‘Renting is nothing short of brutal. Rents are rising at an astronomical and unsustainable rate.’
Rents in London increased by 11.6% in the 12 months to November 2024. Source: FT
THE ISSUE WITH US HOUSING AFFORDABILITY IN ONE CHART...
Annual income needed to buy a house in the US hit a whopping $109,564, an all-time high. This has DOUBLED in just 4 years... At the same time, median income earned is just $83,431. The difference between the two has NEVER been greater. Source: Global Markets Investor
US rent prices are falling:
Median asking rent in the US declined 0.7% year-over-year in November to $1,595, the lowest since March 2022. 1-bedroom apartment rent prices fell 1.7%, to $1,450, reaching the lowest level in 3 years. 2-bedroom apartment rent prices declined 1.1%, to $1,671, to the lowest in 9 months. Furthermore, the median asking rent price per square foot dropped 2.2% to $1.79, the lowest since December 2021. This marks the 19th consecutive monthly decrease. Rent prices are cooling off. Source: The Kobeissi Letter
Total unsold US (single family) new homes for sale now at its highest level since...December 2007.
The increase in unsold homes takes place as housing affordability is near all-time low (mortgage rates AND prices are too high). A few remarks though: -There is a lack of inventory in some states while in other states inventory is building up due to population loss. - The chart is NOT normalized by population. The US population is about twice that compared to 1960. If you normalize the number from today compared to 1960, they might actually be the same. Source: Don Johnson @DonMiami3
82% of Americans say it's a bad time to buy a house in late 2024.
That's the most pessimistic homebuyers have ever been about the housing market. Helps explain why homebuyer demand is so low. Source: Nick Gerli, re:venture
US HOUSING AFFORDABILITY HAS NEVER BEEN WORSE
84% of US consumers believe it is a bad time to buy a home, near the most on record. The share is greater than in the 1980s when rates were sky-high and as much as 20% versus 4.5% now. House prices are also near record highs. Source: Global Markets Investor
Between 2000 and 2024:
US Income +24% US House prices +140% Source: Trend Spider
One of the reasons mentioned by many analysts to explain the aggressive rate cut (50bps) by the Fed in September was the following:macr
Shelter is the sticky component of inflation. If the Fed cut rates, we should see a drop in the mortgage rate which will enable more real estate supply and thus lower shelter inflation. Well, the Fed cut rates but mortgage rates are not declining. They are even moving higher? Has the Fed lost control of the bond market?
