"People Are Waking Up" And Becoming Motivated Home Sellers | Melody Wright
Jul 28, 2024
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Melody Wright, a housing analyst, reveals alarming trends in the housing market, including record-low transactions and a nearly 30% increase in inventory. Delinquencies are spiking, reminiscent of the 2008 crisis, raising concerns about a potential housing collapse. Despite an all-time high in median home prices, she questions whether we're sleepwalking into another crisis. The conversation also covers the impact of government involvement in the mortgage market and the struggles of homeowners amidst rising costs.
The significant increase in housing inventory nationwide indicates a potential oversupply and troubling supply-demand imbalance in the market.
Rising delinquency rates are raising alarms about borrower struggles, signaling a critical indicator of future market health and possible foreclosures.
Consumer sentiment is shifting, leading many homeowners and potential buyers to become more motivated to sell or wait for better conditions.
Deep dives
The Housing Market Decline
The housing market peaked in 2022, marked by record sales and pricing data, but has since seen a significant downturn. Analysts note misleading nature of median home pricing amid the downward trend and highlight how rapidly conditions are changing nationwide, with increased inventory and motivated sellers emerging everywhere, not just in high-profile states like Florida and Texas. The recent statistics indicate a disconnection between reported median prices and the underlying market health, revealing that record low transactions are occurring during traditionally busy home-selling seasons. This contrast suggests a potential crisis brewing beneath the surface of seemingly stable median home prices.
Worsening Delinquency Trends
Increasing delinquency rates in the housing market present a serious concern, with new data indicating a month-over-month rise in 30-day delinquencies that hasn't been seen since the last housing crisis. Such a significant increase signals that borrowers are increasingly struggling to meet their mortgage obligations, a critical indicator of housing market health. Analysts note that the decision to become delinquent is not taken lightly, often representing a last resort when all options to avoid such a scenario have been exhausted. The alarming rise in delinquency rates raises fears of future foreclosures and further destabilization of the housing market.
Expanding Inventory and Shifting Demand
Inventory levels are climbing significantly, with national statistics indicating an increase of up to 30% year-over-year, raising alarms about an oversupplied market. Many locations are reporting atypical seasonal behavior, with their off-season inventory growing substantially, potentially exacerbating the supply-demand imbalance. Analysts emphasize that this trend is occurring in markets that experienced rapid growth and speculative buying, indicating a correction is underway. This growing inventory combined with diminishing buyer demand sets up a troubling scenario for prices moving forward.
Impact of Institutional and Short-Term Rental Sales
Institutional sellers, who have heavily influenced housing prices in recent years, are starting to pull back significantly from acquisitions, leading to potential flooding of the market with homes for sale. This dynamic is coupled with a concerning trend among short-term rental operators, many of whom are now facing cash flow problems and considering exiting the market. Many first-time landlords are starting to recognize that the financial reality of operating in this space is not sustainable, prompting them to put properties up for sale. As these properties enter the market, they could contribute to an already increasing inventory and exacerbate downward pressure on housing prices.
Consumer Sentiment and Future Expectations
Consumer sentiment regarding the housing market is shifting, with reports indicating that a large percentage of Americans are concerned about their financial stability and ability to afford housing. This change in outlook could inhibit potential buyers, who may begin to wait out the market for more favorable conditions, particularly in response to anticipated interest rate cuts. Furthermore, existing homeowners are increasingly aware of the growing costs associated with homeownership, such as rising property taxes and insurance, leading many to reconsider their capacities. This sentiment shift indicates possible future price corrections as homeowners become more motivated to sell, fearing an erosion of their home equity.
Yesterday I had a private conversation with housing analyst Melody Wright. In it, she revealed how shocked she is by the latest stats that show how the housing market is starting to unravel.
Record-low transactions during what is normally the business time of the year for home sales. Inventory up nearly 30% year over year nationally.
And of ever greater concern, spiking delinquencies -- in some cases, at rates worse than seen during the 2008 Global Financial Crisis.
In Melody's words this is the turning point and "winter is coming" for the housing market.
Not that you'd know it by looking at the median existing home price, which just hit another all-time high.
Is the country really sleepwalking into another housing crisis?
We'll find out now, as Melody kindly accepted my ask for her to join me today for an impromptu discussion on this important topic.
Follow Melody at:
https://www.youtube.com/@DoomersNewsNetwork
https://x.com/m3_melody
https://m3melody.substack.com
https://www.youtube.com/@m3_melody
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#housingmarket #homeprices #realestate
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