Yes the US housing market plunged $2.3 trillion, biggest tumble since 2008, but here is the big surprise.
March 1 (King World News) – Gerald Celente: The total market value of U.S. homes fell from an all-time high of $47.7 trillion in June to $45.4 trillion at the end of December, slumping 4.9 percent in the largest percentage drop in value since 2008 during the Great Recession, according to a study by online broker Redfin.
Record home prices, combined with mortgage interest rates that have more than doubled in the last year, have sidelined many prospective buyers.
In January, the average price of an existing U.S. home was $363,100, according to the National Association of Realtors, compared to a peak above $400,000 last year.
“The housing market has shed some of its value, but most homeowners will still reap big rewards from the pandemic housing boom,” Chen Zhao, Redfin’s chief economic researcher, said in a statement announcing the study.
However, if they choose to reap those rewards by selling their homes, they face higher prices and mortgage rates for any new digs they buy. If they rent, those prices are only now easing down from recent records…
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Despite the decline, the total value of U.S. homes on 1 January remained about $13 trillion greater than in February 2020 at the start of the COVID War and 6.5 percent higher than a year earlier, Redfin noted.
Home values fell most in urban centers including New York and San Francisco, which saw mass exodus during the work-from-home revolution.
San Francisco led the way down. Its housing stock slumped in overall value by 6.7 percent year-on-year in December, with Oakland and San Jose losing 4.5 and 3.2 percent, respectively. New York City and Seattle booked notable declines.
In contrast, prices in many Sunbelt destinations such as Austin and Miami are still staying aloft.
While overall U.S. housing values have slumped, Miami’s market has held steady since peaking near $472 billion last July. Homes in Sarasota, Knoxville, and Charleston, South Carolina, all maintained yearly gains greater than 17 percent they made last year.
Last week, the number of applications for mortgage loans to buy a home sank 18 percent, according to the Mortgage Bankers Association’s index, which booked the sharpest drop since 2015…
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The interest rate on a 30-year, fixed mortgage climbed to 6.62 percent during the week of 13 February, the highest since November, the association said. Earlier this year, the rate had fallen as low as 6.15 percent.
On 21 February, the average rate had shot up to 6.87 percent, Mortgage News Daily reported. The rate was 7.02 percent on 27 February, according to Bankrate.com.
Rates will rise again next month if the U.S. Federal Reserve raises its key interest rate, as is widely expected.
Also last week, Wells Fargo—2021’s largest mortgage lender—lopped 500 workers from its mortgage lending operation.
As we correctly forecast, the U.S. housing market is not experiencing a 2008-style price crash, nor will it. Lenders have been more careful about screening buyers properly during the 2021-2022 boom and relatively few adjustable-rate mortgages have been granted.
Home prices are gradually deflating due to higher interest rates and also due to inflation, which will keep prices above their pre-COVID levels. Indeed, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, in 2022, home prices rose 5.8 percent, racking up the 15th best performance in the index’s 35-year history.
Whether more first-time buyers will be able to become homeowners will depend partly on the economy’s performance through the summer. If shoppers can see a future clear of recession, the proportion of first-time buyers will begin to creep up as prices continue to ease.
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