Title: The Current State of the U.S. Housing Market: Is Recovery on the Horizon?
Introduction:
Contrary to the emerging narrative that the U.S. real estate market has bottomed out, a recent report by economic research consultancy Pantheon Macroeconomics suggests that a true recovery is still a long way off. While there has been a spring upswing in the housing market, Pantheon argues that this growth is not a genuine indication of recovery. This article explores the factors hindering a real estate market recovery, such as affordability and the impact of mortgage rates. Additionally, it delves deeper into the concerns raised by Pantheon Macroeconomics and provides unique insights and perspectives on the current state of the U.S. housing market.
I. The Illusion of Recovery
1.1 The Recent Surge in Home Sales
– Explanation of initial increase in home sales due to a fall in mortgage rates in late 2022.
– Highlight the subsequent fall in sales due to recent rate hikes and impending decline implied by mortgage applications.
1.2 Affordability as the Biggest Hurdle
– Explanation of Pantheon’s argument that affordability remains a significant obstacle to a sustained housing market recovery.
– Analysis of the impact of the shock to mortgage rates and the surge in house prices during the pandemic housing boom on the affordability crisis.
1.3 Uncertain Price Adjustment
– Pantheon’s prediction of a sharp and sustained decline in house prices, while acknowledging the uncertainty surrounding the speed and extent of this adjustment.
– Emphasis on the need for a price correction for a genuine recovery to occur.
II. Divergent Views on House Prices
2.1 Corporate Economists’ Perspective
– CoreLogic’s and Zillow’s expectation of an earlier bottoming out of nationwide house prices.
– Mention of the rising prices and new home sales as evidence for these firms’ arguments.
2.2 Pantheon’s Counterargument
– Pantheon’s skepticism towards the recovery narrative despite the shift towards new home sales.
– Emphasis on the significance of affordability for a comprehensive housing market recovery.
– Clarification that Pantheon’s discussion of “U.S. home prices” refers to a national aggregate.
III. Understanding the Road to Recovery
3.1 Dissecting the Homebuilder Recovery
– The role of aggressive builder discounts and lack of resale inventory in driving the homebuilder recovery.
– Highlighting that these factors do not signify an actual recovery in the real estate market.
3.2 The Prerequisite: Improved Affordability
– Pantheon’s assertion that a sustained recovery in market activity is impossible without improvements in affordability.
– Exploration of the necessary conditions for improved affordability: lower mortgage rates, falling home prices, or a combination of both.
3.3 The Path Forward
– Acknowledgment that the real estate market is currently in the slump phase, transitioning from a decline in demand, sales, and construction to falling prices and home-related consumer spending.
– Highlighting the need for a balance between affordability and market activity.
IV. Unique Insights and Perspectives on the Housing Market
4.1 The Housing Market Beyond Numbers
– Incorporation of personal anecdotes and examples to provide a deeper understanding of the challenges facing the housing market.
– Real-life implications of the affordability crisis and its impact on prospective homebuyers.
4.2 The Role of Government Policies
– Analysis of the impact of government policies on the housing market.
– Discussion on how policy adjustments could help address the affordability crisis and stimulate a genuine recovery.
4.3 Lessons from Past Market Cycles
– Examining historical housing market cycles and their similarities or differences to the current situation.
– Identifying potential patterns and insights that can inform predictions and strategies.
V. Summary:
In sum, the article has examined the differing perspectives on the state of the U.S. housing market, highlighting Pantheon Macroeconomics’ skepticism and its emphasis on affordability as a prerequisite for recovery. The article goes beyond the initial report and provides unique insights and perspectives to enhance readers’ understanding of the current challenges and potential pathways towards a genuine housing market recovery. As we navigate through these uncertain times, it is important to remember that a comprehensive recovery is contingent on addressing affordability concerns and finding a balance between market activity and price stability.
Follow @NewsLambert on Twitter to stay up to date with the latest developments in the housing market.
Remember, your home is more than just a financial investment; it’s where memories are made, and dreams are realized.
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Contrary to the emerging narrative that THe u.S. The real estate market has bottomed outA recent report by economic research consultancy Pantheon Macroeconomics argues that the real estate market is still a long way from a real recovery.
In their eyes, the upswing in the US housing market this spring was just a sham.
“We are baffled by the narrative emerging in the comments that housing is now recovering, because it is not. Home sales soared early in the year, lagging the fall in mortgage rates in late 2022. But they’ve been falling more recently, thanks to the recent rate hike, and mortgage applications suggest they’re about to fall to a new cycle low,” wrote Kieran Clancy, the senior US economist at Pantheon Macroeconomics.
The biggest hurdle to a real housing market recovery is affordability, Clancy writes. The shock to mortgage rates last year and the surge in nationwide house prices by over 40% during the pandemic housing boom have somewhat worsened housing affordability not seen since the housing bubble peaked in 2006.
“However, the broader point here is that most of the fall in house prices is yet to come; The lagged effect of the sales decline suggests a sharp and sustained decline. The speed and extent of the price adjustment is uncertain, but the direction is clear,” Clancy wrote.
While Clancy believes nationwide house prices need to fall further, corporate economists believe they do CoreLogic And Zillow I expect nationwide house prices to have bottomed out earlier this year. As evidence, these firms have pointed out that nationwide house prices are rising again along with new home sales.
However, the stronger than expected spring development of the real estate market is not enough to convince Pantheon Macroeconomics. Pantheon’s Clancy specifically points out that the homebuilder recovery is being driven by aggressive [builder] Discounts and a lack of resale inventory – no actual recovery in the real estate market.
“However, the shift in sales towards new homes does not change the big picture, which is that a sustained recovery in overall market activity is out of the question until affordability improves. Mortgage payments for an existing single-family home buyer at the average price.” “Home count is now about half of average after-tax income, up 30-35% before Corona. Home sales can’t recover until affordability improves, which requires lower mortgage rates or falling home prices, or both,” he wrote to Clancy. “In short, the real estate market is not in the early stages of recovery; the downturn is just turning from a slump in demand, sales and construction to falling prices and home-related consumer spending.”
Remember, when a company like Pantheon Macroeconomics talks about “US home prices,” they’re talking about a national aggregate.
Would you like to stay up to date on the housing market? follow me Twitter at @NewsLambertor on threads at newslambert.
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