US housing is simply unaffordable for many households. And now the affordability crisis has seeped into the heartland.
Liquidity moves markets!Follow the money. Find the profits!
(Bloomberg) Low mortgage rates and thriving employment should be the recipe for a strong housing market. Instead, they’re deepening America’s affordability crisis.
What began on the coasts, in areas like New York and San Francisco, is now radiating into the nation’s heartland, as well as to cities from Las Vegas to Charleston, South Carolina. Entry-level buyers are scrambling to purchase homes that are in short supply, sending values soaring.
Expectations that the Federal Reserve will reduce interest rates this week will do little to change the sober reality: For many, prices have risen much faster than incomes, pushing homeownership out of reach for a new generation of hopeful buyers. That’s cooling the market, with the 2019 spring season shaping up as the slowest for sales in five years, according to CoreLogic Inc.
Affordable homes disappeared first in technology and financial hubs like Silicon Valley and New York, where buyers with big paychecks pushed up prices. Now values are flattening after many would-be homeowners have been forced to the sidelines. In some areas, demand has also been hit by a pullback in foreign buyers and new federal limits on property-tax deductions — as well as fears that a recession may be around the corner.
Yes, home price growth in the broader FHFA purchase-only index YoY has been greater than US Avg Hourly Earnings Private NFP Prod&NonSup In Nom$ YoY since 2012. But. the gap is narrowing (pink box) like it did during the housing bubble (after the orange box).
Of course, lack of new home supply can lead to rising home prices. But it is odd that The Fed’s QE, ZIRP low interest rate policies did little to increase 1-unit construction.
No doubt, we are addicted to gov. As in low rate policies and HUD/Fannie/Freddie stimulus.
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