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I calculated on a previous post that an approximately 30% price drop is needed based on a the 30 year mortgage rate increasing from around 2.75% to 6%. That means the COVID pandemic price increase will be wiped out and we return to early 2020 price levels for housing.
Once layoffs pick up steam, we’ll see a bigger price drop.
Did your calculations include the massive increase in the money supply?
Housing prices are not the same as housing payments...and the role interest rates plays in that.
Eman says
1) This is a point some people can’t grasp.
Housing prices are not the same as housing payments...and the role interest rates plays in that.
Eman says
Once layoffs pick up steam, we’ll see a bigger price drop.
That. In addition, I don't see any IPOs in the pipeline. It may be relevant because IPOs produce new millionaires who feed the demand in Bay Area.
To be frank, I keep hearing about layoffs in high-tech but anekdotaly I don't see it (yet?).
HunterTits says
Housing prices are not the same as housing payments...and the role interest rates plays in that.
I agree. A large majority of homes are bought with a mortgage. When you buy a home, you are really buying a monthly payment (mortgage, property tax, property insurance, and HOA fee).
I posted before on Patnet that house prices need to drop 30% based on 30 year mortgage rate increasing from 2.8% to 6%. The Federal Reserve wants to wipe out housing price gains accrued from mid 2020 to early 2022. They already wiped out most of the gains for the stock market.
.
some data
actually happened
That is why I am figuring housing prices need to come down about 30%.
Eman says
actually happened
S&P 500 peaked to 3381 in February 2020.
It is now at 3900 after dropping from 4818.
It recently bottomed to 3636 (a 24.5% drop) and this bottom is within 10% of the February 2020 peak. That drop to 3636 wiped out a majority of the COVID pandemic gains.
Is it reasonable to use the above metrics to extrapolate the potential drop in housing prices
If we have the right products price, they’ll still sell in any market.
Don't most things overcorrect?
Redfin Investor Purchases by zip code:
https://www.redfin.com/news/data-center/new-construction/
Redfin Investor Purchases by zip code:
https://www.redfin.com/news/data-center/new-construction/
zzyzzx says
In the same area: https://www.zillow.com/homedetails/6803-E-Main-St-UNIT-3317-Scottsdale-AZ-85251/82387358_zpid/ - 2.4M for 1,497sq.f condo with >1K HOA
And there I was, thinking that Bay Area is expensive.
The Bay Area is becoming cheap...?
Interesting investors didn’t slow down in buying properties through the housing bust, and they bought more through the 2010’s.
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https://finance.yahoo.com/news/pimco-kiesel-called-housing-top-160339396.html?source=patrick.net
Bond manager Mark Kiesel sold his California home in 2006, when he presciently predicted the housing bubble would pop. He bought again in 2012, after U.S. prices fell more than 30% and found a floor.
Now, after a record surge in prices, Kiesel says the time to sell is once again at hand.