Real Estate News This Week
Here are the stories that are catching my eye in week 4 of March 2023
Why Millions of Households Making Six Figures Are Still Renting (via Motley Fool)
There has been an increasing number of households making over $150,000 over the past few years, but there are so many of these same households that do not feel comfortable with purchasing a home. Obviously, high interest rates are one factor, but rising house prices and demand are another that is keeping potential buyers at bay. According to the Fed the median sales price of houses sold in the US during Q4 2022 was $467,700. This number that has since increased by 45% since the start of COVID-19. Mortgage rates in the beginning of 2022 were around 3.22% and currently hover at 6.60%. The monthly mortgage payment for a $500,000 home is now $1,000 more due to mortgage rates more than doubling in a year.
The Housing Market in the US is Soaring and Falling all at the Same Time (via Business Insider)
The US housing market is really weird….. There is a giant crash and a lethal boom happening at the same time and it really just depends on where you live at. Black Knight provided data to show West Coast prices are plunging according to YoY numbers in places like Seattle (-7.5%) and San Francisco (-10.3%). While Miami (+12%) and Orlando (+9.3%) have been steadily increasing. Geographically, homes west of the Rocky Mountains are dipping while homes East of the mountains are Increasing. For context, in 2007 and 2008, 134 out of 153 metropolitan areas dropped in home prices with the 19 others seeing flat prices.
Elon Musk Believes that One Type of Debt is a Looming Issue Facing the Economy (via Yahoo Finance)
Elon Musk is sounding the alarm on what he says is the “most serious looming issue”. The Kobeissi Letter, publishes weekly commentary on markets and shared how over the next 5 years, more than $2.5 Trillion in commercial real estate debt will mature.
Which they stated is the most in any 5 year period in history. They also mention how rates have doubled, while only 60%-70% of this is actually occupied. Of course this could be due to so many companies going to remote work after the COVID Breakout. The worst part about this is that 70% of commercial real estate loans are owned by small banks. The lesson we are learning here is that there is NO SUCH THING AS FREE MONEY. The recent failure of SVB (Silicon Valley Bank) has made this looming issue worth paying attention too!