet and has sidelight windows on both sides that go to the roof from the floor. Or the 4 panel sliders that open all the way in what they call pocket sliders in Florida, so you can open them and presto 25 feet of living room wall is not there. Open to the pool.
But the best part for me (live alone no kids or pets) is that a large chunk of the house is the master space, it is a third of the house. The bedroom is 28 by 32 feet.
It has three walk in closets, a water closet for the toilet, a shower/jacuzzi nook, vanity for two, a walk in closet 13X8 and another 8’1″ by 7’4″ so his and hers or his and his, or one huge closet and an office instead of two huge closets, and the third walk in is basically a linen closet. The suit has it’s own 8 foot hall. Again 17 foot ceilings and floor to ceiling windows and every window in the house has marble sills.
Every counter surface is about the most expensive stone you can get. The walk in pantry even has it. I could go on and on, it is a very special place. And I got it for less in April than some ticky tacky set of drywall boxes are fetching only 6 months later. My house is on more than a third acre set far back on the property, I can see no neighbors from any window. I do have a next door neighbor but they are in their 90’s and scared to death of Covid so we have only spoken by phone. No house in this subdivision is without a greenspace behind it either golf course or forest.
So when I saw today that there is a pending sale for full price after little more than a week on the market for the party house that is so much smaller for more than I paid for this house I was pretty shocked. That house would have sold for maybe 199,500 in January.
Sounds like you caught the market at just the right (COVID) moment. Congrats on your place. it sounds awesome….and now you have almost instant equity. Score.
What general area, if you don’t mind sharing the info?
It is suburban Tampa.
And here is a story from CNBC today: Fierce competition for a limited supply of homes for sale has caused a surge in prices. Now, potential buyers, some fleeing urban areas hit hard by the coronavirus pandemic, are facing a national affordability crisis.
My heart goes out to people who want to buy a house but are being priced out. My advice to them is that some house is better than no house right now…you need the hedge of home ownership to protect yourself from the bubble. But nobody should buy a house they can’t afford…..it is important to be able to service the debt in a downturn if and when the bubble does pop.
I saw this all coming in 2008, and bought three houses (two of them brand new) when NOBODY was buying. I used equity from an investment house I bought in the early 90’s. Now two of the 2009 house purchases are paid off completely.
Since then I’ve sold the other one and bought a few more. They are mortgaged, but I paid down enough to start with a lot of equity…that’s very important. In a bubble, a lot of leverage is not very smart.
Some people will tell you to use gold for a hedge….but assuming you play by the rules and pay taxes…..the tax liabilities on gold are formidable. Gains on gold are not capital gains…..they are taxed at your marginal rate, which for me is 40%.
The other thing is more subtle……I have owned gold….and although it does provide some security in uncertain times….it does not in itself guarantee a return. Because gold is a highly manipulated market….it can behave irrationally for long periods of time….and it can be a stranded asset. Money that is not working for you. Right now gold looks really good….but if you put all your money there and the dollar doesn’t really die……well, time passes and you get older but not any better off.
Real estate has real tax advantages. Sure prices can fall if we have a bust…which one has to expect. But they don’t fall to zero, and people have to have a place to live.
ZIRP is no doubt bad policy….but it is THE policy for the foreseeable future. Banks have to borrow short and lend long….but you can borrow long…..and that creates an arbitrage opportunity, a good one, if you can borrow long and put the money into an excellent financial asset that outpaces inflation.
People flame me for trying to explain to them how they could use this flawed system to NOT end up as a victim…..of a system that creates wealth inequality by design.
The thing is, what is more important.?……complaining about a corrupt system or learning to survive and maybe even thrive in the real world.
I agree and disagree Eddie_T: This is why the nation is in the existential threat it now finds itself.
Labor, that is the people who work at jobs, cannot buy a house, they cannot have healthcare without paying through the nose and that is if they remain healthy, if god forbid they should have a medical issue the copay and deductibles will bankrupt them on the spot.
Seriously, your doctor says you have lung cancer and your first though is not how you can beat it but how you can pay for it, I have to have a cat scan this Saturday in Tampa to rule uot lung cancer, I do not have to pay because I am a 100% disabled vet. But, I went to the ER in Crystal River in May sick as hell with all the symptoms of Covid, three hours maybe four in the ER was billed to the VA at more than $16,000 and I pay nothinng, but if I were on private insurance I would not have gone in the first place out of concern for cost, better to die than to get that bill even with the ACA.
More than half (52%) of all adult kids are now living with their parents. Let that sink in for just a minute.
They cannot marry and start families and buy houses and all that goes with that (household formation according to the Fed). They are adults basically couch surfing on the one couch that will not say no. Mommy and Daddy, even with degrees from college that left them 6 figures (or more) in debt.
I live near a Walmart, the people that work there are dirt freaking poor. Their wages do not even cover half their poverty stricken lives.
There is a ballot initiative in Florida this year that would raise the minimum wage to $13 per hour, I hope it passes because $13 per hour is poverty and current workers make $8.25. I mean really, I am compensated at $50,000 per year tax exempt and I am getting further behind every goddamned month. My credit cards are maxed out, my credit score has dropped to 643, and I see no hope of ever getting back to solvency even with Mark Cuban’s suggestion that we do $1,000 to every household every two weeks for two months. Make it 12 months and I will be able to get by, but the level of living even with a $1,000 per month raise would still be near nothing. Prices are rising so fast I am looking to lay in groceries that don’t spoil.
I am going to say this once right now, I am supposedly “middle class” at my income level, yet I contacted a real estate agent today about selling my house because prices are rising so fast that I will not make it through next year. I need to be someplace where your income does not determine if you live or die.
Sorry to hear of your health crisis. I understand healthcare costs. For one thing I raised 4 kids and paid for private insurance for a family of six…plus a few employees, for many, many years. I also spend my days trying to help people with their dental problems, and deal with the provider side….my wife spends a fair percentage of her time trying to get insurance companies to just do what they promised our patients….and it’s a constant struggle.
I favor single payer coverage for everybody……because we once had single payer here for Medcaid, and it worked better than anything we ever had, before or since. I believe that insurance is best provided by the government……with no parasitic middle men who get bonuses for not paying claims.
My argument to those who say we can’t afford to insure everyone is that it would work better and ultimately be cheaper than what we have now. If we can spend over 6 trillion for 20 years of wars, we can offer some level of universal health coverage.
Any of us can be bankrupted by a health emergency. If I get very seriously ill myself, I have already decided to refuse treatment rather than spend the money my spouse might need to live on in her old age.
I agree entirely. We could have the same level of care we have right now for half the cost AND give business a multi trillion dollar tax break if they were not paying for healthcare. We need to make care a right and by doing so end private for obscene profit care. I can refute all arguments made otherwise. Private health insurace adds at least 30% to costs without adding anything to care outcomes.
In that visit to the hospital in May I was screened by a (rude) nurse in a tent, I was deemed sick enough to pass through to the ER, once in the ER I was put on a gurney and left alone for hours. A nurse put in an IV without even asking if I was allergic to anything. An hour later I was dragged off to XRay, and at some point a girl came to take blood and pee.
The Xray alone was almost $1,700 bucks for a SIMPLE FREAKING XRay that cost them about $4. Used to be you had to have Xray techs and a lot of positioning and a very expensive panel made by a monopoly like Kodak to take an Xray, now it is all digital and costs them nearly nothing. Yet they charge a price like a used car for one snapshot. Crap, that is groceries for a YEAR for me. Well seven months anyway.
I actually laid there for about 4 hours with less than 8 minutes of contact with hospital employees and the total billing was more than $16,000 bucks at which point they told me yes I was sick but they did not think it was Covid. And the taxpayer paid it all. At most it should have been – given the strain on their resources – would be about $500. But because there is no limit on what they can charge and no limit on what the government will pay it was 32 times that much. Does that make me a leech on my society because I am a disabled vet? Or does that make government a total failure for not mandating prices they charge? I am not a leech because I got sick, and in fact I am a very healthy person that at 62 takes no prescriptions, the doctor ordered this CT scan of my chest for this weekend because I have smoked for 51 ish years and he is sure I must have cancer, and it is cheaper to catch it early. I cannot argue with them. It is not allowed. I could refuse but then you get a notation in your reecords that make you a low priority patient. So I go along with it, but, at the VA the Xray/CT scan is not charged for at all. The people doing it are on salary and there is no individual billing generated per proceedure. This means that my CT scan on Saturday will cost the price of elecricity and the 20 minutes wages of a government employee it takes to do it plus a fraction of the price of the machine aggregated over every scan they do for years.
This is how it WOULD be done if we had single payer. No $16k bills for a few hours of being left alone in an ER. We could have 100% full coverage for every American with no premiums, no copays, not a singler cent of deductibles, just do it the way the VA does it. You pay no premiums, your employer gets the biggest tax break in the history of employment, at least some of that will go to employees. You get a raise of about 20% and your employer is happy.
But we cannot because the GOP blocks it at every turn. WHY? It is a multibillion scam that they make a lot of money off of. Private for obscene insurance is the single most profitable industry on this planet, it makes cocaine and movie theater popcorn look dirt freaking cheap!
(I have to edit this for accuracy: of the total billed the VA paid less than a tenth. They paid $1,300 on the hospital billing and only $106 on the radiology billing. The hospital accepted that as payment in full. So why does the VA get such a great price from them? Are they taking a $15k loss on veterans? While your insurance pays the full $16 thousand plus? Did that insurance company intervention mean you got well sooner? Or that your family member is now magically alive?)
The Wolf Street crowd has been predicting a real estate crash since … Forever. Yet it never comes. Anyone contrary is ridiculed. I have a hard time seeing how real estate crashes without a stock market crash, and the Fed has outlawed stock market crashes.
This is probably the last surge of buyers before the real estate market slows. it happened in 1979-80 as interest rats hiked to the moon, and in 2005 when is started slowing down and then crashed into 2011-12 with excessive supply from foreclosures. This time around we have cheap interest rates as the carrot and a declining work force that would normally be buying. Add in the older population that currently own homes that will become future supply and… poof.
I have a question. Does this mean that this is a seller’s market or a buyer’s market? I just read articles claiming that inventory was low and demand high. This should drive prices up I think. Is this article claiming that more inventory/supply is happening and wouldn’t that drive prices down some? Thanks in advance.
Right now it is a seller’s market… unless you live in some undesirable locale such as Minneapolis or New York City, ect. Looking at the graph of existing home buyers, July looks to be pent up demand from May and June. How long this goes on I don’t know but it can’t be very long before things start to sour. People will cull their desire in the future when they may be looking at a declining economy. Eventually, buyers are going to be hit with reality.
You mean like coming up with a down payment that a $500,000 – $750,000 starter home requires??
I don’t really disagree with Greggg on the broader real estate market, but it is important to remember that the real estate market is not monolithic. It’s highly fragmented, and whether you should be a buyer or not depends on where you are, and what your long term goals are. I’m not a real estate pro….just an old guy with a few properties. But that waiting for a “poof” for your buying opportunity does depend a lot on what city you want to live in. The thriving cities today are mid-sized, growing livable cities that are not on the coasts….their economies need to be 21st century economies, meaning tech-heavy…and they need to offer the kind of things that 21st century young adults need and want. In those cities, waiting might be watching prices go much higher from here, for a number of reasons.
You make no sense. How are those cities that “young adults”(millennials or those under 35)not on the coast??? NYC, Boston, San Francisco, Seattle and all of So cal are as tech heavy and “21st century” as you can get. And prices in the NYC metropolitan area are rising by double digit percentages. Sure, people are ‘fleeing NYC’ for the suburbs like Long Island and NJ where they will have 5 figure annual property tax bills..
So what happens to those who are ‘not young adults’ (or over the age of 35)?? How do they not count or are they supposed to just die off because they can’t afford $1500 a month (at least) for health insurance if they aren’t inheriting millions from their parents
Coastal cities are, generally speaking, more affected by climate change. People and tech companies are leaving Cali in droves.
People aren’t moving from NYC to Long Island. They’re often moving to places in the South……like Texas. Five of the ten fastest growing cities in the country are in Texas.
People are moving to the Salt Lake area….South Jordan UT is the fifth fastest growing city in the US.
Meridian Idaho is number 6.
I was addressing what I said to someone who seemed to be thinking about buying a house. Most people want to live somewhere with good jobs and where you don’t pay a million bucks for a tract house or a crummy condo unit. Housing is going up, but some places are better than others. Do some research You aren’t as well educated as you think you are.
Listen carefully. I don’t control the Fed. I don’t set interest rates. I didn’t make this system that results in wealth inequality. But I am smart enough to see an opportunity and take it. If you buy a house now and pay for it with a typical mortgage loan, the interest you pay (at today’s manipulated rates, which can be locked in) over the 30 years of loan service will be less than the rate of real inflation.
I’m not on mission to save the world. I’m only responsible for me and my family. People over 35 are old enough to figure out the way the world works. If they thrive fine. If they don’t it’s hardly my fault.
Whatever feelings you might have about how the Fed blowing up asset bubbles is grossly unfair…or wrong, or whatever….frankly that will not net you anything.
The affordability of housing is going to get worse. I recognize that life is hard and people struggle. I started with exactly nothing. No inheritance. No free college. I’ve struggled with this system now for over 30 years.
Welcome to the struggle. You can sink or swim. Waiting for the system to be reformed is not a decent strategy.
I have millennial children, four of them. I give them the same advice.
Maybe it makes no sense to you…….that’s not my fault either.
I don’t think price discovery will happen until after the eviction moratorium.
Must be the top 10% doing the house buying!
September 22, 2020
Americans are becoming increasingly pessimistic about the US economic rebound, with almost 90 per cent saying Washington needs to pass a new stimulus package to mitigate the fallout from the coronavirus pandemic.
Or maybe people are seeing trillions being printed and want to make some kind of hedge against inflation…in some kind of tangible asset. Just sayin’.
But mostly it’s probably driven by the low interest rates….some of it is no doubt people bailing out of NY and Cali.
Some of it is people working from home and planning to keep doing it…and they want the right place for that. Maybe some home office space.
You still have to dispose of your current house unless you are moving up from an apartment, which would seem a bit strange in today’s environment. And you have to make the down payment. Buying a house for most people isn’t a “what the hell” kind of decision.
So…all that is true…but remember that housing prices are much higher in some of the places that are becoming less livable. Like California, or NYC, or Chicago….. even now, prices are still higher than here. So someone moving from the Bay Area, say, to here, might have what seems like a lot of equity, in this cheaper market.
And people do save down payments. First time buyers going for FHA money can still get in with a fairly modest downpayment.
Buying a house is never a WTH decision for me either. I like to save enough to pay 40% down…so I know all about saving, having been a serial saver for most of my adult life.
The news is NEVER bullish near bottoms, only near tops.
Like San Francisco housing in the year 2000…oh wait…it went up for 20 more years.
But when it comes to housing, they seldom all burst at the same time.
Barring a world-wide deflationary depression, I challenge anybody to name a better investment than single family homes in Austin TX. And if we do have a depression, at least assets with tangible value won’t fall to zero.
The median home price in Austin jumped 14% yo.y., to $ 395K in the city proper. Not quite so much in the burbs. Active listings are down 34% and inventory is low….just one month of supply
I’m feeling pretty good about the houses I own here ….I was expecting good appreciation, but COVID has had a major impact on the shifting demographics. I’ve been buying fairly steadily since 2009.
They all flow good cash and my leverage is fairly low.
Maybe time to refinance….but all the ones I have mortgaged are already locked in for 30 years at excellent rates.
Tell me again why this bubble is such a bad thing?
Because it’s theft from people that work and save money. Your ill-gotten gains will be gone one way or another. Just wait…
So…are you a saver? What do you do with your savings? Keep it in cash and watch it become worth less over time….or do you try to make some investment to hedge your savings and possibly make a small profit?
Because I AM a saver…one of those people you’re so worried about. I just think you have to own something that will hold some value in a world full of paper assets that have no guarantee of doing that.
How much are you saving, that you’re so worried about being ripped off? What is your plan for your old age? Because I have a strong suspicion you’re probably not really a saver at all. But if you do have any savings, you should think about a hedge of some kind.
And if you don’t, then you can just stay broke and hate on people who manage to negotiate reality better than you.
Go eff yourself buddy… I might very likely have more money than you do Mr. big shot Austin slum lord. I’m a liquid multi-millionaire. You dummies crack me up. Every cycle thinking how smart you are with your little hamster wheel rentals that churn out a risky $1K/mo profit or less. Good on you if you found some value somewhere but it’s pretty well accepted that good risk/reward died in 2008 when true price discovery was destroyed across all asset classes. But do not for a second assume you know a thing about me or monetary policy because you clearly do not have a clue.
Some people have money/credit to sparte?