The current housing bubble will only get worse than in 2007, as it takes more than 8 years to buy a single-family U.S. home, about twice as long as the historical norm.
Meanwhile, the stock market has given a big hint as this indicator has a 90%+ correlation with the housing market.
As of now, U.S. home prices are down the most in history.
According to U.S. media reports, potential buyers and sellers in the U.S. housing market are silent due to high mortgage rates of around 7% and a depressed economic environment.
Data show that the U.S. real estate market activity from July to September was dismal compared to the previous quarter, with prices falling at a record rate and home sales and new homes continuing to decline.
In October, the real estate market suffered its second blow of the year.
Rafender, one of the companies representing the U.S. real estate brokerage industry, released a report showing that the number of home sales fell 25% in September and new listings fell 22%, setting a record for the largest decline in both categories in addition to the epidemic factor.
Data from the National Association of Realtors (NAR) showed that home sales fell for the eighth consecutive month in September, the longest consecutive monthly decline since 2007.
Ian, chief economist at research firm Pantheon, noted that with higher mortgage rates, even potential buyers looking to downgrade to a cheaper home will face larger monthly payments, which will prompt them to stay on the sidelines and further limit supply.
But on the other hand, prices will have to fall sharply to regain equilibrium.
The housing supply curve is not smooth, so a sudden drop in demand would depress prices and possibly even return to levels seen before the New Coronavirus outbreak.
It is reported that in September 2020, the S&P Home Price Index rose 6.96% year-over-year, the largest increase since May 2014. in the third quarter of 2020, U.S. single-family home prices rose 12% year-over-year to $313,500.
Previously, several U.S. media outlets reported that the Federal Reserve's sharp interest rate cuts and tightening housing supply have created room for rising U.S. home prices in the early stages of the new crown pneumonia epidemic.
Among other things, in July 2020, the average U.S. 30-year fixed-rate mortgage rate fell below 3% for the first time in nearly 50 years, and the 15-year mortgage rate fell below 2.5% at the same time.
Falling home prices may be the clearest sign of a recession.
An analysis citing the book "Housing Debt" said that the impact of falling home prices, the level of consumption of low-income homebuyers fell significantly, and the decline in consumption was then transmitted to the supply side, leading to reduced investment, which in turn led to the recession.
