The important part of why the rollover is what matters now.
Simply, when interest rates were at historic lows (less than half the rates of the Great Depression era) when a million-dollar home was sold, the majority of funds would be paid to the seller on closing. However, as interest rates have gone up, the “big paydays” for sellers are over and done.
As a result, while homes may still be on the market, the net to sellers is coming down – and fast.
Now we fast-forward to the Case-Shiller, S&P, CoreLogic Home Prices report just out and remind you that this data is very much rear facing; the homes involved in this likely sold 2-months (or longer) ago. Inspections, title search, funding, and then registering the sales – this stuff all takes time.
So, given there is hysteresis in this data (Two months? That’s how I think of this…) we can see how real estate was rolling before the Turkeys came out:
NEW YORK, NOVEMBER 29, 2022: S&P Dow Jones Indices (S&P DJI) today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for September 2022 show that home price gains declined across the United States.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 10.6% annual gain in September, down from 12.9% in the previous month. The 10-City Composite annual increase came in at 9.7%, down from 12.1% in the previous month. The 20- City Composite posted a 10.4% year-over-year gain, down from 13.1% in the previous month. Miami, Tampa, and Charlotte reported the highest year-over-year gains among the 20 cities in September. Miami led the way with a 24.6% year-over-year price increase, followed by Tampa in second with a 23.8% increase, and Charlotte in third with a 17.8% increase. All 20 cities reported lower
price increases in the year ending September 2022 versus the year ending August 2022.
Before seasonal adjustment, the U.S. National Index posted a -1.0% month-over-month decrease in September, while the 10-City and 20-City Composites posted decreases of -1.4% and -1.5%, respectively.
After seasonal adjustment, the U.S. National Index posted a month-over-month decrease of -0.8%, and the 10-City and 20-City Composites both posted decreases of -1.2%. In September, all 20 cities reported declines before and after seasonal adjustments.
We will leave you with the friendly reminder that if you rent a home, you’re making someone else rich, since you’ve got to have a place to live anyway. You’re usually better off “paying yourself first” by owning your own home, if you can swing it.
Just remember, like some other investments, don’t over-trade and remember the average home is held seven years, or longer and that’s when the money begins to pile up in your corner.
The unexpectedly glum report has flipped market futures negative, so we would not be surprised to see another snowball pick up speed – the Wave 3 (3)(i) decline is looking ever more likely, now.
OK, write when you get rich,