A weekend topic starting with Fox Business. “St. Louis Federal Reserve President James Bullard agrees with Powell that it’s time to start reducing its $120 billion monthly purchases of Treasury and mortgage-backed securities. ‘At this point, I’m not sure these purchases are really doing anything helpful at this stage of the recovery, because we do have this incipient housing bubble here and we don’t want to be feeding into that,’ Bullard said.”
“Bullard confirmed that the Federal Reserve’s Federal Open Market Committee (FOMC) is currently developing a plan to deliver the change.”
From CNBC. “Investor Peter Boockvar is sounding the alarm on a housing price bubble brought on by the Federal Reserve’s Covid pandemic policies. He warns first-time homebuyers are most vulnerable to dramatic losses. ‘I feel bad for the people who bought homes over the past year because they’re the ones that paid the very elevated prices,’ the chief investment officer at Bleakley Advisory Group told CNBC. He suggests there’s evidence the air is leaking out of the bubble.”
“‘People are now seeing sticker shock in home prices and they’re backing off,’ added Boockvar. ‘Buyers are calling a time out. They said ‘I can’t afford this’ or ‘I want to wait to see home prices cool down.’”
From Cowboy State Daily. “The housing market has been on fire in Wyoming since the pandemic last year persuaded city-dwellers to look to this mostly rural state to escape the restrictions of urban life. But if one takes a look at real estate listings right now, there is a much wider selection than there was at this time just a few months ago — depending on where you’re looking. Lance Bower, a Cody real estate agent, said high-quality homes that are ready to move into are still difficult to find in towns that are close to picturesque, mountainous areas.”
“Bower’s observation holds true in Sheridan, where a search of home listings garners just one with a price between $200,000 and $500,000 — described as a ‘timeless home in a great location… settled on an 11,900 square foot lot with mature trees, alley access, a one car tuck-under garage.’ Built in 1959, it lists for $349,900.”
“But in the other corners of the state, there area a few more options. A search revealed 13 single-family homes between $200,000 and $500,000 in Evanston, where the highest-dollar option is a ‘spacious 6 bed/3.5 bath home on a quiet cul-de-sac. The kitchen, living, and dining rooms boast extra tall vaulted ceilings…’ for $495,000.”
“If you’re looking in a smaller town, your housing dollar goes a bit farther. In Buffalo, for example, there are 36 listings in the $200,000 – $500,000 price range. You can choose in town or in the country, on one acre or on 43; brand new or established. Take this house on a large lot, for just $250,000. There are literally dozens of homes for under $500,000 in the immediate Cheyenne area, including a seven-bedroom, two-bath home for $485,000… which indicates that the shortage of available homes for sale that has plagued the real estate industry since the pandemic began may be coming to a close — at least, in some parts of the state.”
“‘It continues to be a seller’s market, you know, under $500,000,’ Bower reports.”
From Go Local Providence in Rhode Island. “‘There’s a large demographic of people looking for quality houses in neighborhoods where they can afford, and I think that is still very valuable to people — and over on the East Side, we’re missing out on that entry level home because people are over-bidding and there’s no more housing in the $300,000 or $400,000 — if there are, they’re very rare,’ said Robert Rutley with Mott & Chace Sotheby’s International.”
From Money. “Whatever you decide to do, experts say you should make your move fast. Recent data shows for-sale inventory is rising (at least slightly), and when you throw in slowing demand from burned-out buyers, it seems the red-hot market may soon be cooling off. ‘We are seeing people accelerate their plans to take advantage of the market,’ says Rick Ruvin, a partner at Falk Ruvin Gallagher Real Estate in Whitefish Bay, Wisconsin. ‘In many markets, sanity is returning, and the level of competition is softening. Prices tend to rise, plateau and then fall. Many are sensing we are headed into a plateau phase.’”
The Marina Times in California. “The national housing market appears to be slowing down, according to Michelle Robertson, reporting for SFGate. She quotes Daryl Fairweather, the chief economist at Redfin, who said, ‘We’re going from 100 mph to 80 mph. What’s happening right now is a lot of buyers seem to be backing off the market because of how high housing prices have gotten. We’re seeing lower sales and a slight uptick in price drops.’”
“That’s not entirely the case in San Francisco, according to Eileen Mougeot, senior broker associate with Corcoran Global Living in the city. ‘Things aren’t as crazy as they were, but we’re still seeing multiple offers on homes for sale way over the asking price, just not way, way over the asking price,’ said Mougeot. ‘We hear all the time about how everybody’s leaving San Francisco, but if that’s the case, why are we still getting multiple offers? There are always going to be people who want to live in the city.’”
The San Francisco Business Times. “The pace of California companies moving their headquarters out of state is quickening, according to a new report. ‘The departures are accelerating as more relocation plans move to implementation,’ according to the report. In the first half of 2021, 74 companies moved their headquarters out of California, for a monthly average of 12.3. In all of 2020, 62 companies took their headquarters out of the Golden State for a monthly average of 5.2, while 78, or a monthly average of 6.5, did so in 2019.”
“In 2018, 58 companies moved their headquarters out of California, or a monthly average of 4.8, according to the report titled, ‘Why company headquarters are leaving California in unprecedented numbers.’ That means California lost a total of 272 headquarters between Jan. 1, 2018, and June 30, 2021, the report found, based on press releases, media reports and other disclosures that a company’s headquarters has left California. The figures may understate the actual departures since small businesses leaving the state often go unnoticed.”
“The report’s authors cite familiar reasons for the headquarters leaving California: taxes, regulations and high costs tied to labor, litigation, energy and utility costs. Other factors coming into play are so-called quality of life issues such as housing affordability and homelessness. California Gov. Gavin Newsom has been increasingly vocal about the need to combat the departures.”
“‘We need to step up our game — time to be more damn competitive,’ Newsom said at the Bay Area Council’s virtual 2021 Pacific Summer in June. However, when Newsom spoke at the same event in 2019, he was dismissive of Texas and Tennessee’s high rankings on CEO Magazine and other rankings of best places to do business. California often languishes low on those lists despite the state’s strong economic growth and innovation. Still, anecdotal evidence also suggests the pace of departures is accelerating.”
The Los Angeles Times. “Joey Myers, 41, who runs a digital marketing firm, and the others agreed to meet this week outside a high-end coffee shop in Fresno to talk about their support for Newsom’s ouster more than a year before his term is due to end. The group summed up the state of the state with a series of lamentations: ‘Disaster.’ ‘Chaos.’ ‘Disappointing.’ ‘Heading toward Afghanistan.’”
“Myers repeated a line — ‘jewel to poop’ — he’d earlier used to sum up San Francisco, the hometown of both Pelosi and former Mayor Newsom. Myers loved visiting the city with his wife and kids until it became, in his estimation, a slough of vagrancy, drug abuse and criminality. California, he suggested, has followed the same trajectory under Newsom as governor.”
The Orange County Register. “California’s pandemic-era homebuying binge slashed affordability to levels last seen in 2007 when folks were grossly overpaying for residences. By CAR’s math, just 23% of California households in the second quarter could theoretically qualify to buy California’s $819,630 median-priced home. That’s down from 27% in winter and 35% in 2020’s first quarter.The last time this benchmark was lower was in 2007’s fourth quarter when it hit 18%, just after bottoming out at 11% the previous two quarters. If you’ve forgotten, this was just as that housing market’s bubble was crashing into the Great Recession.”
“Forget the index for a moment. Let’s look at house payments for new owners. The pandemic’s buying frenzy wiped out any help low mortgage rates gave buyers, according to California Realtor quarterly stats. Nationally, affordability was 50% in the spring, down from 54% in winter and 59% in 2020’s first quarter. It’s the lowest since the end of 2010.”
“On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … SIX BUBBLES! A healthy market requires an ample supply of potential buyers who can purchase a residence without bankrupting themselves. If too many potential buyers can no longer afford to buy — and we may be nearing that situation — we likely will see marketplace changes that include heightened risk-taking: Wannabe owners stretching their wallets even further; more generous lending; and/or investors stepping into the buying void.”
“Or is it ‘different’ this time?”