As highlighted by The Kobeissi Letter, the US housing market is having its historical moment
The US housing market is having its historical moment. Indeed, Real home prices in the US are currently almost 10% MORE expensive than they were in 2008. In fact, real home prices are now 80% ABOVE the 130-year historical average, according to Reventure. This means that even on an inflation adjusted basis, home prices have never been more expensive. Meanwhile, housing supply is 40% below the historical average. All while mortgage demand is at its lowest since 1994 and the median homebuyer now has a $3000/month payment. Source: The Kobeissi Letter, Reventure
Buying a home is now 52% more expensive than renting, the highest premium on record (note: the premium peaked at 33% during the last housing bubble in 2006)
Source: Charlie Bilello
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Are US homes sellers so desperate?
THE US REAL ESTATE MARKET IS MAKING HISTORY...
As highlighted by The Kobeissi Letter -> For the first time since 2005, new home prices are set to drop below existing home prices. In other words, new will be selling for LESS than old. The median new home price is down to ~$410,000 while the median existing home prices is nearing $400,000. Why is this happening? ~90% of mortgages outstanding currently have an interest rate that is below 5%. Many mortgage rates are BELOW the current inflation rate. A mortgage issued in 2020 or 2021 is effectively an asset now. Truly historic. Source: The Kobeissi Letter
The US population has increased 87% since 1960 but fewer homes are being built today than back then
Source: Charlie Bilello
Global Property Guide
Q2 2023 gross rental yields for apartments/condos in over 250 cities across 60+ countries: Dublin: 7.70% Istanbul: 6.21% Dubai: 6.13% Warsaw: 6.02% Madrid: 5.27% Athens: 5.25% Amsterdam: 5.00% Singapore: 4.78% Vienna: 3.29% Zurich: 3.11% Hong Kong: 3.08% Source: https://lnkd.in/eTaAkcHM
Compared to a year ago, the CPI for rent spiked by 8.2% in October, up from 7.3% in September, and the biggest year-over-year spike since April 1983
Soure: Wolfstreet.com, WallStreetSilver
Existing Home Sales Crash To Slowest Since 2010
Sales actually fell 4.1% MoM (far worse than expected and down for the 20th time in the last 23 months) with September's 2.0% MoM decline revised even lower to -2.2% MoM. That decline left existing home sales down 14.6% YoY... Fewer US existing homes are selling today than at any point since 2010. The 3.79 million annual rate is even below the lowest level of sales during the 2020 covid shutdowns (4.01 million). The chart below by Francois Trahan puts things in greater perspective and shows that when adjusting for population, this is one of the worse housing profiles we have seen in decades. On this "per household" basis October existing home sales data was worse than the lowest reading seen at the depths of the GFC. Source: François Trahan
