The housing market tanked WAAAAY more than expected....

The Tradition

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Pending home sales, a measure of signed contracts on existing homes, dropped a much worse-than-expected 10.2% in September from August, according to the National Association of Realtors.

Economists had predicted a 4% decline. Sales were down 31% year over year.

This marks the lowest level on the pending sales index since June 2010, excluding April 2020, when the Covid pandemic was in its early days.

Realtors point squarely to sharply higher mortgage rates, which had sat at record lows for the first two years of the pandemic. The average rate on the popular 30-year fixed mortgage was right around 3% at the start of this year, but then rose swiftly, crossing 6% in June, according to Mortgage News Daily. It pulled back a bit in July and August, but then began rising again, crossing 7% in September, when these contracts were signed.

“Persistent inflation has proven quite harmful to the housing market,” said NAR Chief Economist Lawrence Yun. “The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers.”

Mortgage demand and new listings are dropping, too, because homeowners are unwilling to give up their record-low interest rates to trade up to a much higher one. For potential buyers, the increase in rates means the monthly payment on a median-priced home, with a 20% down payment, is now close to $1,000 higher than it was in January.

“With wages falling behind on account of inflation, and rates rising, buyers’ purchasing power has been reduced by over $100,000,” said George Ratiu, senior economist at Realtor.com.

“As we look to the remainder of the year, we can expect interest rates to continue their upward trajectory. The Federal Reserve’s monetary tightening has not yet made a dent in inflation, which means that the bank is expected to hike its policy rate further,” he added.

While red-hot home prices are starting to cool and even drop in some local markets, the decline is not enough to make up for the increase in interest rates. Home prices are up more than 40% since the start of the pandemic, fueled largely by those rock-bottom interest rates early on.

Regionally, pending home sales dropped 16.2% month to month in the Northeast and were down 30.1% year over year. In the Midwest, sales were down 8.8% for the month and 26.7% from one year ago.

In the South, sales retreated 8.1% for the month and were down 30.0% year over year, and in the West, the most expensive region in the nation, sales fell 11.7% for the month and were down 38.7% from the year before.


As the husband of a realtor I just want to say, "Thanks, Joe."
 

joelbc1

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you can’t always get what you want!
The only reason the Fed has to be so aggressive is because of all the Biden money sloshing around the economy....
You are soooo full of shit Trad! Doesn’t your stupidity shame you the least bit? This mortgage raise has been in the works for 14 years....someone, at sometime had to pull the trigger....and you blame Biden! LOL
Your phuquin’ brain is incapBle of rational functioning...
 

seminole97

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2022-10-02_00-homebuyer-purchasing-power.png
 

NCHawk5

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Yeah, this has been expected/anticipated for anyone who isn’t a moron. I bought my newest project $20 k under listed value. It’s huge, but definitely a risky buy. My interest rate is locked and worst case scenario I sit on it(cash out towards P is worthless anyway). I’m ahead on inflation. Substantially ahead.
 

joelbc1

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you can’t always get what you want!
Yeah, this has been expected/anticipated for anyone who isn’t a moron. I bought my newest project $20 k under listed value. It’s huge, but definitely a risky buy. My interest rate is locked and worst case scenario I sit on it(cash out towards P is worthless anyway). I’m ahead on inflation. Substantially ahead.
That’s because you are a financial savant, NC. Don’t be modest...just admit it.....
 
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mauricehawki

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Can someone explain why home buyers have to take on the brunt of inflation fighting? Seems no one else is suffering except home buyers on the inflation fighting front. Sure everyone is paying more at the cash register but a home buyer gets a double whammy. Sometimes the timing of needing a hew home can not be planned so why should those unfortunate buyers be the inflation fighters?
 
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The Tradition

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Can someone explain why home buyers have to take on the brunt of inflation fighting? Seems no one else is suffering except home buyers on the inflation fighting front. Sure everyone is paying more at the cash register but a home buyer gets a double whammy. Sometimes the timing of needing a hew home can not be planned so why should those unfortunate buyers be the inflation fighters?

It's a problem for anyone who desires to take out a loan. Business owners take it in the shorts, too.
 

NCHawk5

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That’s because you are a financial savant, NC. Don’t be modest...just admit it.....
I work money, for sure. I’m not a savant- and anyone who tells you they are should raise red flags.
I do what is necessary to invoke less taxes on ventures that deserve less taxes. If that makes sense.
 

seminole97

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I work money, for sure. I’m not a savant- and anyone who tells you they are should raise red flags.
I do what is necessary to invoke less taxes on ventures that deserve less taxes. If that makes sense.

200.gif
 

joelbc1

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you can’t always get what you want!
Can someone explain why home buyers have to take on the brunt of inflation fighting? Seems no one else is suffering except home buyers on the inflation fighting front. Sure everyone is paying more at the cash register but a home buyer gets a double whammy. Sometimes the timing of needing a hew home can not be planned so why should those unfortunate buyers be the inflation fighters?
?????
WTF you talking about? Try being poor...and renting if you want to experience inflation. Keeeeerist, home owners control their costs 100% in comparison.
Sometimes maurice, life is hazard. Buck up, buttercup.
 

seminole97

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Yeah, says an individual who has never created anything in his life other than dissent based on falsehoods- a conspiracy proponent.
What a peculiar delusion to imagine you have any knowledge whatsoever regarding what I have created in this life.
It comes off half baked as an attempt at insult.

I’m genuinely happy for you for whatever money you keep from The Man.


giphy.gif
 

funksouljon

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Jan 26, 2004
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What a peculiar delusion to imagine you have any knowledge whatsoever regarding what I have created in this life.
It comes off half baked as an attempt at insult.

I’m genuinely happy for you for whatever money you keep from The Man.


giphy.gif


It was a bit of a weird response, but someone pulled the cord today, so.....
 

MitchLL

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Dec 26, 2018
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OP is a whiny, little pussy always looking for sympathy.

Obviously a drama queen.

Thing is...as others have stated, this is just a market correction that occurs at different intervals throughout history.

This is exactly what the real estate market needed. It's a reminder to potential buyers to purchase within your means.

Thanks, Brandon.
 

noleclone2

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I mean, if there is anything everyone on HORT could agree on, it would be “housing prices are out of control” followed closely by “the line at OPs mom’s house is always too long”
 

seminole97

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OP is a whiny, little pussy always looking for sympathy.

Obviously a drama queen.

Thing is...as others have stated, this is just a market correction that occurs at different intervals throughout history.

This is exactly what the real estate market needed. It's a reminder to potential buyers to purchase within your means.

Thanks, Brandon.
When your purchasing power declines by over 25 percent in less than two years because the Fed is scrambling to rein in the inflation wrought by trillions in unfunded spending passed by Pelosi and Schumer, why would anyone thank Biden?


Better would be to get the Federal Reserve out of the business of manipulating interest rates and let the market signal when savings are insufficient to fund borrowing.
 
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Gus is dead

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You are soooo full of shit Trad! Doesn’t your stupidity shame you the least bit? This mortgage raise has been in the works for 14 years....someone, at sometime had to pull the trigger....and you blame Biden! LOL
Your phuquin’ brain is incapBle of rational functioning...
It doesn’t matter. The entire public, save for a few losers on here, blame Biden. No one wants excuses. The reckoning comes Nov 8.
 
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Hawki97

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Dec 16, 2001
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Pending home sales, a measure of signed contracts on existing homes, dropped a much worse-than-expected 10.2% in September from August, according to the National Association of Realtors.

Economists had predicted a 4% decline. Sales were down 31% year over year.

This marks the lowest level on the pending sales index since June 2010, excluding April 2020, when the Covid pandemic was in its early days.

Realtors point squarely to sharply higher mortgage rates, which had sat at record lows for the first two years of the pandemic. The average rate on the popular 30-year fixed mortgage was right around 3% at the start of this year, but then rose swiftly, crossing 6% in June, according to Mortgage News Daily. It pulled back a bit in July and August, but then began rising again, crossing 7% in September, when these contracts were signed.

“Persistent inflation has proven quite harmful to the housing market,” said NAR Chief Economist Lawrence Yun. “The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers.”

Mortgage demand and new listings are dropping, too, because homeowners are unwilling to give up their record-low interest rates to trade up to a much higher one. For potential buyers, the increase in rates means the monthly payment on a median-priced home, with a 20% down payment, is now close to $1,000 higher than it was in January.

“With wages falling behind on account of inflation, and rates rising, buyers’ purchasing power has been reduced by over $100,000,” said George Ratiu, senior economist at Realtor.com.

“As we look to the remainder of the year, we can expect interest rates to continue their upward trajectory. The Federal Reserve’s monetary tightening has not yet made a dent in inflation, which means that the bank is expected to hike its policy rate further,” he added.

While red-hot home prices are starting to cool and even drop in some local markets, the decline is not enough to make up for the increase in interest rates. Home prices are up more than 40% since the start of the pandemic, fueled largely by those rock-bottom interest rates early on.

Regionally, pending home sales dropped 16.2% month to month in the Northeast and were down 30.1% year over year. In the Midwest, sales were down 8.8% for the month and 26.7% from one year ago.

In the South, sales retreated 8.1% for the month and were down 30.0% year over year, and in the West, the most expensive region in the nation, sales fell 11.7% for the month and were down 38.7% from the year before.


As the husband of a realtor I just want to say, "Thanks, Joe."

Good. I want to buy a second home in the mountains. Want this market to crash. Paying cash so don't care about the rates. Burn baby, burn.
 

EasyHawk

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Jun 21, 2015
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Yeah, this has been expected/anticipated for anyone who isn’t a moron. I bought my newest project $20 k under listed value. It’s huge, but definitely a risky buy. My interest rate is locked and worst case scenario I sit on it(cash out towards P is worthless anyway). I’m ahead on inflation. Substantially ahead.
So you didn’t expect it. Luckily it worked out.
 

Hawki97

HR Heisman
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Dec 16, 2001
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Iowa City, IA
Yeah, this has been expected/anticipated for anyone who isn’t a moron. I bought my newest project $20 k under listed value. It’s huge, but definitely a risky buy. My interest rate is locked and worst case scenario I sit on it(cash out towards P is worthless anyway). I’m ahead on inflation. Substantially ahead.

House flipper too? Do you have a show on HGTV?
 

St. Louis Hawk

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Can someone explain why home buyers have to take on the brunt of inflation fighting? Seems no one else is suffering except home buyers on the inflation fighting front. Sure everyone is paying more at the cash register but a home buyer gets a double whammy. Sometimes the timing of needing a hew home can not be planned so why should those unfortunate buyers be the inflation fighters?

Because home owners can deduct interest expense, leverage bank financing and risk with very little skin in the game, and refinance when the market rate inevitably comes down in 12-24 months?

Good grief.
 
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seminole97

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Because home owners can deduct interest expense, leverage bank financing and risk with very little skin in the game, and refinance when the market rate inevitably comes down in 12-24 months?

Good grief.
The tax cuts under Trump that basically doubled the standard deduction eliminated any advantage in itemizing for most filers. They’re in a better position with respect faxes owed under the increased standard deduction, but the home related advantage is basically eliminated for most.

For the first year following the implementation of the TCJA, an estimated 135.2 million taxpayers were expected to opt for the standard deduction. By comparison, 20.4 million were expected to itemize, and, of those, 16.46 million would claim the mortgage interest deduction
 

Hawki97

HR Heisman
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Dec 16, 2001
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Iowa City, IA
The tax cuts under Trump that basically doubled the standard deduction eliminated any advantage in itemizing for most filers. They’re in a better position with respect faxes owed under the increased standard deduction, but the home related advantage is basically eliminated for most.

For the first year following the implementation of the TCJA, an estimated 135.2 million taxpayers were expected to opt for the standard deduction. By comparison, 20.4 million were expected to itemize, and, of those, 16.46 million would claim the mortgage interest deduction

This. I’m amazed how many people still think mortgage interest expense helps them. No offense St Louis - its very common for folks to not realize how the doubling of the Standard Deduction basically killed itemizing for a huge chunk of folks.
 

luvmyhawks

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Mar 22, 2005
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Can someone explain why home buyers have to take on the brunt of inflation fighting? Seems no one else is suffering except home buyers on the inflation fighting front. Sure everyone is paying more at the cash register but a home buyer gets a double whammy. Sometimes the timing of needing a hew home can not be planned so why should those unfortunate buyers be the inflation fighters?

Because artificial rates and real estate values are the main catalyst for our inflation right now. It should be the sector feeling the most pain.
 

mauricehawki

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Feb 15, 2006
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Because artificial rates and real estate values are the main catalyst for our inflation right now. It should be the sector feeling the most pain.
So crashing the real estate market cheapens food, gas, and everyday necessities? Just trying to understand how this works?
 

Jan Itor

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Jan 31, 2009
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The only reason the Fed has to be so aggressive is because of all the Biden money sloshing around the economy....
Covid is the major driver of inflation. The first two Covid relief packages were needed because of the lockdowns. The 3rd, was not needed, IMO. Things were open and people were going back to work.

So if you want to blame Biden for any of this, maybe adding 1.9 trillion when it wasn’t really needed. But even that’s a bit of a stretch.

Once we locked down, the supply shortage we’re seeing now was inevitable.

I don’t blame Trump for this either. I will say all of the Covid relief packages were too broad. People like me did not need those checks. Congress could have been more surgical with these.
 

luvmyhawks

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Mar 22, 2005
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It is probably far too complicated for you to understand, but here goes. The fed artificially keeping rates low by buying $35b in mbs every single month + zero reserve ratio requirement X money multiplier equals an overheated real estate market and an inflationary environment.

Too much money supply.
 
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NCHawk5

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Covid is the major driver of inflation. The first two Covid relief packages were needed because of the lockdowns. The 3rd, was not needed, IMO. Things were open and people were going back to work.

So if you want to blame Biden for any of this, maybe adding 1.9 trillion when it wasn’t really needed. But even that’s a bit of a stretch.

Once we locked down, the supply shortage we’re seeing now was inevitable.

I don’t blame Trump for this either. I will say all of the Covid relief packages were too broad. People like me did not need those checks. Congress could have been more surgical with these.
Omg, who has been pushing this for months now? I’ll give you a hint: me. Biden threw gasoline all over this problem, then acts like it didn’t happen. He’s a moron. Dems are morons. And it wasn’t bipartisan.
 

NCHawk5

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It is probably far too complicated for you to understand, but here goes. The fed artificially keeping rates low by buying $35b in mbs every single month + zero reserve ratio requirement X money multiplier equals an overheated real estate market and an inflationary environment.

Too much money supply.
Lol. Yeah, or people aren’t selling and that created a supply shortage at a time many were looking to move due to better job opportunities or remote work potential. Jesus, I love the money supply economists who are too stupid to just look at reality.
 

The Tradition

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Lol. Yeah, or people aren’t selling and that created a supply shortage at a time many were looking to move due to better job opportunities or remote work potential. Jesus, I love the money supply economists who are too stupid to just look at reality.

The first six months of the year houses were selling themselves.

The brakes have been completely locked-up on that now.

Why would anyone want to abandon their 3% mortgage to sell and have to pay 7% for the next house?
 
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NCHawk5

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The first six months of the year houses were selling themselves.

The brakes have been completely locked-up on that now.

Why would anyone want to abandon their 3% mortgage to sell and have to pay 7% for the next house?
Well- I’ll throw a rock into your scenario. I sold a house in October of ‘21 that was in an ARM for over twice what I paid for it in ‘16. The exemption on CG for a residence is enticing, and I strategically “live” in one of my properties that I want to sell. Cash heavy, and it didn’t get reinvested until the summer of ‘22 at like 5% (still historically favorable).
 

The Tradition

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Well- I’ll throw a rock into your scenario. I sold a house in October of ‘21 that was in an ARM for over twice what I paid for it in ‘16. The exemption on CG for a residence is enticing, and I strategically “live” in one of my properties that I want to sell. Cash heavy, and it didn’t get reinvested until the summer of ‘22 at like 5% (still historically favorable).

You're not typical.