Is another decline in the U.S. housing market imminent?

[C.]

I've been reading a few articles and watching prices. I feel like several cities that saw rapid price appreciated after the Great Recession may be due for a slight pullback.

One example of many: http://austin.culturemap.com/news/re...travis-county/

What's SSP thoughts and how is the housing market in your city?

Rising interest rates reduces a potential home buyer's ability to borrow, which should limit price appreciation.

There was also a lot of new condos built post recession, where the developer was subsidizing maintenance costs to keep the HOA/condo fees artificially low. As they sell the last of the units and turn complete control of the association over to the homeowners, prices have been rising as the true costs are revealed. (Let's be real, the manicured lawns, swimming pools, game rooms and exercise equipment look like cool features at first, but they're gonna be killer maintenance and replacement reserves in the long-run. That's why I prefer a condo with none of that extra crap.)

[JManc]

Austin could stand a pull pack, real-estate there has gotten out of hand. By TX standards. Here in Houston but the downturn in the O&G industry and Harvey made their impact already.

[C.]

Originally Posted by JManc

Austin could stand a pull pack, real-estate there has gotten out of hand. By TX standards. Here in Houston but the downturn in the O&G industry and Harvey made their impact already.

Correct me if I'm wrong, but Houston is one of the most affordable big cities in the nation. Has there been major appreciation in the past few years?

[Sun Belt]

Originally Posted by CIA

Correct me if I'm wrong, but Houston is one of the most affordable big cities in the nation. Has there been major appreciation in the past few years?

I think there has been major appreciation just about everywhere since 2011.

A home doubling in price from say $100,000 to $200,000, while cheap for somebody living in San Francisco is significant for those that live within the region that is known to have cheap housing.

E] the median list price per square foot in Houston bottomed in 2012 @ $79/sf. It peaked in 2016 @ $167/sf and is now at $162/sf --

[JManc]

Originally Posted by CIA

Correct me if I'm wrong, but Houston is one of the most affordable big cities in the nation. Has there been major appreciation in the past few years?

Compared to the West/ East Coasts, yes, it is still fairly affordable overall but rapidly becoming out of reach for a lot of middle class in most of the decent/ stable areas. You can buy a fixer-upper for $100k in the city limits but it's in the hood or an area in transition otherwise you're looking at a minimum of $300-$400k for modest square footage. Again, a bargain compared to the Bay Area but not exactly "affordable" anymore in the truest sense. Even decent suburbs (stable/ good schools) have seen a huge spike in values. Our main house went up $100k in value in just 5 years and our other one about $75k. The problem is that much of the modest housing stock is being replaced by bigger homes and/ or upscale townhouses dricing everything else up.

[C.]

Originally Posted by Sun Belt

I think there has been major appreciation just about everywhere since 2011.

A home doubling in price from say $100,000 to $200,000, while cheap for somebody living in San Francisco is significant for those that live within the region that is known to have cheap housing.

E] the median list price per square foot in Houston bottomed in 2012 @ $79/sf. It peaked in 2016 @ $167/sf and is now at $162/sf --

Interesting, thanks!

[Steely Dan]

the chicago housing market is still crawling along.

zillow says home values increased 3.4% in the past 12 months.

zillow predicts home values will increase 4.5% in the next 12 months.

not horrible. not great. meh.


we never saw the large post-recession price appreciations that the coastal cities experienced, so there's not a whole lot to crash down from.

median list price per sq. foot is still only $245, which is bargain-basement compared to other big urban alpha cities (other than philly).

[Trae]

Originally Posted by JManc

Austin could stand a pull pack, real-estate there has gotten out of hand. By TX standards. Here in Houston but the downturn in the O&G industry and Harvey made their impact already.

The problem in Texas, particularly Austin (and to a lesser extent North DFW), is all of the newcomers from the West or NE. These companies relocating pay the same salary to their employees as they would on the coasts. They come to Texas, buy a house in cash, put the rest in reserves (maybe after a new car also) and are living like $100k millionaires. Meanwhile, rent goes up for the locals, housing prices almost double, and minimum wage is still $7.25.

I've read that some businesses in North DFW have a harder time hiring employees because: 1. the job is minimum wage 2. it's too far away from the lower income South DFW where most of the workers would come from and 3. the luxury apartments going up near the new retail in North DFW are too expensive for the workers.

If the flooding bond for Houston passes (I really hope it does), Houston will go up even more for the area. Honestly, Houston should have the most expensive housing in the state considering where it's located. Houston needs to the most quality construction in my opinion.

[Sun Belt]

Originally Posted by Steely Dan

the chicago housing market is still crawling along.

zillow says home values increased 3.4% in the past 12 months.

zillow predicts home values will increase 4.5% in the next 12 months.

not horrible. not great. meh.


we never saw the ridiculous post-recession price appreciations that the coastal cities experienced, so there's not a whole lot to crash down from.

Chicago bottomed out March, 2012 and the prices still haven't recovered to pre-crash levels yet, but like you said has been steadily increasing yoy since the bottom.

The best time to buy a home there is January. I noticed that Chicago has predictable cyclical drops coinciding with the winter.

[Pedestrian]

Originally Posted by Sun Belt

I think there has been major appreciation just about everywhere since 2011.

Since the 2012 bottom, yes (March 2018 data). But in quite a few places we are still well below the 2006 peak.






https://www.kiplinger.com/tool/real-...reas/index.php

[Trae]

Originally Posted by Sun Belt

Chicago bottomed out March, 2012 and the prices still haven't recovered to pre-crash levels yet, but like you said has been steadily increasing yoy since the bottom.

The best time to buy a home there is January. I noticed that Chicago has predictable cyclical drops coinciding with the winter.

I think that's everywhere. Typically mid-Spring (March-ish) to mid-Summer (before August) is the time to sell. A lot of that having to due getting the kids in before school starts.

Edit: I completely misread your post.

[Sun Belt]

Originally Posted by Pedestrian

Since the 2012 bottom, yes (March 2018 data). But in quite a few places we are still well below the 2006 peak.

Great find, thanks for posting.

The column that's most interesting to me is the change since peak figure.

Look at Utah and Colorado cities, also Nashville and Seattle.

[Steely Dan]

Originally Posted by Sun Belt

The best time to buy a home there is January. I noticed that Chicago has predictable cyclical drops coinciding with the winter.

yes, the chicago real estate market is very annually cyclical.

january is the best time to buy. june is the best time to sell.

at least by closing date, the actual contract agreement usually take place 1-2 months prior, so nov./dec. is really the best time to buy, apr./may the best time to sell.

we came close to that ideal with our last move.

bought our new home low back in december.

sold our old home high this past march.

that time-stagger gave us around $30,000 extra dollars, which MORE than made up for carrying the old property for 4 months.

Originally Posted by Sun Belt

The column that's most interesting to me is the change since peak figure.

Look at Utah and Colorado cities, also Nashville and Seattle.

check out austin, 72.8!

[Sun Belt]

Originally Posted by Steely Dan

check out austin, 72.8!

Oh yeah, somehow missed that!

[Kenmore]

yes

millenials and younger are saddled with debt and have no savings

boomers are going to live forever and watch their equity and savings eaten by healthcare costs

[C.]

Originally Posted by Sun Belt

Oh yeah, somehow missed that!

Yeah, the article I posted originally is about Austin's housing market. Given that they've had such rapid appreciation since the housing market peak in 2006, I wonder if they can be seen as the "canary in the coal mine."

Denver is the other city that looks kinda toppy. I'm told one of the things to watch for when the market softens, for rental apartments anyway, is the number of concessions being made to new renters. When first month free or no security deposit deals start to appear, it's indicative of oversupply and the last step before prices start to fall.

[Kenmore]

the thing with buying in chicago in january, especially lately...there's just not a lot of quality inventory, especially when a decent family sized property in a decent school district already starts at 400k+

[C.]

Originally Posted by Kenmore

yes

millenials and younger are saddled with debt and have no savings

boomers are going to live forever and watch their equity and savings eaten by healthcare costs

So many years of zero percent interest rates. Now that it's finally starting to rise, that's gotta have an impact on the economy and especially housing.

[Steely Dan]

Originally Posted by Kenmore

the thing with buying in chicago in january, especially lately...there's just not a lot of quality inventory, especially when a decent family sized property in a decent school district already starts at 400k+

true. inventory was very low when we bought last winter, but we found a great property that's working great for our family, and because there were almost no other buyers in the market at the time, and because the property had been on market since july, we got it for $20,000 under list (and list was pretty effing reasonable, nothing outrageous or anything).

the catch: the brown line runs right down our alley, and some buyers simply won't even begin to entertain the notion of living that close to the el. as a train nerd, i was ecstatic, but yes, the el is noisy and that fact will depress our home value if we ever go to sell it. since we're planning on long-hauling it here in lincoln square as we raise our kids over the next couple of decades, resale was a minor concern.

[LouisVanDerWright]

While a slowdown is eventually inevitable, I'm just not sure that a nation wide one is so imminent. Some areas that have got ahead of themselves might see price declines, but the real estate market isn't as healthy as everyone thinks.

Most of the price increases we've seen in the last two or three years aren't actually resulting from speculation or overheated markets, but from a straight up supply shortage. Since the supply of recession addled homes has dried up, there's basically no crappy inventory in need of renovation. Pretty much everyone who was going to lose their building lost it in 2008-2013. Everyone who was going to be forced to sell did so then too. Then look at the flip of that coin, you had a ton of people buying these properties at rock bottom prices often cash or close to it and now those people are all swimming in equity. So the problem is that those people don't want to sell and get slapped by taxes. Many have refinanced money out of their properties at rock bottom rates and aren't in a hurry to refinance again now that rates have increased. A lot of people are just sitting on equity, no need to sell or refi.

So while prices might slow down a bit, we are actually in an acute supply crunch. Home sales have actually been falling on and off for the past two years now. Less inventory is hitting the market. In fact, just today it was announced that housing starts plummeted 12.5%. Why would that happen in the face of an acute supply shortage? You'd think developers would be shitting them out as fast as possible as they did in the last boom. But that's just it, old memories die slowly and you have a lot of people who made a fortune off of other's misfortunes in the crash. Those people are never going to forget how they made their money, the memory of the recession is going to take a generation to erase. Developers and landlords are reacting to rising rates and a hot housing market by pulling back and taking more defensive positions which is likely to actually squeeze the housing market further and force prices to rise even more.

The thing is economic shocks are almost always demand based. We are in a situation right now where demand is vastly outstripping supply. We don't even have the new inventory to satiate demand nationwide (perhaps there is oversupply happening in a few key places like NYC or SF or Denver) so how are we going to suffer a demand shock? In theory the housing market would be healthier if we had a bit of a dip in demand for housing because there's too much for the market to bear right now.