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Started By
Message
Homebuilders say U.S. is in a ‘housing recession’ as sentiment turns negative
Posted on 8/15/22 at 9:29 am
Posted on 8/15/22 at 9:29 am
quote:
Homebuilders say U.S. is in a ‘housing recession’ as sentiment turns negative
LINK
Builder sentiment in the market for single-family homes fell into negative territory in August, as builders and buyers struggle with higher costs.
The National Association of Home Builders/Wells Fargo Housing Market Index dropped 6 points to 49 this month, its eighth straight monthly decline. Anything above 50 is considered positive. The index has not been in negative territory since a very brief plunge at the start of the Covid pandemic. Before that, it hadn’t been negative since June 2014.
“Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession,” said NAHB Chief Economist Robert Dietz.
Of the index’s three components, current sales conditions dropped 7 points to 57, sales expectations in the next six months fell 2 points to 47 and buyer traffic fell 5 points to 32.
Despite higher costs for land, labor and materials, about 1 in 5 builders in August reported lowering prices in the past month in an effort to increase sales or limit cancellations. The average drop reported was 5%.
The biggest hurdle for buyers right now is affordability. Home prices have been climbing since the start of the pandemic, and the average rate on the 30-year fixed mortgage, which had hit historic lows in the first part of the pandemic, is nearly twice what it was at the start of this year. Home price growth has cooled somewhat in recent weeks, while mortgage rates have come down from highs.
“The total volume of single-family starts will post a decline in 2022, the first such decrease since 2011. However, as signs grow that the rate of inflation is near peaking, long-term interest rates have stabilized, which will provide some stability for the demand-side of the market in the coming months,” Dietz said.
Regionally, on a three-month moving average, builder confidence in the Northeast fell 9 points to 56, and dropped 3 points in the Midwest to 49. In the South it fell 7 points to 63, and in the West, where home prices are highest, it declined 11 points to 51.
Posted on 8/15/22 at 9:34 am to member12
Start building a house today amid supply shortages...interest rates will probably be up by 2 points by the time you finish.
Posted on 8/15/22 at 9:37 am to member12
quote:
The total volume of single-family starts will post a decline in 2022, the first such decrease since 2011.
We need to be building houses and apartments left and right.
Posted on 8/15/22 at 9:39 am to GetCocky11
quote:
We need to be building houses and apartments left and right.
We needed to be doing that for the last decade. But we didn't, and we very well can't really do it easily now with material shortages (HVAC, Electrical, and even windows) and the constant cloud of mortgage rate hikes.
Posted on 8/15/22 at 9:48 am to member12
Looked hard and building a house last year, and even got a good set of plans set up. None of the builders we spoke to were comfortable committing to a fricking 12 month timeline. And we weren't about to move twice while the last of our new house was being finished. 12 months to build a house!
So we bought an old house, rented it back to the previous owner for a while, and we are now renovating it slowly.
Not a good idea to start a new custom build right now unless you aren't in a hurry and don't care what interest rates do over the next 12-18 months.
So we bought an old house, rented it back to the previous owner for a while, and we are now renovating it slowly.
Not a good idea to start a new custom build right now unless you aren't in a hurry and don't care what interest rates do over the next 12-18 months.
Posted on 8/15/22 at 9:52 am to member12
We got lucky and got in right before the market went sky high. Our house has jumped in "value" almost 100k, with a large increase in our homeowners insurance due to the change in property value and cost/materials.
We would've been living without much leeway in funds coming in if we tried to buy the same now.
ETA: Lumber had already started going up when we were looking, so we decided against building for ourselves.
We would've been living without much leeway in funds coming in if we tried to buy the same now.
ETA: Lumber had already started going up when we were looking, so we decided against building for ourselves.
This post was edited on 8/15/22 at 9:53 am
Posted on 8/15/22 at 9:53 am to member12
30% increase in listings on the MLS in the month of July. Houses aren't selling.
Posted on 8/15/22 at 9:54 am to stout
quote:
30% increase in listings on the MLS in the month of July. Houses aren't selling.
Rates are up and there is a recession. Sales are naturally slowing. Which might mean prices stop climbing so fast.
Posted on 8/15/22 at 9:54 am to stout
I saw an article that showed a shortage of nearly 6 million homes across the US.
We’re still several years away from adequate inventory.
We’re still several years away from adequate inventory.
Posted on 8/15/22 at 10:01 am to member12
Who didn't know this was coming?
Posted on 8/15/22 at 10:05 am to member12
Just redefine the definition of recession and voila
Posted on 8/15/22 at 10:06 am to Bard
quote:
Who didn't know this was coming?
But it was "unexpected", amirite?
Posted on 8/15/22 at 10:09 am to Paul Allen
quote:
We’re still several years away from adequate inventory.
Building isn't the only way to solve the inventory issue. Many think it is but IMO gentrification and zombie houses will have to come into play soon for buyers who cant afford the new developments due to the increase in material costs and rates.
This post was edited on 8/15/22 at 10:11 am
Posted on 8/15/22 at 10:12 am to Paul Allen
quote:
I saw an article that showed a shortage of nearly 6 million homes across the US.
There’s reportedly 16 million vacant houses in America. Crime, shithole cities and crap governments have made them undesirable.
We don’t have a housing shortage. We have a shortage of housing in places people want to live.
Posted on 8/15/22 at 10:17 am to stout
quote:
Many think it is but IMO gentrification and zombie houses will have to come into play soon for buyers who cant afford the new developments due to the increase in material costs and rates.
coming out of a scorching hot market like we had, these types of houses are harder and harder to sell... basically, there's a bias towards something being on the market longer than 30 days... some realtors will avoid showing their clients stuff that old, b/c they either can't or don't want to answer "what's wrong with it", and then you add the fact that everyone one wants a "new" house, it's a challenge to sell 1st time homebuyers on older homes... investors/flippers are your best bet, though with renovation costs up due to material costs, they aren't in the market like they normally are either...
Posted on 8/15/22 at 10:18 am to Bjorn Cyborg
quote:
We don’t have a housing shortage. We have a shortage of housing in places people want to live.
Correct. Schools being one of the largest drivers for desirability.
As I said in my last post, we need to start looking more to the gentrification of areas than just always looking at new developments but that is not profitable for developers and would require Government funding.
If Biden truly wanted to BBB he would have set aside money from all of the recent bills to help.
Posted on 8/15/22 at 10:19 am to chRxis
quote:
coming out of a scorching hot market like we had, these types of houses are harder and harder to sell... basically, there's a bias towards something being on the market longer than 30 days... some realtors will avoid showing their clients stuff that old, b/c they either can't or don't want to answer "what's wrong with it", and then you add the fact that everyone one wants a "new" house, it's a challenge to sell 1st time homebuyers on older homes... investors/flippers are your best bet, though with renovation costs up due to material costs, they aren't in the market like they normally are either...
That and owners of these shitty houses thinking their teardown is worth 90% of what the brand new or fully renovated house down the street sold for.
Posted on 8/15/22 at 10:20 am to stout
quote:
Many think it is but IMO gentrification and zombie houses will have to come into play soon for buyers who cant afford the new developments due to the increase in material costs and rates.
They will, if you can find them.
First the safer but "older" neighborhoods will end up with new, younger residents and renovated houses. This would be like what's going on in Broadmoor or Tara in Baton Rouge.
Then the sort of declining areas that see new investment. This would be like Ogden Park or the area north of Government in mid city.
I don't see it progressing north of Florida though.
Posted on 8/15/22 at 10:22 am to Bjorn Cyborg
quote:
We don’t have a housing shortage. We have a shortage of housing in places people want to live.
Well said. The 3 L's strike again as the oldest but simplest answer to the puzzle.
Posted on 8/15/22 at 10:23 am to chRxis
quote:
they aren't in the market like they normally are either...
Another issue with the flipper market is the "we buy ugly houses" model
They advertise massively and get people to think they are going to get a cash offer but all the seller is getting is a contract to purchase while the buyer finds another buyer. The buyer then calls all of the flippers they know and mark the house up $10K+ above what their contract price is with he original seller. They never actually take possession of the house and do what is called a double closing. The flipper now has $10K more in the house than he would have because of the middle man.
I am all for capitalism but I hate that model. It only further makes older homes less desirable for many due to cost.
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