Category Archives: Housing Market

Home Prices Set To Soar In 2018

 

https://martinhladyniuk.files.wordpress.com/2014/07/0acf0-lereahd.png?w=287&h=432The temperature may be frigid across much of the nation, yet home prices are sizzling and sellers are in the hot seat.

Sales prices jumped 7 percent annually in November, according to a new report from CoreLogic. That is the third straight month at that pace, far higher than the price gains in the first half of 2017. Low supply and high demand are fueling the spurt and neither of those is expected to ease up anytime soon. Supply is actually falling even more now, and a strengthening economy is pushing demand. This will have potential buyers out early this year, trying to get a jump on the spring market. “Rising home prices are good news for home sellers, but add to the challenges that home buyers face,” said Frank Nothaft, chief economist at CoreLogic, in the report. Nothaft said the limited supply is the worst at the lower end, and will hit the growing number of first-time buyers hardest.

The largest metropolitan areas are seeing the biggest gains.

In the nation’s top 50 markets, half of the housing stock is now considered overvalued, based on market fundamentals, like income and employment. CoreLogic defines an overvalued housing market as one in which home prices are at least 10 percent higher than the long-term, sustainable level. Las Vegas led the November report as not only being overvalued, but showing a double-digit annual price gain of 11 percent. San Francisco was not far behind at 9 percent, and Denver came in third at 8 percent. Las Vegas and Denver are both considered overvalued, but San Francisco is not, as incomes in the tech capital far exceed the national level. Of the nation’s 10 major markets with the biggest price gains, seven are overvalued. These include Washington, D.C., Houston and Miami. Boston and Chicago are still seeing price gains but are considered at value. Without a significant jump in home construction, prices will remain high and likely move higher. Mortgage rates could also move slightly higher, and new tax policy limiting mortgage and property tax deductions, is hitting homeowners in some states hard.

All will combine to make housing less and less affordable in the new year.

By Diana Olick | CNBC

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What’s Hot: Home Trends in the Pipeline for 2018

Every industry tracks innovations in its field, and housing is no different. As a real estate pro, here are the need-to-know products and services promising to transform homes and your clients’ lifestyles over the next year or so.

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The big-picture view on housing trends in 2018 center around integrating technology and creating healthy and connected living environments. That’s why building materials, systems, and products that speak to these concerns are expected to generate greater buzz in the coming year. And with more generations living under the same roof, home-related features that provide an extra pair of hands or calming—even spiritual—influence are also being enthusiastically embraced. Here’s a sampling of coming trends that are important to understand and share with clients.

The Rise of the Tech Guru

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Why now: Smart homes are getting smarter, with homeowners increasingly purchasing devices and apps that perform tasks such as opening blinds, operating sprinkler systems, and telling Alexa what food to order. But not all these helpers speak the same language, nor do they always work together harmoniously. “Even plugs and chargers aren’t necessarily universal for different appliances and phones,” says Lisa Cini, senior living designer and author of The Future is Here: Senior Living Reimagined (iUniverse, 2016). Also, with more devices competing for airtime, Wi-Fi systems may not be strong enough to operate throughout a home, which results in dead spots, she says. “What many homeowners need is a skilled tech provider who makes house calls, assesses what’s needed, and makes all the tech devices hum effortlessly at the same time.”

What you should do: More buyers want to see listings updated to take advantage of all technological possibilities from the moment they move in. Add a home technology source to your list of trusted experts. You might even be able to offer a free first visit as a closing gift.

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Smart Glass Adds Privacy, Energy Savings

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Why now: As more homes feature bigger and more numerous windows, homeowners will naturally look for ways to pare down the energy costs, lack of privacy, and harmful ultraviolet rays that can accompany them. Next year, glass company Kinestral will begin offering a residential option to their line of windows and skylights. Called Halio, the technology allows users to tint glazing electronically up to 99.9 percent opacity. The company claims this can eliminate the need for blinds, shades, and curtains. “You’ll be able to tell Alexa to tint your windows, which will also provide privacy,” says Craig Henricksen, vice president of product and marketing for Halio. He notes that previously, the commercial version only offered the choice between yellow, brown, or blue casts, but that they’ll now add in an appealing gray tint to the mix. Windows come in a variety of sizes, and contractors can install the cable and low voltage system required to change the tinting. Homeowners can control the tint by voice command through an app, manual operation with switch, or with preset controls. Henricksen says Halio can save homeowners up to 40 percent off their energy bill, and that while the initial cost is around five to six times greater than similar low-E glass, the fact that traditional window treatments won’t be needed means the investment gap narrows.

What you should do: This is an important option to keep in mind if buyers are unsure about big, long runs of windows in a listing. It may make sense to price out options for your particular listing to help home shoppers understand how much it might cost to retrofit the space with such technology.

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Spiritual Gardens That Lift the Soul

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Why now: Homeowners have long seen their gardens as a place for quiet reflection, so choosing plants and designs that have a physical tie to spirituality is a natural next move. The trend may have started with Bible gardens, which use any number of the more than 100 plants mentioned in the Christian text to populate a restful repose. “So many are good choices because they are hardy, scented, edible, and can withstand harsh climates and environments,” says F. Nigel Hepper, with the Herbarium at the Royal Botanic Gardens in Kew, England, and author of Illustrative Encyclopedia of Biblical Plants (Inter-Varsity Press, 1992). But people of all faiths, or even those simply drawn to botanical history, can appreciate such spaces. “Around for generations, they feed the body and the soul,” says landscape designer Michael Glassman, who designed such a garden in the shape of a Jewish star as a meditative spot at one of Touro University’s campuses. He filled it with mint, pomegranate trees, sage, and other plants that are mentioned in ancient religious texts. Hepper says labeling and providing detailed context to plantings can transform a miscellaneous, obscure collection into an instructive experience.

What you should do: Find out if your local area has a peace garden that could provide examples of this trend. Homeowners might also find inspiration on the grounds of hospitals and assistance care facilities, which often create healing gardens for patients and family members.

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Kitchens That Do More Than Just Look Pretty

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Why now: An emphasis on eating fresh, healthy foods may mean more frequent trips to grocery stores and farmers markets, but it could also change the architecture of our kitchens. Portland, Ore.–based designer Robin Rigby Fisher says many of her higher-end clients want a refrigerator-only column to store their fresh foods, installing a freezer or freezer drawer in a separate pantry or auxiliary kitchen. The container-gardening industry is vying for counter space with compact growing kits that often feature self-watering capabilities and grow lights. Fisher is also getting more requests for steam ovens that cook and reheat foods without stripping them of key nutrients, though she notes that these ovens can cost $4,000 and have a steeper learning curve than conventional ones. Homeowners also want to be able to use their kitchen comfortably, which means having different or variable counter heights that work for each member of the family, ample light for safe prepping, easy-to-clean counter tops, and flooring that’s softer underfoot, such as cork.

What you should do: Be able to point out the beneficial elements of appliances and features in your listing, such as the antimicrobial nature of surfaces like quartzite and copper.

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Home Robots to the Rescue

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Why now: With lifestyles that seem busier by the day and many families inviting elders who require assistance to live with them, robots that can perform multiple services are gaining in popularity. IRobot’s Braava robots mop and vacuum floors, while Heykuri’s Kuri robot captures short videos of key life moments, including pets’ antics when owners are away. Some robots offer health benefits that mimic real pets, which the U.S. Centers for Disease Control and Prevention says can lower blood pressure and cholesterol, says Cini. She says Hasbro’s Joy for All line of furry robot dogs and cats can provide companionship for the elderly with dementia.

What you should do: Ask buyers about pain points in their current homes that might be mitigated by these new interactive technologies.

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Black Is the New Gray

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Why now: Palettes change all the time, and some feel the interest in black is a welcome contrast after years of off-whites, grays, and beiges. The hue is coming on strong in every category—appliances, plumbing fixtures, lighting, metal finishes, hardware, and soft goods, according to commercial interior designer Mary Cook of Mary Cook Associates. She appreciates black’s classic, neutral, sophisticated touch and notes it can be a universal mixer. “Black is a welcome accent in any palette,” she says. Marvin Windows and Doors launched its Designer Black line this year, incorporating a hip industrial vibe. Designer Kristie Barnett, owner of the Expert Psychological Stager training company in Nashville, loves how black mullions draw the eye out toward exterior views more efficiently than white windows can. Kohler has released its popular Numi line and Iron Works freestanding bath in black. Even MasterBrand cabinets are available in black stains and paints. For homeowners who prefer to step lightly into the trend, Chicago designer Jessica Lagrange suggests painting a door black.

What you should do: Suggest black accents as an option for sellers looking to update their homes to appear more modern.

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Air Locks Preserve Energy, Increase Security

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Why now: Incorporating two airtight doors has become a popular way for homeowners to cut energy costs. The double barrier helps keep outside air from entering the main portion of the house and provides a better envelope seal. “We rarely design a house nowadays without one,” says Orren Pickell, president of Orren Pickell Building Group in Northfield, Ill. It’s not just energy homeowners save, though; Pickell says it also supports the trend of more people shopping online. “It keeps packages safer than being left in full view” because delivery services can leave them inside the first door. Homeowners will need a minimum area of five feet squared in order to make this work. Costs vary by project size but it could run homeowners as much as $10,000 to add a small space beyond a front or back door. This usually costs less in new construction or as part of a larger remodeling project, Pickell says.

What you should do: If homeowners are thinking about making changes to their main entryway, be sure to alert them to this trend so they can decide if it makes sense to incorporate it. It may be expensive, but it’s not likely to go out of fashion anytime soon.

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Maximized Side Yards

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Why now: As a national trend toward smaller lot sizes combines with surging interest in maximizing outdoor space, one area that’s often neglected is the side yard. But designers are beginning to pay attention, transforming these afterthoughts into aesthetically pleasing, functional places that buffer a home from neighbors, says Glassman. He suggests growing plants such as star jasmine, climbing roses, and clematis vertically along the siding or a fence. He has created a pleasant pass-through to a backyard, with meandering walkways flanked by ornamental grasses or honeysuckle. Homeowners who have extra space here might consider adding a small recirculating water feature or a tiny sitting area.

What you should do: Pay special attention to side yards when evaluating a home that’s about to go up on the market. Sellers don’t need to spend much to make this space stand out, and any little thing is better than the feeling that the space has been “thrown away, since real estate is so valuable,” Glassman says.

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Battery Backup Systems Offer Resilience

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Why now: Any home owner who’s experienced a weather-related disaster, such as hurricanes, forest fires, and torrential downpours, understands the peace of mind that comes from having systems in place to help withstand Mother Nature’s worst punches. One example of this is a battery backup that integrates into a home’s electric system and operates during power outages, says architect Nathan Kipnis of Kipnis Architecture + Planning in Chicago. The backup batteries can store either electricity from the grid or renewable energy generated onsite by solar panels or other means. A key advantage is that the system doesn’t create the noise and pollution you get with an old-school generator, because it doesn’t use natural gas or diesel fuel. While they’re generally more expensive than traditional fossil fuel systems, prices do continue to drop.

What you should do: Understand the difference between a battery backup system and a typical generator, even if you’re not working in an area that sees frequent extreme weather events.

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Missing Middle Housing

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Why now: Architect Daniel Parolek, principal at Opticos Design in Berkeley, Calif., sees a solution emerging for the mismatch between demand and the housing that’s actually been delivered over the last 20 to 30 years. “Thirty percent of home buyers are single, and their numbers may swell to 75 to 85 percent by 2040, yet 90 percent of available housing is designed for families and located in single-family home neighborhoods,” he says. Parolek says builders must fill in this demand with smaller housing of 600 to 1,200 square feet, usually constructed in styles such as duplexes and cottages communities, and preferably in walkable areas. He cites Holmes Homes’ small townhouses at Daybreak in South Jordan, Utah, as an affordable transit-oriented development that follows missing middle principles.

What you should do: Know where existing missing middle housing may be hiding in your community, so you can help buyers of all ages seeking smaller homes. Also, look for opportunities to invest, either for yourself or your clients, in a type of housing that will likely see more demand than supply in the coming years. 

By Barbara Ballinger | RealtorMag

New Home Sales Smash Expectations: Spike To 10 Year Highs As Average Price Tops $400k For First Time

Following the bounce in exisitng home sales (albeit lower YoY), new home sales ripped back higher in October (up 6.2% vs expectations of a 6.1% drop) following a big downward revision of last month’s manic spike. This is the highest print for new home sales since Nov 2007.

The 6.2% surge is a six standard deviation beat of expectations…

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September’s 18.9% spike was revised notably lwoer to a 14.2% jump to 685k SAAR…

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This is the highest new home sales SAAR print since Nov 2007… but still has a long way to go back to ‘normal’…

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And finally, we note that the average new home sales price hit a new record high, above $400K for the first time ever – $400,200.

Source: ZeroHedge

Baby Boomers Who Refuse to Sell Are Dominating the Housing Market

Jake Yanoviak is hunting for houses. On a weekday afternoon in North Philadelphia, the 23-year-old painter cruises along on his bike, its black paint obscured under stickers from breweries and rock bands. He turns onto a side street, where he spots a few elderly neighbors, standing on adjoining porches. He parks, leans on one handlebar and makes his pitch.

“Anybody on the block considering selling?” Yanoviak asks gently. “I’m not a developer, I’m not interested in renting to students. I’m just a kid trying to buy a house, fix it up and live in it.”

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“We’re not going no place,” replies a 70-something woman, relaxing in fuzzy white pig slippers in the row house where she’s lived twice as long as Yanoviak has been alive. “All these houses are taken.”

Like much of his generation, Yanoviak is desperate to get a piece of an increasingly scarce commodity: prime American real estate. Millennials are finding themselves out in the cold because building has slowed, and longer-living baby boomers are staying put, setting up a simmering conflict between the two biggest generations in U.S. history.

 

To succeed, buyers and real estate brokers must show uncommon persistence and, at times, diplomacy. Yanoviak has tried sheriff’s sales, lost two bidding wars, ridden miles on potholed streets and left notes in mailboxes, all to no avail.

People 55 and older own 53 percent of U.S. owner-occupied houses, the biggest share since the government started collecting data in 1900, according to real estate website Trulia. That’s up from 43 percent a decade ago. Those ages 18 to 34 possess just 11 percent. When they were that age, baby boomers had homes at almost twice that level.

Public policy contributes to the generational standoff. Property-tax exemptions for longtime residents keep older Americans from moving. Zoning rules make it harder to build affordable apartments attractive to senior citizens.

“The system is gridlocked,” says Dowell Myers, a professor of urban planning and demography at the University of Southern California. “The seniors aren’t turning over homes as fast as they used to, so there are very few existing homes coming online. To turn it over, they’ll have to have a landing place.”

In Lexington, Massachusetts, a Boston suburb, broker Dani Fleming offers pizza and refreshments to entice the mostly elderly homeowners to attend seller seminars on “how to unlock the potential of your home.”

In Alameda, California, east of San Francisco, 38-year-old Angela Hockabout, her husband and their two children live with her 76-year-old mother-in-law, who is holding onto the home because the real estate taxes are so low. Under the almost-40-year-old ballot measure Proposition 13, they are tied to the property’s value when the house was purchased in the 1970s.

“Dear Homeowner, I have been looking to buy a house for almost a year and have not found one.”

Kale, Tomatoes

In Omaha, Nebraska, Bill and Peg Swanson, a couple in their late 60s, say they might move if they could find affordable single-family homes aimed at seniors nearby. Still, like many from their generation, they like aging in place, tending their garden of green peppers, kale and tomatoes.

“There are a lot of reasons to stay here,” Bill Swanson says. “We still enjoy putzing around the yard.”

That kind of thinking ends up costing young home shoppers such as Yanoviak. After graduating from Carleton College in Minnesota with a degree in media studies, he now lives in West Philadelphia with his parents, an arborist and a director of a nonprofit. For a living, he does carpentry and helps paint movie sets. He’s looking at homes costing as much as $200,000 and may rent out rooms to friends.

https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iORwGYGK2SdE/v3/1000x-1.jpgYanoviak looks at a Philadelphia zoning notice outlining a plan for multifamily units on that site.

Yanoviak scouts property with Google Maps, Zillow and the city’s property-record site. When he finds something, he calls his real estate agent, Cecile Steinriede, who checks it out. He also keeps an old-school sheaf of letters in the rear pocket of his pants, so he can hand them out or slip them in mailboxes.

“Dear Homeowner,” they read. “I have been looking to buy a house for almost a year and have not found one.”

Brewerytown

Yanoviak has his sights on a neighborhood called Brewerytown, a community of brick, masonry and vinyl row houses that range from tidy to decaying, with paint peeling, holes in roofs and weeds growing from cracks in sidewalks.

Along with inter-generational tension, Yanoviak’s search raises delicate questions of race and class. He’s white and college-educated, and he’s often knocking on the doors of working-class black homeowners who see their homes as key to an affordable retirement and a way to pass wealth to future generations. (None would give their names.) Yanoviak acknowledges the awkwardness. It doesn’t help, he says, when developers assault residents with insulting, low-ball cash offers.

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Yanoviak inspecting a house in the Brewerytown district.

“It’s inevitable for me to be perceived as an outsider,” Yanoviak says. “But I’m not trying to change the community. I’m trying to contribute in positive ways and be a neighbor.”

Resentments fester in neighborhoods of all ethnicities. In a traditionally Italian section of South Philadelphia, which is now out of Yanoviak’s price range, 70-year-old Nick Ingenito, sits on the front steps of the three-story brick house his grandmother’s aunt bought in the early 1900s.

‘Wouldn’t Move’

“Where do these young people get this money?” he says, looking out at the street where he played stick ball as a kid. “This neighborhood still has the soul of the past. Everybody I know — people older than me — wouldn’t move from here for nothing unless they couldn’t afford it no more.”

On a recent Thursday evening after work, Yanoviak, wearing a black T-shirt, jeans and a brown belt emblazoned with the Schlitz logo, mounts his bike to make the housing round. 

On one of his first stops, a black cat slinks under the wooden gate next to an abandoned house with bay windows that piqued Yanoviak’s interest. Using his bike as a ladder, he stands on the seat and stretches his chin over barbed wire. All he can see are bed springs and junk.

Yanoviak starts cycling again, taking both hands off the handle bar to tap on his iPhone, noting the address of a property he might want to revisit.

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Yanoviak carries pitch letters with him to hand out to homeowners and slip in mail boxes.

Church Properties

He stops to chat with the pastor of a church, which owns a handful of properties but isn’t selling.

“No, we’re holding out for God to do what he said he was going to do and that is to give us the block,” the pastor tells Yanoviak.

Then, he sees a gray-haired man puttering in his garage.

“I’m looking at properties in the neighborhood, there isn’t a whole lot on the market so I’m cold calling,” Yanoviak says.

“Give me $2 million,” the homeowner replies. “I don’t want no low number.”

It turns out the price is for the whole block. Even then, the potential seller has second thoughts.

“I wouldn’t sell even if you gave me $2 million — this is my retirement,” he says. “If you gave me a bag of money, I wouldn’t sell.”

After a few hours chatting with a half dozen owners and visiting eight properties, Yanoviak gets back on his bike, his pitch letters still hanging from the back pocket of his jeans. He heads back to his parents’ house, deferring for yet another day his search for a home.

Exercise self discipline, practice and consistency …

By Prashant Gopal | Bloomberg 

 

This Michigan Bank Just Brought Back The Zero-Down Mortgage; They’ll Even Cover Your Closing Costs

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A small savings bank in Michigan, Flagstar Bank, has come up with a genius, innovative new mortgage product that they believe is going to be great for their investors and low-income housing buyers: the “zero-down mortgage.”  What’s better, Flagstar is even offering to pay the closing costs of their low-income future mortgage debtors.  Here’s more from HousingWire:

Under the program, Flagstar will gift the required 3% down payment to the borrower, plus up to $3,500 to be used for closing costs.

According to the bank, there is no obligation for borrowers who qualify to repay the down payment gift.

The program is available to only certain low- to moderate-income borrowers and borrowers in low- to moderate-income areas throughout Michigan.

Borrowers would not have to repay the down payment or closing costs. But a 1099 form to report the income would be issued to the Internal Revenue Service by the bank. So the gifts could be taxable, depending on the borrower’s financial picture.

Flagstar said borrowers who might qualify for its new program typically would have an annual income in the range of $35,000 to $62,000. The sales price of the home — which must be in qualifying areas — would tend to be in the range of $80,000 to $175,000.

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Think it’s too good to be true?  Lakeshia Wiley of Detroit’s west side begs to differ…she recently went through Flagstar to purchase her new home and only had to come up with $350 of her own money.  Per the Detroit Free Press:

Lakeshia Wiley, 35, said she wouldn’t have been able to buy her first home without the Fifth Third Down Payment Assistance program and two other grants, including one from Southwest Solutions.

The brick home, built in 1951, is on Detroit’s west side, needed very little work and was priced at $50,000.

“I’m very excited every time I think about it. It’s beautiful. I love it,” Wiley said.

Wiley never expected to be able to buy a home, though, because she has had a hard time saving for a down payment.

“I didn’t think I’d be able to do it,” said the single mother who has two sons, ages 17 and 10, and a daughter, age 6. She works at a Detroit pharmacy.

Thanks to the down payment assistance and the grants, Wiley was able to buy her home in April. She had to bring less than $350 to the table at closing.

The Flagstar program is available in 18 counties in Michigan, and could be used for certain homes in Detroit and Flint, along with other cities.

Of course, we would highly encourage Flagstar to take a look back into ancient history for case studies on what happened the last time banks started peddling “innovative” mortgage products.  Here’s a summary of the Lehman Brothers case study:

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Ironically, South Park also did some fascinating research on the topic:

Source: ZeroHedge

 

Mid-November Chart Check

Still no sign of a rebound:

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Home prices rising about 6% annually and loans now growing at under 4% annually looks in line with at best flat housing sales:

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Looks like the blip up as hurricane destroyed vehicles were replaced has run its course:

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This had looked like it peaked a couple of years ago, but since went back up to new highs:

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By Warren Mosler | Investment Watch Blog

 

Home Prices In All US Cities Grow Faster Than Wages… And Then There’s Seattle

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From 1898 until Aug. 10, 1940, streetcars (here seen in 1910) made their way between upper and lower Queen Anne Hill, assisted by a weighting system called a “counterbalance.”

According to the latest BLS data, average hourly wages for all US workers rose at a respectable 2.9% relative to the previous year, if still below the Fed’s “target” of 3.5-4.5%, as countless economists are unable to explain how 4.3% unemployment, and “no slack” in the economy fails to boost wage growth. Another problem with tepid wage growth, in addition to crush the Fed’s credibility, is that it keeps a lid on how much general price levels can rise by. With record debt, it has been the Fed’s imperative to boost inflation at any cost (or rather at a cost of $4.5 trillion) to inflate away the debt overhang, however weak wages have made this impossible.

Well, not really.

Because a quick look at US housing shows that while wages may be growing at a little over 2%, according to the latest Case Shiller data, every single metro area in the US saw home prices grow at a higher rate, while 15 of 20 major U.S. cities experienced home price growth of 5% or higher, something which even the NAR has been complaining about with its chief economist Larry Yun warning that as the disconnect between prices and wages hits record wides, homes become increasingly unaffordable. Paradoxically – the higher prices rise, the more unaffordable US homes become for the average American as we showed this weekend. In fact, as of this moment, homes have never been more unaffordable, which even more paradoxically hasn’t stopped priced from hitting new all time high virtually every month for the past year.

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And while this should not come as a surprise, one look at the chart below suggests that something strange is taking place in Seattle where prices soared by a bubbly 13.2% Y/Y, and which has either become “Vancouver South” when it comes to Chinese hot money laundering, or there is an unprecedented mini housing bubble in the hipster capital of the world.

https://i0.wp.com/www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/10/21/case%20shiller%20aug%202017.jpg

Putting the above data in context, here are two charts courtesy of real-estate expert Mark Hanson, the first of which shows how much household income increase is needed to buy the median priced home in key US cities…

https://i0.wp.com/www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/HOUSEHOLD-INCOME-MUST-INCREASE_0.png

… while the next chart shows the divergence between actual household income, and the income needed to buy the median priced house.

https://i1.wp.com/www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/08/12/divergence-hh-income-vs-hh-cost-to-own.png

Source: ZeroHedge

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