As we have watched the economic conditions for Main Street businesses and blue-collar workers continue to worsen, the horizon grows ever more dark. Last month when we reviewed the inflation data we noted as follows:
“The rapid increases in the price of food and gasoline are hitting the middle-class hard. This will have a downstream effect on more luxury items and durable goods. Spend more on food/gas and you might not be able to purchase that new table you wanted. Durable good inventories increase and layoffs in those sectors begin.
It will be very interesting to watch how the housing market responds over the next few months. If the trendline continues we should see a considerable softening in home sales, again depending on region, as the inflation hits the working class” (link)
Today we get the first set of housing data to accompany the inflation forecast: “New home sales dropped 5.9% to a seasonally adjusted annual rate of 863,000 units last month, the Commerce Department said on Tuesday. March’s sales pace was revised lower to 917,000 units from the previously reported 1.021 million units. Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, at a rate of 970,000 units in April.”
[…] “The median new house price soared 20.1% from a year earlier to $372,400 in April. Sales were concentrated in the $200,000-$399,000 price range. Sales below the $200,000 price bracket, the sought-after segment of the market, accounted for a mere 2% of transactions last month.” (link)
Some of the drop is likely attributable to low inventory in hot markets like Florida. However, that said, inflation, high unemployment and lower wage rates are hampering the ability of blue collar workers to afford entry level homes (as noted above). Financial security is now a concern as real wages continue to drop and inflation bites hard into working class incomes.
U.S. new home sales drop in April; March sales revised sharply lower https://t.co/9s9siaHhG9 pic.twitter.com/9ivY8A0cCX
— Reuters (@Reuters) May 25, 2021
With lumber going through the roof, (pun intended, ) small wonder. Even the crabby particle board is going up.?….then add gas prices on top.????
The cost of wire and PVC has also skyrocketed in recent weeks. While lumber is obviously driving the bus, many trades are having to kick up their prices due to increased material costs. Here in the Louisville, KY market, it certainly hasn’t slowed the builders with whom I sell to, as they are balls to the wall. They are building an extraordinary # of spec homes, which to me is a little nuts. I still remember 2006-2007, which is when we lost a ton of builders due to bankruptcy….
If you think prices are high now, wait until China stops selling their goods to us…
then prices will increase by ~10-20 fold.
That flatscreen TV you bought at Walmart, will be 3-5000 instead of 300-500, your appliances, stoves, washers, dryers will be 3000- 4000 instead of 400-1000. We haven’t seen anything yet, even though everything has gotten crazy since Biden stole the Oval Office.
I wonder how long before the middle class is completely destroyed by this clown.
What middle class? Those people who used to be considered middle class less than 20 yrs ago are living in homes they could not buy today.
I can’t buy the car I bought before either…. or the food I ate either. Thanks to Obama…. and his great economy LMAO…. ohhh I almost forgot my healthcare and dental, I can’t afford it either.
What ever goes on economically, new homes would still be built for boarder hoppers?
It’s almost looks like Janet Yellen is back in the big chair again.
My Mom and Dad bought their first home in the “suburbs” of Boston, MA sixty years ago. A three br, 2 bath (my Dad installed the 2nd) 1 car garage. Under 1,100 sq. ft.
I checked the Zillow estimated value. It was $400/ sq. ft. In Taxachusetts. With SALT.
For comparison purposes a new home was completed this year across the street from me in FL. It closed at $200/ sq. ft. FL has no income tax. And the ad valorem basis for taxes can not rise more than 3% per yr for state residents.
My parents bought their house in 1963, for $12,000, right next to Boston. Two family which really helped to make it affordable. Going on the market in a week or two for $800,000 and will most like go into a bidding war. They did good, God love them.
In the past a house was the best investment you could make. Nowadays it is one of the worst…. relative to pricing and future profits if sold.
Just sold my 2 family in a town adjacent to Boston for 70,000 over asking in one day. Cash, as is, no inspection. Wanted a quick sale without swarms of people going through the property. Goodbye Maskachusetts, Florida here I come.
A house in our town sold for$125,000.00 MORE than asking.
The house in Orange county Calif. my parents bought for around 55,000 in 1966 is now valued at 1,253,000.
So who can afford to buy it, and who will live in it??
Chinese nationals and “wealthy communists” colonizing all the prime real estate.
we’re coming to Florida! Enough of Taxachusetts and the fact my vote doesn’t count here.
I had experience in the home building business. I can tell you historically home builders and their financiers were loathe to build a home that was not under contract.
In the present market, builders are holding back speculative homes for sale until the homes are ready for flooring.
Nowadays, a home might take nine months to get to that stage and then two to four months to complete after going under contract.
In other words, what is happening is there is a bit of an apples and oranges comparison going on.
Looks like they got a buyer…”contingent”
I’ll give them 5 million monopoly dollars Lol.
there’s a lot more going on to this. I’m a recent buyer, april signed on the dotted line, southern Utah. Home builders totally changed up their plan this year. They are holding back home sales. They are selling fewer lots for many reasons. 1 it creates a bidding war, I was bidding against 90 people for new construction. They have a worker shortage and material shortage, they were taking garage doors off of model homes to put on finished homes so they could close. In order to cover their butts, they are selling fewer homes per month so they can build them faster to minimize the material cost increases. They want cash buyers, they don’t have to wait 2 months before construction and ordering material. in two months the price of materials could shave 20% off their bottom line. every month the home prices go up, why sell now when you can get more later. I was offered two homes to build, the two most expensive, that’s why cheap homes aren’t selling. I was given very little options on the interior. Again do to time, the longer it takes for them to build, the more they have to lose. They lock in the suppliers that can deliver on time and that’s what you can choose from. they are spreading the sales out over time to increase profit and minimize loss. I don’t think this market is going to go down anytime soon. Between inflation, the cost or materials, the restrictions on making materials, the trade battles between countries, regulations. it only increases the cost. There’s millions of new yorkers and Californians yet to leave. I work in NYC, moving trucks all over. It’s not getting better here, it’s getting worse.
Apparently in the state of Washington, squatters can enter your home while you are away and take whatever they want, while the police standby and do nothing
Taking the advice of local prosecutors and lawyers, Pingrey said law enforcement is limited in what they can do. His frustrations hit a boiling point when the squatters demanded to be allowed to take property inside the home with them. Pingrey said, legally, his hands were tied and officers conducted a “civil standby.”
Pictures taken by a neighbor show police vehicles lined up on the street with officers watching, as the squatters filled a U-Haul truck with items inside. Another picture shows a garage full of appliances, including an ATM.
“We were not allowed to go in there with them and had to allow them to take this property out,” Pingrey said. “The person who had been illegally living there (was able) to come in and get what they stated was their property.”
https://www.kiro7.com/news/local/squatters-take-over-multimillion-dollar-sammamish-home-police-say-hands-are-tied/XGXDEN6BTRAJFBKMPFGUBGXCXU/
How is it not breaking sbd entering? How?
Another feather in the cap for JoeXiPing.
The politicians that control congress, D, will make a pitch for more ‘stimulus’ pretty soon. More free money to stay home a live the life of a dreg.
Joe Biden MESA agenda “Making Everything Suck Again”
That needs to be on a hat!
In Western NC, home sales are booming…people from Cali and NY coming here in droves. Locals cannot afford to buy anything…my neighbor has tried. She bid on a house and the bid was higher than the asking price and someone offered a lot more in CASH….she has given up and she is a local.
I’m in Southern California.
Interesting thing here: my house price, per my mortgage dashboard online, peaked in March or so. It’s lost about 4-5% of that peak.
I still have insane amounts of equity.
It used to be that if the political party in power presided over a bad economy that caused widespread suffering they would be voted out. But now with the advent of rigging the vote tabulations you will never get those behind these terrible policies out of power. Just like in every totalitarian country.
I suspect construction material shortages because of covid shutdowns is a big reason for this and hopefully will get back to normal now that the hysteria is diminishing. Meanwhile we in Florida get a short reprieve from overdevelopment due to corrupt county commissioners and the old adage you can’t stop progress.
When you factor out the Northeast there was no drop in housing. Except for Calif. housing is still up in the west. People are leaving the Blue states.
Time to dump Kevin McCarthy. An excellent commentary by Jeremy Carl. (This lines up very well with Sundance’s bullseye article that he posted in CTH yesterday.)
“If the GOP is serious about building a winning party and a winning agenda, Kevin McCarthy needs to follow Liz Cheney to the backbenches.”
https://amgreatness.com/2021/05/25/dump-the-failed-and-ineffective-kevin-mccarthy/
Paging Barney Frank, please pick up the red phone, paging Barney Frank.