[HN Gopher] Real-time market monitoring finds signs of brewing U...
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Real-time market monitoring finds signs of brewing U.S. housing
bubble
Author : nimbius
Score : 55 points
Date : 2022-03-31 20:42 UTC (2 hours ago)
(HTM) web link (www.dallasfed.org)
(TXT) w3m dump (www.dallasfed.org)
| djfobbz wrote:
| Finally! I'm relieved to hear that "Real-time market monitoring"
| has caught up to what my common sense has been predicting for the
| last 8 months. I wonder if this "monitoring" whiz has any future
| outlook on food shortages?
| Johnny555 wrote:
| I bought my house about a year ago, since then it's gone up in
| value by about 30% (based on comps of nearby home sales)
|
| A neighbor sold his house recently, he said he had a half dozen
| offers in a week, 3 were over his asking price, 2 were all-cash
| with no contingencies.
|
| I don't know how this market can be sustainable or how the
| average buyer can compete if they need a loan.
| [deleted]
| RspecMAuthortah wrote:
| The Fed has been consistently wrong over last decade in many of
| their policy, and their credibility is on the line.
|
| The reason home prices are not on line with fundamentals is -
| well there is just too much liquidity. Money is looking for
| places to go and there are not many. Except stocks. And then the
| next bet is real estate. They printed way too much for too long.
| Interest rate is at historic low, there is way too much savings,
| and in this inflationary environment, real estate is an excellent
| leveraged asset. No wonder even institutions are now buying, in
| fact one in every 3 SFHs in US are now owned by institutions.
|
| Oh yeah, the same Dallas Fed chairman did not see the whole
| inflation thing coming either.
|
| Yes, it is different this time.
| closeparen wrote:
| There is every reason that macroeconomic conditions would
| affect the value of _land_ , but relatively silly and
| incidental reasons that the price of land would be so strongly
| coupled to the price of a home to live in (itself a
| depreciating commodity).
| onlyrealcuzzo wrote:
| > No wonder even institutions are now buying, in fact one in
| every 3 SFHs in US are now owned by institutions.
|
| Source?
| stonogo wrote:
| You won't get a source because it's misinformation. There are
| US cities wherein one in every three single-family-home
| _purchases_ were made by investors last quarter:
| https://www.redfin.com/news/investor-home-purchases-q4-2021/
| so perhaps OP was referring to that.
| brian_cloutier wrote:
| This is a dumb question but... does housing have fundamentals?
|
| There's a demand curve of renters willing to rent housing at
| different price points and I can see how this would put a
| lower-bound on housing prices, but why should there be any
| upper bound? When you buy a house you intend to live in there
| is no associated revenue stream, and the only return you can
| hope for is your expectation that someone else will buy the
| house from you for more in the future.
|
| Maybe you can quantify that return, by modeling a rising
| population and municipalities which are slow to add housing? It
| still feels like housing is worth what other people are willing
| to pay for it, that's the fundamental.
| gitfan86 wrote:
| I think crypto has played a role in educating more people to
| how bad it is to hold USD, low interest rates, printed money
| combined with that are a recipe for people to get into bidding
| wars and fomo. Ironically this is bad for Bitcoin because it is
| denominated in USD. Maybe Bitcoin does go to 1M, but only after
| a loaf of bread costs 1k.
|
| I'm not suggesting anyone go out and buy a 2br house for 3
| million dollars, but I do think that real estate will hold it's
| value in general much better than USD.
| dclusin wrote:
| Until the alt coin they were emotionally invested in loses
| 80% of its value. Then the stock market and USD don't look so
| bad.
| JumpCrisscross wrote:
| > _Fed has been consistently wrong over last decade in many of
| their policy, and their credibility is on the line_
|
| This is hyperbole. The Fed, by and large, held the American
| economy together through the financial crisis and more
| remarkably the pandemic. Until now, neither of those produced
| meaningful levels of inflation. To say "their credibility is on
| the line" is to disagree with a multi-trillion dollar bond
| market taking the Fed's every word very much seriously.
|
| > _the same Dallas Fed chairman_
|
| This is the Dallas Fed's leadership [1]. None of them authored
| this article, certainly not the (interim) president, Meredith
| Black. If you want the dry stuff, what the Fed is actually
| saying versus its individual researchers, consult the beige
| book [2][3].
|
| [1] https://www.dallasfed.org/fed/leadership.aspx
|
| [2] https://www.federalreserve.gov/monetarypolicy/beige-book-
| def...
|
| [3]
| https://www.federalreserve.gov/monetarypolicy/files/BeigeBoo...
| _March 2_
| datavirtue wrote:
| I agree. Prominent investors, scores of former and current
| federal reserve analysts and directors, traders, and many
| others have been begging congress for financial regulation--
| before and after meltdowns. Many of those mentioned above
| have offered direct, specific advice on what to regulate and
| how to do it. Crickets...for decades.
| stjohnswarts wrote:
| Yeah the only people I've seen that say the Fed is useless
| have been anarchists and libertarians and gold bugs.
| nopenopenopeno wrote:
| Their only option is to be wrong. At the end of the day, the
| fed has an impossible job to do.
| vmception wrote:
| Oooh, nice, this has levels to it.
|
| 1) The Fed should create the outcomes such that their
| predictions were wrong
|
| 2) While also just having a bad interpretation of data to
| begin with
|
| 3) The Fed is only imagining that its toolkit can cause a
| specific outcome for economic growth, but it cannot cause
| humans to transact a certain way or predict what a large
| group of humans (or large pool of capital) will do. No
| economist can, and the other economists don't have an
| infinite balance sheet to try to influence it either.
|
| 4) The Fed was never asked to or mandated to do the things it
| does to stimulus the economy. (Caveat, the stimulus bills in
| 2020 are a major exception). The Fed just notices that nobody
| can stop it. Similar to the Supreme Court realizing that and
| testing it in Marbury v Madison. Congress lacks consensus on
| it and everyone is afraid of the alternative (Congress having
| to deal with monetary policy themselves, politically).
| datavirtue wrote:
| I agree. Congress is paralyzed (far more than the usual)
| when it comes to monetary policy and financial services
| regulation. It's officially their job but not their wheel
| house. Unsettling.
| spaetzleesser wrote:
| I still remember Bernanke's pronouncements before the 2008
| crash that everything is just fine. It's hard to not conclude
| that they either aren't very competent or are playing
| political games.
| JumpCrisscross wrote:
| > _remember Bernanke's pronouncements before the 2008 crash
| that everything is just fine_
|
| The Fed chair saying "we're fucked" is, on its own, enough
| to cause a credit crisis. (This is why the Fed doesn't tend
| to make blanket forward-looking statements like "everything
| is just fine.")
| [deleted]
| notch656a wrote:
| They can be dissolved. The constitution does not require a
| central bank.
| mensetmanusman wrote:
| You need a mechanism to decide the ratio of
| currency/population necessary to prevent a deflationary
| cycle.
| notch656a wrote:
| You don't 'need' the fed. The country lasted 150 years
| without one, and shortly (less than 20 years) after its
| introduction, a deflationary cycle and great depression
| ensued. The fed preventing a deflationary cycle has been
| thoroughly and mercilessly disproven.
|
| Either the fed is powerless to stop the economic crisis
| we've suffered, or they're too incompetent to manage
| them. Either way it looks like they need dissolved.
| magila wrote:
| https://en.wikipedia.org/wiki/Free_banking
| nopenopenopeno wrote:
| The globalists do, and the globalists are in charge.
| posnet wrote:
| I wonder about these grand conspiracies. I am on the
| fence as to whether the world is controlled by a global
| elite of super geniuses stealing from the unwashed
| masses. Or whether the people in charge actually are just
| wildy incompetent. I'd say the evidence supports both.
| tmn wrote:
| Lying is not the same as incompetent. Also they have to
| pretend (lie) that they can do something impossible. They
| are not incompetent. The fed chairs are quite
| intelligent, but they are not running the show.
| yhoneycomb wrote:
| How is this a "grand conspiracy"?
|
| People are going to manipulate things in their favor as
| much as they have the power to do so. Oligarchs in
| America and elsewhere have the most power, and thus do
| the most manipulating. Also, it's no secret that the vast
| majority of wealth is concentrated in the hands of a few
| oligarchs.
| [deleted]
| vkou wrote:
| > The Fed has been consistently wrong over last decade in many
| of their policy, and their credibility is on the line.
|
| Considering that after 2008 and 2020, we did not end up living
| in a weird Mad-Max blood-covered hellscape, trading bottlecaps
| for hits of zyme and ammunition (Which would have been the
| likely ideological outcome of 'just let the whole economy
| fail'), I think the Fed has weathered the past two decades
| fairly well.
| gitfan86 wrote:
| I recently read a book that was basically a diary of a
| businessman from the great depression with some commentary.
|
| It seems like there were two big problems that we have done a
| good job avoiding since then.
|
| #1. Way too many people were rich on paper and with margin.
|
| #2. Once the economy started to collapse everyone panicked
| and tried to avoid spending money, which causes a negative
| feedback cycle.
|
| 2008 was similar to issue 1, but we avoided step 2 by bailing
| out the banks and auto companies that should have collapsed.
| lend000 wrote:
| Rental vacancy rates remain near all time lows, construction is
| still expensive, the population is growing, and most cities are
| doing little zoning-wise to improve their housing supply. This
| bubble has a ways to go.
| gorwell wrote:
| Population isn't growing much at this point tho. It's trending
| to 0%.
|
| https://www.worldometers.info/world-population/us-population...
| posnet wrote:
| That site lists the number of migrants as being identical for
| the last 5 years.
| mirntyfirty wrote:
| Not to be intentionally contrarian, but do you have a data
| source for the vacancy rate?
|
| My understanding is that some states have been losing people
| net and have still had rents and home values skyrocket. I think
| an increase in Airbnb would be one possible contributor.
| datavirtue wrote:
| The problem is so bad that you can lose population and still
| be under water with the housing supply.
| xnx wrote:
| First result: https://fred.stlouisfed.org/series/RRVRUSQ156N
| TameAntelope wrote:
| C'mon folks, I know it's fun to slap, "Source?" on every
| comment, but it took me ~15 seconds to find a number of
| places where this data exists and is readily available. [0]
|
| 'xnx did the same thing as a sibling comment, but I just
| wanted to add that we can do better! This info is super
| readily available.
|
| [0] https://fred.stlouisfed.org/series/RRVRUSQ156N
| hall0ween wrote:
| While I agree people have the ability to look up others'
| claims for themselves, it's a lazy way to go about it -- I
| make an argument and then say "you look it up!"
| EricDeb wrote:
| i dont think it's population growth.. I mean haven't a million
| people died of covid?
| DiggyJohnson wrote:
| I don't think that COVID significantly affect population
| demographics in non-elderly cohorts.
|
| Same point in a different context: I would be skeptical of
| someone arguing that the reason for the Great Resignation is
| opportunities opening up in the workforce due to COVID
| casualties. The numbers just aren't high enough.
| [deleted]
| ianferrel wrote:
| Pre-Covid the US population was growing about 2m per year.
|
| So, if we had 1m excess Covid deaths in the past ~2 years,
| the population would still have grown by ~1.5m per year.
| prepend wrote:
| Population growth in new areas because of telework. People
| are fitting into new homes based on not having to drive into
| urban centers.
| Enginerrrd wrote:
| It's more a growth of the home-buying demographics. If you
| look at it, millenials are a larger demographic boom than the
| baby boomers. They are basically at or entering their years
| of top demand for buying homes. If you compare the potential
| demand to supply, you'll see a mismatch that will likely go
| on for the next 10 years.
| nopenopenopeno wrote:
| > Rental vacancy rates remain near all time lows
|
| Source?
| DiggyJohnson wrote:
| This comment can be deleted if it's out of scope, but I have
| a question:
|
| Did you even try to find this source on your own? If not,
| whose obligation do you think it is to supply a source for
| empirical claims in a civil discussion?
|
| Or if you're trying to educate yourself or simply asking out
| of interest, there's probably a more meaningful way of
| engaging with the OP than a one word comment: 'source'.
| notch656a wrote:
| >Did you even try to find this source on your own?
|
| This would be impossible to do without knowing what the
| poster meant by vacant rentals. Some would interpret any
| empty rental unit as vacant, whereas others would interpret
| it as a rental that is actually available for rent as being
| vacant. Without a source or other clarification, it can be
| impossible to know by which definition someone is using.
|
| >if not, whose obligation do you think it is to supply a
| source for empirical claims in a civil discussion?
|
| The burden on proof is always on the one making the
| assertion.
|
| > there's probably a more meaningful way of engaging with
| the OP than a one word comment: 'source'
|
| It saves everyone from reading a long sentence when in the
| end all they are asking is for the person making the
| assertion to supply proof.
| xnx wrote:
| First result: https://fred.stlouisfed.org/series/RRVRUSQ156N
| notch656a wrote:
| I wonder how much of this has to do with flippers buying up
| rental properties to 'rehab', put a few coats of paint,
| change the tiles, flush out undesirables on and sell
| onward. Higher real estate turnover could put a damper on
| vacancy rates.
| nopenopenopeno wrote:
| I see. This measures only properties that are currently on
| the rental market; not empty homes. As corporate ownership
| increases, which is happening at a startling degree, this
| makes sense.
| innagadadavida wrote:
| They use price to rent ratio for determining if there is a
| bubble. This seems like a flawed metric - both home prices and
| rents are increasing. What is not increasing is the income. So
| shouldn't they be tracking median income to median home prices
| and rents in local areas? I feel this will show a different
| picture and we might already be in bubble territory - especially
| if the interest rates co tongue to spike.
| imapeopleperson wrote:
| Income most certainly is increasing
| stonogo wrote:
| In absolute terms, yes. It's not, however, increasing fast
| enough to keep up with rent, food, fuel, power, or inflation.
| spaetzleesser wrote:
| The ratio of price/income has been growing way faster over
| the last decades.
| QuadmasterXLII wrote:
| Is it possible to have stable housing prices when mortgages are
| available at a rate markedly below inflation?
| aaomidi wrote:
| I mean it's also that construction is hard and expensive.
|
| I want to build, I don't even know where to start and I don't
| have a super elastic budget.
|
| Oh, and mortgages for construction are so much worse.
|
| We really need to encourage people to build by having a
| streamlined process.
| VWWHFSfQ wrote:
| I personally know of two parties currently trying to buy a house.
| The first is a young couple in New Jersey. The other is a retired
| couple in the Tampa Bay area in Florida. Both of them are
| extremely well-qualified.
|
| Both of them have put in at least 3 bids on houses in the last
| year or so and every time they got out-bid by a lot. Imagine a
| listed house at $600,000. You offer $620,000. You lose and find
| out later the house sold for $720,000.
|
| This is freaking New Jersey and Tampa, Florida. None of this is
| realistic. Why is it like this?
| pavlov wrote:
| At the same time Zillow managed to lose a billion dollars last
| year buying and selling homes (the so-called "iBuy" program
| that they were forced to terminate).
|
| Something doesn't add up? But maybe it's just a question of
| most homes on the market actually not being desirable enough to
| get these high bids.
| timy2shoes wrote:
| The bidding up is exactly why Zillow lost money. Algorithmic
| house buying suffers from the winners curse. When Zillow
| thinks they are getting a good deal, there are usually
| extenuating circumstances that are apparent to local buyers
| which cause them to not bid up the price. That and the iBuy
| program was expanded way beyond the original scope.
| vkou wrote:
| > Why is it like this?
|
| It's like it because the house isn't actually worth $620,000.
| It's worth closer to $700,000, but if the seller underprices
| it, they are hoping that emotionally attached people with more
| money than sense enter into a bidding war, that drives the sale
| price way past its real value.
|
| The best way to drive up the sale price for your house is to
| offer it for a bargain.
|
| When looking at housing cost trends, don't look at listing
| prices, look at sale prices. Sale prices in that area didn't go
| up by 20% over the span of a week. If they did, those houses
| would be selling for trillions of dollars by the end of next
| year.
| onlyrealcuzzo wrote:
| I was bidding in Los Angeles 10% over asking, but the sale
| price was usually 30-50% over asking.
|
| I just moved to Chicago instead and got a place for 10% under
| asking...
| rootsudo wrote:
| I like Chicago, was it in north suburbs? Looking at two
| flats/three flats, everything there is quite affordable, but
| am worried about IL itself and cook county taxes.
| onlyrealcuzzo wrote:
| No - Wicker Park. Love it.
|
| My family isn't too far away, and I had a few close friends
| there, so it worked out surprisingly well.
| itake wrote:
| You can't look at the asking price and assume it aligns with
| the current market. Often they will put low-ball askings to get
| more eyeballs on their listing. Their agent should of informed
| them of realistic offers.
|
| What price was the comp homes being sold for?
| hardtke wrote:
| I saw a 2200 square foot house in Mill Valley, CA on Twitter
| this morning. It was listed for about $3M and went for $1.6M
| over asking. Over $2000 per square foot. On the other hand, the
| pictures seem to suggest it has the perfect Pottery Barn look
| that buyers want. One thing that the Fed report fails to
| consider is the cost, time and hassle of renovations. To get to
| that Pottery Barn look on a non renovated house would require
| at least a year and be very, very expensive (probably $1000
| square foot just for renovations). Also, it doesn't seem like
| anyone in the most desirable neighborhoods is selling, as it is
| basically insane to sell when the houses are appreciating at
| 20% like clockwork. So you have a desperate buyer that has to
| pay $1.6M on the single perfect house to come on the market
| this year.
|
| House details: https://www.zillow.com/homedetails/38-Sycamore-
| Ave-Mill-Vall...
| s1artibartfast wrote:
| I just lost after putting a $1,325,00 bid on a $1,000,000 list
| price for a 1000sqft house
| gautamcgoel wrote:
| OT, but I enjoy the hitchhiker's reference in your username
| :)
| daenz wrote:
| Well clearly you were an order of magnitude too low.
|
| Edit>> they left off a zero in the first number.
| gautamcgoel wrote:
| Isn't this, in some sense, a good thing? I prefer a world where
| the current insane prices are indicative of a bubble and
| eventually come crashing down to a world where high prices are
| just the new normal.
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