Agents are telling me that some of their clients are getting cold feet about buying right now for a variety of reasons, including:
Concerns about higher rates and payments;
Concerns about depleted investment accounts;
Concerns about an overheated housing market;
And
Misleading media reports that are scaring the heck out of everyone!
Habib VS Olick: Cage Match Of The Century!
When it comes to the media, our friend Barry Habib has had enough, and he spent much of this week setting things straight in his MBS Highway updates.
He is particularly irritated with Diana Olick of CNBC – who has been “screaming” at everyone to not buy a house for years.
Olick Screamed “Don’t Buy” In 2019 – Before Housing Shot Up 46%!
And, humorously, she posted a chart that was supposed to show how much more expensive housing has become since 2019.
But what it really showed was that housing has appreciated 46% since 2019!
Hence, a $300,000 home from 2019 – when Olick screamed “DON’T BUY!!!” – is now worth $438,000.
Habib reminds us to ignore the media both because they are so often wrong and because they have an intense negativity bias – because that is what sells ads.
Payments Up, But So Are Incomes!
Olick further points out that because of appreciation and higher rates, the payment for that same $300,000 house from 2019 has jumped from about $1,200 per month to $2,000 per month.
Habib points out, however, that average incomes are also up over $700 since 2019, so the “net difference” in payment vs. income is only about $100!
In addition, income growth actually exceeds payment growth if you strip out public sector incomes and focus only on private sector incomes, as they have grown much faster!
Increasing Inventory? Not So Much…
Olick also tries to scare us by sharing data in regard to increased inventory, and we can only wish…
Inventory is up over 180,000 units across the U.S. since February’s lows, but INVENTORY CLIMBS EVERY YEAR AT THIS TIME – so the climb is hardly cause for concern.
In addition, the inventory numbers include “pending sales.”
If we focus on active listings only, they are up a mere 33,000 across the country from February – and that is a minuscule number in a country the size of the U.S.
It Is All About Low Inventory
Olick also says sales are at their lowest pace in a decade, but Habib reminds us that they were slower in 2014 and 2019, so she is misleading us again.
And Habib finally reminds us that rents continue to shoot up, that houses continue to get snapped up in most markets (“61% of sales involve multiple bids still”), and that the lower number of sales is really a result of very tight inventory!
Slower Market ≠ Depreciation
Last but not least is the constant implication by the media that a slowing market means depreciation. But, what it really just means is slower appreciation.
Olick references NAR reports in her analyses, but conveniently ignores the below two quotes from NAR’s Senior Economist, Lawrence Yun.
“Home prices in the meantime appear in no danger of meaningful decline,” he continued. “There is an ongoing housing shortage, and properly listed homes are still selling swiftly – generally seeing a contract signed within a month.”
“With mortgage rates rising, Yun forecasts existing-home sales to wane by 9% in 2022 and home price appreciation to moderate to 5% by year’s end.”
