Red Pear Realty said:
Excellent post, but I've got two problems with it.
1. Prices went up 40%+, not 20% (in Houston), so the problem is way worse than your chart shows.
2. The goal by the powers that be isn't for everyone to own a home. It's for a few people to own all the homes.
1. I noted I was being VERY conservative. The reality is that the all in payment on the house in that example today is probably north of $3,500.
The truth is, if you want buyers back and homes to start moving again in the middle class housing sector, that all in payment in that example needs to be $2,500 at the very most, and likely closer to $2,000.
To get $2,500, that house would need to be priced at $275k with a 5% interest rate. With rates where they are today, you're probably back to COVID prices.
Sure, there are buyers in the market will overpay today. Maybe they have to move. Maybe they got a huge raise in the last couple years. Maybe they inherited money. But to have a MARKET of buyers back, these prices have to be much lower.
And here's what people don't understand, including many Realtors..
Comps will not tell you that, as comps are lagging indicators of market value. That's because comps are representing the few houses that have sold, and since very few HAVE to sell, it's really only the ones getting their price. But the transaction volume is down and will continue to be. If demand were to meet supply, it could only do so back at COVID housing prices. And since the comps don't start falling until sales start getting realized at lower valuations, you won't know it's happening until it's too late.
