As the S&P CoreLogic Case-Shiller 20-city price index posted a 19.1% year-over-year gain in January, it was representative of a .5% increase over the previous month with a month-by-month increase of 1.8% from December-January. The Case-Shiller national home price index showed a 19.2% growth rate from January 2021 to 2022. While these figures mean little to many on the surface, they boil down to meaning a lot.
Craig J. Lazzara, managing director at S&P DJI provided some context in the Case-Shiller report. “Last fall we observed that home prices, although continuing to rise quite sharply, had begun to decelerate. Even that modest deceleration was on pause in January.” This kind of change makes the American people have to look more carefully before buying, as bigger problems are coming up.
The housing market cannot sustain 20-30% gains year-over-year. We saw this back in 2008 when the bubble burst due to too many sub-prime mortgages being out there, and people were buying homes they could never have a chance to afford. Then the bubble burst and the market started to flood with foreclosed homes. As entire neighborhoods found themselves foreclosed on, anyone who was able to make their payments on time was now dealing with owning a home that was worth far less than they still owed on the property.
Now we are seeing the problem with too many cash buyers flooding the market on the heels of low-interest rates. While the average American is trying to buy a house with a low mortgage payment, the cash buyer swoops in and offers the asking price with no inspections or contingency. This can trigger a bidding war, one that will inevitably lead to someone paying far more than a property is worth. Unfortunately, though, the market is flexing upwards with these purchases and is therefore propping up these rapidly inflating prices by establishing a new bottom line.
Trump’s Secret Legacy Is Set To Create Small Fortunes!
Developing Story - Trump administration oversaw a RADICAL change to the tech world… one that could unleash a huge wave prosperity… and wealth creation in the near future. Find Out More
This is where the Federal Reserve is coming in. they expect that increasing the interest rates will allow the housing market to stabilize and help people be able to get into homes. Allowing the market to stabilize is something homebuyers haven’t seen in ages. Especially in states like Arizona and Florida. These two states are not lonely posting the highest growth according to the Case-Shilling report. With Phoenix posting a 32.6% increase, Tampa surging up 30.8%, and Miami at 28.1% these cities have done nothing but continue to grow.
Why wouldn’t they? They are getting a massive influx of people from California and NYC who left to escape the high taxes and horrible policies and given the substantially cheaper real estate compared to home, everything seems like a bargain. When the pandemic started, and jobs began going remote these very cities became the places to move. They could keep their overinflated pay rates and buy a house in cash. Considering how easily real estate sells in places like San Francisco or Manhattan, the move was a no-brainer for many of these people.
Jeff Bezos’ Big Bet
World’s 2nd-Richest Man’s Latest Bombshell
The fuse has already been lit... and on March 9th I believe he’ll reveal a few more details. If you missed out on taking advantage of the Amazon success story... don’t miss out again. Find Out More
