Homes are not affordable anywhere, with some places still rising.
The Wall Street Journal has an interesting article See Where Home Prices Are Rising and Falling the Most. That’s a free link for those who want a closer look.
The spring home-buying season is off to a slow start—but not everywhere.
Buyers are still competing against each other for homes in the Northeast and Midwest, where new supply has been limited and attractive listings can draw crowds.
Home prices in parts of the South have been flat or falling. Even with prices starting to come down, however, buyers are still struggling to afford purchases in places such as Texas and Florida, after prices skyrocketed during the pandemic-era housing boom. Home builders built aggressively in those areas during that time, and now many are sitting on unsold homes after mortgage rates doubled from their lows and relocations to these states slowed down.
Overall, the U.S. housing market is far less active than it was a few years ago, when mortgage rates were low and remote work allowed people to move farther from their offices. Just over four million existing homes were sold last year, down about one-third from the more than six million homes that sold in 2021.
Change in Home Prices vs Change in Inventory
Migrating South
During the pandemic, when home-buying demand soared, many Americans relocated to the South. They wanted a lower cost of living, warmer weather or fewer pandemic restrictions compared with other parts of the country. Many also got new jobs in those fast-growing markets.
From 2020 to 2024, the South’s population grew 5.1%, with Florida and Texas benefiting the most from population growth, according to Census Bureau data.
Home builders responded to the surge in demand by aggressively building new homes. New-home prices climbed as buyers moving from high-cost coastal markets could afford to pay cash for homes.
But the migration to Southern markets has slowed since the height of the pandemic home-buying boom, because those markets got more expensive and some companies ended their remote-work policies. Higher mortgage rates and high home prices have also pushed many buyers out of the market. That has left some Texas and Florida markets with a surplus of newly built homes, leading to price declines.
Share of Mortgages Lower than 4 Percent
One signal of what’s going on in the West is that more sellers in those markets are offering concessions to buyers. That is a sign that even though prices are rising in those markets, buyers have more negotiating leverage than they used to. In Seattle, for example, 71% of home sellers offered some form of concession in the first quarter of this year, up from 36% a year earlier, according to Redfin.
High concession rates show that sellers and buyers are far apart in their negotiations. If demand gets weaker in these markets, more sellers could be forced to cut prices to close a deal.
On What Measure Are Prices Changing?
Unfortunately, the article did not even say.
I suspect it’s median price, a poor measure of price changes, because it does not include number of rooms, size of rooms, lot size, or amenities.
I don’t know, but most sites are addicted to median price.
Case Shiller Home Prices Year-Over-Year
Case-Shiller, a measure of the same house over time, presents a much better way of looking at prices.
It’s drawback is lag. Data is through February, and that represents the market for December, January, and February.
So Case-Shiller is lagging by about four months.
10-City and National Year-Over-Year Prices
- Boston: 5.93
- Chicago: 6.97
- Denver: 1.60
- Las Vegas: 4.93
- Los Angeles: 4.44
- Miami: 2.96
- New York: 7.75
- San Diego: 2.77
- San Francisco: 3.09
- D.C. : 4.57
- National: 3.89
- 10-City: 5.21
Case-Shiller Home Price Index National and Top 10 Metro
Case-Shiller National, Top 10 Metro, CPI, Rent
That’s the chart that best shows the squeeze on zoomers and millennials who want to buy a home but cannot afford one.
Price Change Since January 2020
- Case-Shiller National: 50.6 Percent
- 10-City: 53.5 Percent
- Rent of Primary Residence: +27.1 Percent
- Owners’ Equivalent Rent: +33.8 Percent
- CPI: +23.3 Percent
Home prices since January of 2020 are up more then double the CPI and nearly double the price of primary rent.
It is meaningless that prices in Dallas and Phoenix are down one percent, 2.6 percent in Austin, or even 7.5 percent in Cape Coral, Florida where everyone is struggling with rapidly rising hurricane insurance.
Homes are not affordable anywhere.
Thank the Fed and Congress
Thank Congress for “affordable home” programs such as Fannie Mae and Freddie Mack programs pushing homes and placing upward pressure on prices.
But more importantly, thank the Fed for asinine QE policies suppressing long-term interest rates below 3 percent enabling those who owned houses prior to 2020 to refinance at or below 3 percent.
Fed policies sent asset prices soaring while screwing everyone hoping to but a house but couldn’t.
But hey, look on the bright side. Prices are down 7.5 percent in Cape Coral, Florida (assuming you can afford hurricane insurance).
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Florida is a partially drained, mosquito infested swamp. Eventually it will be back under water. Speaking of underwater, anyone that bought there in the last three years is underwater for what they paid and I sure hope they like taking a bath if they want or need to sell.
Even high end cities like Naples are seeing beautiful homes sit on the market without buyer activity. I have friends there that have either condos or houses on the water and they are being slammed with fees, taxes and/or insurance. The state is an absolute mess. Two of them have properties for sale and absolutely no offers – few lookers.
I am so happy to have sold my business and homes there.
Imagine when the next cat 5 hurricane buzzsaws its way across the state or up one of the coasts. The stuff nightmares and horror movies are made of.
My friend you are absolutely right on!!!! We are in the first inning of this disaster and most will lose all their gains back to 2016 when all is done. The Lord gives and the Lord takes.
Sold a house in the NE. It went in 4 days with a bidding war. Have been on the flip side of supply and demand before, not fun. Good luck to the buyers out there now.
The remedy is just like getting lost. Back up and start over. Drain reserves while driving the banks out of the savings business (creating higher real rates of interest).
All Trump has to do is have the FDIC lower deposit rate insurance back to $100,000.
> All Trump has to do is have the FDIC lower deposit rate insurance back to $100,000.
This will do nothing. If you have 200K in an account you’ll simply open 2 accounts and put 100K in each so that they remain fully insured.
> Drain reserves while driving the banks out of the savings business (creating higher real rates of interest).
Banks aren’t in the savings business. Savings are a liability to them because they have to pay interest (they park all that money at the Fed for free interest). They are in the loan business which are assets to them because it generates money via interest paid on the loans.
The remedy is just like getting lost. Back up and start over. Drain reserves while driving the banks out of the savings business (creating higher real rates of interest).
Basically the eastern half of the country except for Florida is still going gangbusters.
Connecticut is bonkers. Inventory is down because fewer are selling probably because the crazy price increases of the last 2 years make any house they want to move to unaffordable.
Prices have gone up more since interest rates increased to 7% than they did during the 3% era.
According to Redfin, West Hartford, CT has a median sales price of $485,000, up 7.8% from a year ago. Only 30 houses sold in March, down 38% from last year. This is a town of 64,000. Sales to list price is 107.3% which means every house gets multiple bids.
If you can’t afford a bidding war, get out of the way for the many who can.
Median home prices aren’t a good measure of anything.
On the other hand this: “Only 30 houses sold in March, down 38% from last year” tells you everything you need to know about West Hartford. Things are definitely NOT BONKERS if sales are down 38% from last year.
If you don’t think sales price is a good metric, Redfin says: “The median sale price per square foot in West Hartford is $264, up 13.1% since last year.”
I know it’s hard for people in Florida to imagine that the real estate market in Connecticut is hot, but it is because of the extreme lack of inventory. Listings in 2024 in CT were down 75% from 2019, the largest drop of any state.
The Problem with median price is it doesn’t tell you anything. Maybe only large home square ft wise were sold which cost more. Maybe only rich people bought homes there etc.
Presumably you understand the median price is just the middle home is the list of homes sold so if there were 101 homes sold in a year, the price of the 51st most expensive home is the median price. The more homes sold, the better the median price is as a guesstimate of home appreciation. But with fewer sales (like 38% fewer) its liable to be far more inaccurate.
Maybe we’ll see flip this house reality shows again.
Chart of “Change in Home Prices vs Change in Inventory”
That’s a beautiful example of a supply / demand curve from Economics 101.
Everyone underestimates the impact of the FHFA conforming loan limit, the maximum loanable amount for a GSE sponsored loan. Had that limit been frozen at 2019 levels throughout this madness, home prices would be much lower than they are today, likely to the tune of at least 20% lower. The ceiling limit went from $726K in 2019 to $1.2 million today, and the base limit went from $484K in 2019 to $806K today.
Florida real-estate has always been boom-bust. It is quick and easy to build there so over-building occurs and then prices collapse and the cycle starts all over allowing younger families to buy in. California on the other hand makes it impossible to build so prices rarely come down.
Prices in much of California dropped 30-80% from 2005-2009
Which cities?
Home prices all over the developed world and some of the third world have gotten so expensive as to make it impossible for the middle class to buy in. It is a global problem brought on by excess global savings with not enough interesting projects to invest in so it goes into real estate.
Ah, the excess savings theory. Promulgated by the same $hitheads who cut rates to zero, and pumped fiat like drunken sailors.
The amount of money in the system drives the price level of EVERYTHING.
What they really are saying is that the US overconsumes foreign goods.
Many are going to find buyers are a mirage and prices go back to 2010 levels.
That seems incredibly unlikely given that 2010 was 15 years ago.
You don’t seem to be factoring in inflation. Assuming its 3% a year (that’s roughly in line with estimates and what typical raises are) then 1.03^15=1.557. That means homes should be 57% more expensive just based on inflation of wages. So the 200K median price in 2010 would be 311 today. So it seems very unlikely prices would drop below 311 (the equivalent of 200K in 2010).
https://fred.stlouisfed.org/series/MSPUS
Inflation matters. But one also needs to account for interest rates, since the marginal buyer is shopping based on monthly payments rather than house price.
Rates ahead are likely to remain higher than in 2010, so prices may bottom out a bit lower than a straight inflation estimate would suggest.
2016 is the mean that is where in ultimately ends up.
Hey, Cape Coral. Isn’t that where the poster Black Swan who used to post here 15+ years ago move to? A falling out of some sort occurred? Best I could tell from afar, it was over real estate investment opinions.
Anyway, Freddie and Fannie limits should be moved down, then dissolved. At that point there’d be true price discovery. These are subsidies for sellers.
I agree with you about Phony and Fraudie.
Unfortunately, those 2 ARE the housing market because they roughly own 50% of all MBS’s (which in effect makes the tax payers on the hook for these mortgages). No idea who would step in if they actually went away because that’s a LOT of money needed.
I think I remember Black Swan got into — and then got out of, after a few years — the Cape Coral market.
You and I have been here a long time.
Map of Median US Home Prices By County In 2024 https://brilliantmaps.com/map-of-median-us-home-prices-by-county-in-2024/
Thanks for the helpful map.