Housing Market Near Peak
Following are comments from BCA Research which agree with our contentions.
It seems that cracks are appearing in the U.S. housing boom. Homebuilders’ stocks are off their peak and lumber prices have collapsed.
The inventory of unsold homes is rising. The stock prices of some subprime mortgage lenders have been hit hard and home equity lending has moderated.
Importantly, deteriorating affordability appears to be pricing first-time home buyers out of the market.
Real mortgage rates are still low compared to past Fed tightening cycles, but the Affordability Index for first-time buyers has plunged below the average of past cycles because of soaring prices.
The recent dip in the U.S. rental vacancy rate may be an indication that potential first-time buyers are increasingly opting to rent instead. These could be early warning signs that the housing boom is in late innings.
In the U.K., home prices leveled off about 6-9 months after first-time home buyers had dropped out of the market.
Any fading in the wealth tailwind from housing could hit consumer spending hard, especially given the escalating drag from energy prices.
It seems that cracks are appearing in the U.S. housing boom. Homebuilders’ stocks are off their peak and lumber prices have collapsed.
The inventory of unsold homes is rising. The stock prices of some subprime mortgage lenders have been hit hard and home equity lending has moderated.
Importantly, deteriorating affordability appears to be pricing first-time home buyers out of the market.
Real mortgage rates are still low compared to past Fed tightening cycles, but the Affordability Index for first-time buyers has plunged below the average of past cycles because of soaring prices.
The recent dip in the U.S. rental vacancy rate may be an indication that potential first-time buyers are increasingly opting to rent instead. These could be early warning signs that the housing boom is in late innings.
In the U.K., home prices leveled off about 6-9 months after first-time home buyers had dropped out of the market.
Any fading in the wealth tailwind from housing could hit consumer spending hard, especially given the escalating drag from energy prices.
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