Residential
Real
Estate
Has the
Bubble Burst??
Prices of mid-tier single-family homes have dropped by 11% to 26% seasonally adjusted in these 15 bigger cities and counties through July, from their respective peaks, mostly in mid-2022, but two of them in 2024.
| 1 | Austin | TX | -26% | 2022 |
| 2 | Oakland | CA | -24% | 2022 |
| 3 | New Orleans | LA | -20% | 2022 |
| 4 | Lee County (Cape Coral, Fort Myers) | FL | -18% | 2022 |
| 5 | Sarasota County | FL | -17% | 2022 |
| 6 | Birmingham | AL | -17% | 2022 |
| 7 | McKinney | TX | -14% | 2022 |
| 8 | Washington | DC | -13% | 2022 |
| 9 | Hayward | CA | -13% | 2022 |
| 10 | Contra Costa County (East Bay) | CA | -12% | 2022 |
| 11 | Denver | CO | -12% | 2022 |
| 12 | Collier County (Naples) | FL | -12% | 2024 |
| 13 | Phoenix | AZ | -11% | 2022 |
| 14 | Aurora | CO | -11% | 2024 |
| 15 | Fort Worth | TX | -11% | 2022 |
New homes are competing with existing homes, and homebuilders
have to sell homes, it’s getting tougher, and they’re buying down mortgage
rates, and they’re offering lower price points, and they’re throwing incentives
at buyers. And the market of existing homes feels that.
DYI: Simply put, if prices remain too high for long enough, pricing more and more buyers out of the market, economic gravity will bring down prices to a more affordable level. So far from my point of view higher mortgage interest rates is doing the lion share of the decline with overall high prices taking a second seat. If mortgage rates go higher eventually it will end up being price drops far greater than what is caused by interest rates. Throw in a recession bargains in certain areas of the country will show up. If Price to Yearly Rents is less than 10 to 1 you’re in bargain territory (5 to 1 or less – bargain of a lifetime).
Buy vs Rent
Till Next
Time
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