Just ten days ago, your Lone Ranger here laid out why one should see the barely beginning downturn of the housing market in Seattle as the bellwether for a national housing market bust. Naturally a snowflake or two of criticism landed on my nose to say I knew nothing about real estate. That being the case, look at how the world has changed in so little time to catch up with me. An idea that you may have read here first is now mainstream news in every housing fact being reported across the nation and around the world.
The Seattle slump
Let’s start with Bloomberg’s article that came out two days ago since Bloombergalso now sees Seattle as being an omen for what is developing nationally:
“The U.S. Housing Market Looks Headed for Its Worst Slowdown in Years” Sellers were getting jumpy, even here in the hottest of markets. Homes that should have vanished in days were sitting on the market for weeks…. The U.S. housing market — particularly in cutthroat areas like Seattle, Silicon Valley and Austin, Texas — appears to be headed for the broadest slowdown in years. Buyers are getting squeezed by rising mortgage rates and by prices climbing about twice as fast as incomes, and there’s only so far they can stretch.
That, of course, has been my own argument as to why the housing market would resume its collapse this summer. (As regular readers will recall, I predicted last summer that a collapse that had begun would be delayed due to all the hurricanes and wildfires, which destroyed over half a million houses. Subsequently, I showed how the housing market ramped up right after that season of storms for about three months and then began to decline again, and I said the decline would become a collapse by the end of this summer. Now here we are already seeing it rapidly build.)
With incomes certain to remain flat (as they did) and mortgage rates certain to rise due to the Federal Reserve’s quantitative tightening (as they did), predicting a housing-market collapse for this summer seemed as easy as it was in 2007 to me. Yet, almost no one was seeing it … until now.
“This could be the very beginning of a turning point,” said Robert Shiller, a Nobel Prize-winning economist who is famed for warning of the dot-com and housing bubbles…. A slew of figures released this week gives ample evidence of at least a cooling. Existing-home sales dropped in June for a third straight month. Purchases of new homes are at their slowest pace in eight months. Inventory, which plunged for years, has begun to grow again as buyers move to the sidelines, sapping the fuel for surging home values. Prices for existing homes climbed 6.4 percent in May, the smallest year-over-year gain since early 2017, and have gained the least over three months since 2012….
So, if you wouldn’t take it from me, there is Bloomberg and even Robert Shiller now saying this looks like the turning point in the housing market. But let’s not stop there because the media abounded with stories about a turn in housing since I wrote on the subject.
Read the rest here: The Great Recession
‘gon be ug leeeee!