Hey folks. I would consider last month as a bit of a stalemate, based on the non-movement in months of inventory:
But the previous level of inventory was quite low.
Not many people are buying, but even fewer are selling. And so prices are being supported, and rose further last month.
This is despite the fact that inflation-adjusted monthly payments are actually higher than they were at the bubble peak!
Inventory at this level is very supportive of prices in the short run, so I’d expect prices to rise further immediately ahead. But inventory is weather, not climate (see the second graph). FWIW my long term view continues to be that this level of affordability is not sustainable.
More graphs below…
Agree with every single part of that. The data is showing what I’ve been talking about for months. The only solution is continued albeit slower inflation and passage of time
Wait until the May and June data comes out. Inventory y-o-y is about to go deeply negative
“ This is despite the fact that inflation-adjusted monthly payments are actually higher than they were at the bubble peak! ”
Combine the fact that real incomes increased by about 30%, and the strong secular trend of WFH increasing residential demand, and the secular trend of increased real construction costs…
I think our fundamentals are a lot stronger than 2006.
I was helping someone look for a 2 bedroom to rent in suburban east county recently.
Lots of Zillow listings of places around $2000 now that were 1200-1400 in 2019-2020. The average listing age was also short, there were tons of contacts on them, and landlords almost all said up front how picky they are. Good credit, no pets, verified income.
Just one example:
8551 Graham Ter APT 6, Santee, CA 92071
Listed at 1400 in 2019, 2000 in a new listing today, 9 contacts and 1 application already.
I hear people in their 20s and 30s who rent talk about the specifics of the 10% annual rent increase law a lot too. There’s an expectation of regular large increases. They want to buy to avoid them.
Fair point on real income increases, income is a the better denominator than inflation. However, even using incomes/rents (which basically say the same thing)… we’re still not too far below bubble peak levels for monthly pmt affordability: https://piggington.com/shambling-towards-affordability-january-2023/
(PS 30% real income growth since 06 seems high but the point is directionally correct)