Home Sweet Loan: The Great American Housing Circus in Numbers

The United States housing market has always been a roller coaster ride, but recent figures show that we’re in a new loop-de-loop of extremes. With a mind-boggling total value of $47 trillion, the U.S housing stock is not just a market, but an economy unto itself. Here’s the lay of the land, so to speak: 82 million single-family homes, including townhomes, duplexes, and your typical white-picket-fence houses, make up this residential wonderland.

But before you get too dreamy-eyed, consider this: only one million homes are currently up for grabs. Yes, that’s right, the competition is stiff. Adding to the housing buzz are a million Airbnb properties scattered across the country, serving as both homes-away-from-home and additional income streams for homeowners.

Now let’s dig a bit into the mortgage scene, which has taken a rather dramatic turn. If you were lucky enough to get a mortgage before 2020, there’s a 4% chance that you’d have secured an interest rate below 3%. Fast forward to today, and it’s a whooping 23% of all outstanding mortgages that are enjoying these low rates. Those saddled with interest rates between 4% and 5% fell from 40% to 20%, while just a meager 9% are navigating the treacherous waters of a 6% or higher interest rate, which is the current market norm.

But wait, there’s more. Even when adjusted for inflation, homes today are about 10% more expensive than they were during the 2008 financial crisis—a period not exactly known for housing affordability. In a jaw-dropping revelation, inflation-adjusted home prices are now 55% above their historical average.

However, the twist is that while prices are sky-high, availability is scraping the bottom of the barrel. The share of single-family homes up for sale is about 60% below its historical average. With such a supply crunch, it’s no surprise that existing home sales have plummeted 15.3% compared to last year, marking the biggest drop since 2010.

“Rates have only been higher for a few months. It’s going to take years at these inventory levels,” says Entrepreneur and real estate developer Greg Dickerson, adding that “a housing crash is not possible without doubling the inventory.”

Housing, according to Dickerson, is “stronger and more resilient than many want to believe.” If mortgage rates were to drop, buyers would swarm any available listing just like they did earlier this year, inevitably driving prices even higher. “This will lead to higher prices,” Dickerson predicts.

And for those wondering if a crash looms on the horizon, Dickerson sets the record straight: “When does a crash happen? Only when you have a normal supply and demand scenario. Borrowers are healthy now. When you reach an oversupply, that’s the only time we will have a housing crash.”

So, whether you’re in the market to buy, sell, or simply gawk at the figures, the U.S housing market is a circus of extraordinary feats and terrifying drops. With such dramatic fluctuations, the American dream home may well be just that—a dream—for many. But for those who have managed to snag those low-interest loans or capitalize on Airbnb rentals, it seems that the housing market, much like a circus tent, has room for all sorts of acts. As Dickerson aptly concludes, “Keep in mind real estate is hyper local so every market will experience this environment differently, but at the end of the day, it’s all about inventory and rates.”

 

 

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Maria Irene
Maria Irenehttp://ledgerlife.io/
Maria Irene is a multi-faceted journalist with a focus on various domains including Cryptocurrency, NFTs, Real Estate, Energy, and Macroeconomics. With over a year of experience, she has produced an array of video content, news stories, and in-depth analyses. Her journalistic endeavours also involve a detailed exploration of the Australia-India partnership, pinpointing avenues for mutual collaboration. In addition to her work in journalism, Maria crafts easily digestible financial content for a specialised platform, demystifying complex economic theories for the layperson. She holds a strong belief that journalism should go beyond mere reporting; it should instigate meaningful discussions and effect change by spotlighting vital global issues. Committed to enriching public discourse, Maria aims to keep her audience not just well-informed, but also actively engaged across various platforms, encouraging them to partake in crucial global conversations.

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