XPost: alt.economics
Of course, the big inaccuracy here, is they are talking nationwide.
Puget Sound area has done much better.
see the graphs at:
https://www.visualcapitalist.com/chart-u-s-home-price-growth-over-50-years/
Chart: U.S. Home Price Growth Over 50 Years
Published 3 months ago on June 28, 2023
By Dorothy Neufeld
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Chart: U.S. Home Price Growth Over 50 Years
Chart: U.S. Home Price Growth Over 50 Years
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U.S. home prices grew significantly in 2022, even as interest rates
climbed higher.
Yet in inflation-adjusted terms, this growth rate was far lower. By Q4
2022, it fell to being flat year-on-year, making it the slowest real
growth seen in a decade.
The above graphic compares nominal and real residential property price
growth over 50 years based on the latest data from the Bank for
International Settlements (BIS).
Nominal vs. Real Home Price Growth
In 2022, opposing forces of rising mortgage rates and a narrow supply of housing produced a moderate nominal growth rate of just over 7% as of Q4
2022. That said, real price growth dropped to 0% over the period.
Here’s how that looks in context of the recent highs and lows of housing price growth:
Nominal Home Price Growth
Year-over-Year Real Home Price Growth
Year-over-Year
Q4 2022 7.1%
0.0%
Peak 19.5% (Q1 2022) 12.9% (Q2 2005)
Low -16.9% (Q4 2008) -19.5% (Q3 2008)
Recent Highs: During the pandemic, growth hit almost a 20%
year-over-year rate by Q1 2022, which was record home price growth at
the time. It was driven by ultra-low interest rates and remote work
leading people to seek out more space.
Recent Lows: In both real and nominal terms, home price growth sank to
their lowest levels in 2008. The property market crashed after a wave of
easing lending requirements. This flooded the market with an oversupply
of houses as subprime homeowners couldn’t afford to make payments,
leading prices to plummet.
Factors Influencing Home Price Growth
Today, a mix of factors are supporting nominal house prices.
First, the housing supply remains low. Total existing inventory stood at
1 million in April, under half the four-decade average. As interest
rates have increased, homeowners have been hesitant to sell and the
number of mortgage applications has fallen. In turn, this is pushing
prices higher.
In fact, the majority of primary mortgages have interest rates locked in
under 4%. As of May 4, the average 30-year fixed mortgage rate stood
much higher, at 6.4%.
Mortgage rates vs. number of active mortgages graph
Along with this, new home sales are falling.
After hitting a 15-year peak in 2021, sales sank almost 27%
year-over-year in April. New home sales are often considered a leading indicator for the residential market.
Wider Implications
The U.S. residential market is valued at about $45 trillion, and has historically been highly sensitive to interest rates.
While the rapid increase in interest rates haven’t yet had a major
impact on housing prices, some cracks are beginning to show.
On the other hand, if prices remain stubborn, it may contribute to
inflationary pressures, leading the Federal Reserve to continue with
rate increases, given the market’s sheer size and influence on the
overall U.S. economy.
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