Offbeat Housing shortage could be turning, signaling a price bubble

19:00  12 july  2018
19:00  12 july  2018 Source:   cnbc.com

U.S. housing starts drop to a nine-month low

  U.S. housing starts drop to a nine-month low U.S. homebuilding fell to a nine-month low in June and permits declined for a third straight month, dealing a blow to the housing market as it struggles with an acute shortage of properties available for sale. Housing starts tumbled 12.3 percent to a seasonally adjusted annual rate of 1.173 million units last month, the Commerce Department said on Wednesday. That was the lowest level since September 2017.The percent drop was the biggest since November 2016. Data for May was revised down to show starts rising at a 1.337 million-unit rate instead of the previously reported 1.350 million-unit rate.

Before the crash we had housing oversupply, but today we have a housing shortage . Low supply and high demand means high prices . One could argue that today’s housing bubble It may over the next few years turn out that these forces inflate a housing bubble —and that bubble might burst

The United States housing bubble was a real estate bubble affecting over half of the U.S. states. Housing prices peaked in early 2006, started to decline in 2006 and 2007

The most competitive and tightest housing market in decades may finally be loosening its grip, and that could put pressure on overheated home prices. The supply of homes for sale in the second quarter of 2018, the all-important spring market, rose at three times the rate of the same period in 2017, according to Trulia, a real estate listing and research company.

The inventory jump was the largest quarterly improvement in three years and could be signaling a slight thaw in today’s very hot housing market. But it is just a start.

“This seasonal inventory jump wasn’t enough to offset the historical year-over-year downward trend that has continued over 14 consecutive quarters,” according to Alexandra Lee, a housing data analyst for Trulia's economics research team.

Home prices make the biggest jump in four years

  Home prices make the biggest jump in four years As the supply of homes for sale continues to fall, prices are heating up at the fastest pace in years.Home prices jumped 7.1 percent annually in May, according to a new report from CoreLogic. That's the biggest jump in four years. Annual price gains had been shrinking slightly, as mortgage rates rose, but apparently higher rates are not hurting demand. They are, however, exacerbating the already critical supply shortage.

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Last year the U.S. median home price reached 6,000, up two percent from the 2006 housing bubble peak. Hale says there is a housing shortage in some parts of the country because builders have not built as many new homes; construction is about 50 percent of what it was in 2006.

The supply of homes for sale is still down 5.3 percent compared to a year ago. Still, all real estate is local, and some markets are seeing greater relief. Thirty of the nation’s 100 largest cities, including New York City, Miami and Los Angeles, now have more supply than a year ago.

Vicious circle

Of course, the increase is a double-edged sword. Supplies are increasing because sales are slowing, and sales are slowing because prices are so high. In New York City, the median household must spend 65 percent of its income to buy a home, according to Trulia. In Los Angeles, it takes 59 percent.

“Among these unaffordable metros, San Diego posted the largest inventory growth—22 percent year-over-year,” wrote Lee. “Compare that with the same quarter last year, when that Southern California metro registered a 28 percent inventory decrease.”

Home prices are high. What could cool them down?

  Home prices are high. What could cool them down? Housing supplies are increasing in many cities, starting to reverse a long-term decline that has driven up home pricesLoad Error

The housing bubble in Sweden is so severe there is a shortage of toilets. Economists worry that if the economy takes a downturn, Swedes will be forced to liquidate their stocks and bonds at the same time they sell their houses — and that could cause an economic death spiral.

You're viewing YouTube in Russian. You can change this preference below. Housing Crash 2019 - Landlords Will Sell For Any Price When Cashflow Turns Negative! Housing Bubble USA End is Near, 2018 Real Estate Plunge - Продолжительность: 6:12 BULL BOOM BEAR BUST 30 202

Historically, prices lag sales by a few months, and sales have been slowing this year in most major markets. This housing cycle, however, has so far been unique. The drop in sales is due to the tight supply, and that just pushes prices higher. The tight supply is due to very high demand and still below-normal construction, as the market continues to recover from the worst housing crash in history almost a decade ago.

Home sales in Southern California fell in May by 3.4 percent annually, according to CoreLogic, but the median price of a home sold in May was up over 8 percent to a record $530,000. This even with the slightly increased inventory.

“With inventory tight and affordability worsening, the number of Southern California homes sold has fallen on a year-over-year basis during three of the last five months,” said Andrew LePage, a CoreLogic analyst. “Total sales during the first five months of this year fell about 2 percent from the same period last year, reflecting limited inventory particularly in more affordable price ranges.”

A Single Parking Space in Hong Kong Has Sold for $765,000

  A Single Parking Space in Hong Kong Has Sold for $765,000 Spare a thought for Hong Kong’s beleaguered car owners. The market for parking spaces is hotter than ever as a single spot in a luxury development in Kowloon’s Ho Man Tin district changed hands for a record HK$6 million ($765,000).“It’s crazy," said Darrin Woo, a classic car collector who shipped his 1968 Mercedes-Benz 600 Pullman limo and a fiery red 1957 Fiat Abarth to California to save money on storage. “Buy a space? No way. I could buy five cars for that much.”The average parking space now goes for about HK$2.25 million, a more than sixfold increase since 2006.

A potentially-destructive house price bubble is one of the key risks we have to manage as best we can . The shortage of houses for sale is strong evidence against a house price bubble . As a result, the increase in high-PTI MSAs since 2010 appears unlikely to signal another bubble .

Most of the actual data suggests that Australia does not suffer a shortage , but rather, a debt-fuelled bubble . The ratio of income to house price , relative rental yields, rental price growth and the proportion of mortgage debt to GDP.

Charlotte buyers' challenge

The disparity is even more striking in Charlotte, a very hot market fueled by big job growth and an influx of retiring baby boomers. Home sales fell nearly 12 percent in June annually but the median price of a home sold was still nearly 3 percent higher, according to the Charlotte Regional Realtor Association. Homes were also selling, on average, 8 days faster than a year ago.

“Even though the Charlotte region is wedged into a solid seller’s market, incredibly low supply coupled with higher prices and rising mortgage rates are presenting challenges to buyers,” wrote 2018 Charlotte Regional Realtor Association/CarolinaMLS president Jason Gentry in a release. “However, home sales are still occurring across the region, as buyers continue to seek homes outside Charlotte’s city limits.”

Inventory in Charlotte did rise one percent compared to a year ago, but supplies are still quite low.

While home builders are slowly ramping up production, they are doing so largely in the move-up and luxury market. Sales of newly built homes have been rising in Southern California, easing the inventory shortage somewhat, but not enough.

“New-home sales continue to run well below historically normal levels, with the sales through May of this year 37 percent below the average number sold during that five-month period over the past three decades,” noted LePage. “Also, most of the new homes sold this year were aimed at mid-market to high-end buyers, with almost two-thirds selling for $500,000 or more and 15 percent selling for less than $400,000.”

Mortgage applications to purchase a newly built home plummeted nearly 9 percent in June compared to June 2017, according to the Mortgage Bankers Association. This suggests lower new home sales going forward, despite higher prices.

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