– by New Deal democrat
One merchandise I meant to deal with with this week’s present and new house gross sales information was the relative distinction in value within the two, and the impact on the relative share of the market.
I’m following up now as a result of yesterday Kevin Drum put up a submit yesterday wherein he concluded that “The value of a brand new home is now under its pre-pandemic trendline and heading towards its 2020 degree . . . When the Fed lastly will get round to reducing rates of interest, the actual value of shopping for a house will probably be again to regular.“
Not precisely. The graph Kevin places up solely goes again to 2013. Let’s take a longer-term look.
The primary graph under divides the median value of a brand new house by the common weekly earnings on nonsupervisory staff (blue), and all staff together with supervisors (pink), each adjusted to zero at their present readings:
The present ranges for each are within the higher reaches of their readings for the reason that flip of the Millennium, and solely about 10% decrease than on the peak of the housing bubble. The latter metric solely goes again to 2008, however right here is the previous one prolonged all the best way again to its inception within the Sixties:
You possibly can see that it took about 200 weeks’ pay to purchase the median new single household house within the Sixties, rising to about 350 by 2000. So the present degree of 411 stays traditionally very excessive.
Now right here is similar metric utilized to repeat present house gross sales as measured by each Case-Shiller (mild blue) and the FHFA (darkish blue) in contrast with the median value of a brand new house for nonsupervisory staff (pink) as within the graph above (all metrics normed to 100 as of 2001):
Each new and present properties went up about 20% instantly after the pandemic. Since then new properties have given again about half of that enhance, whereas present properties have given again none of it.
Lastly, here’s a collection of graphs I cribbed from Ben Casselman of The Economist. Notice particularly the “Share of New Homes” graph:
It’s displaying a pointy enhance within the share of the housing market taken by new properties vs. present properties (since Realtors don’t permit FRED to submit multi-year information on present house gross sales, it’s not out there there).
Snail’s tempo of housing market rebalancing, as present gross sales stay vary certain, and stock has not elevated sufficient to alleviate pricing strain, Offended Bear, by New Deal democrat
