Sellers Beware End Of ‘Bubble Yum Pricing’

Home sales just dropped for 6th straight month & prices coming down in many areas as media sales price eased from $413K to $403K. No bubble burst as bad as 2008, but bubble yum price gouging seen last 2 years is likely over.

Realiy check: There are now few silver linings for the housing market. Not only did sales of previously owned homes slide almost 6% in July to mirror the previous 5 months’ drops, but home builder confidence also fell for the 8th straight month as 1/5 of them told the Nat'l Assn of Home Builders they had reduced prices. And, Redfin reports 16% of July’s pending deals fell through as buyers are getting spooked by worsening economic news. Meanwhile, the Mortgage Bankers Assn said mortgage applications fell 2.3% last week due to higher interest rates nearing the 6% mark (compared to below 3% just a year ago); & the Commerce Dept. says housing starts fell 1.3%. Says the WSJ, “the combination of [stubbornly] high prices & rising interest rates has pushed home-buying affordability to its lowest level in decades.” Concluded Comerica Bank’s chief economist Bill Adams, "housing has gone from a tailwind in 2021 to a big headwind for the economy.”

Still, while falling home sales suggests demand is softening, WSJ reminds, the number of homes for sale remains historically high which may be “offsetting lower demand and keeping some prices high” for the time being. There’s still no reporting of the existing pricing bubble suddenly bursting as in 2008 when, almost overnight, sellers (including myself) found the market value of their listed homes dropping 20-50% (depending on the area) overnight, and the booming “sellers’ market” had turned into a nightmarish “buyers’ market.”

Davd Soul