Looking For Signs Of A Housing Market Collapse?

In my pursuit to find evidence of an impending housing bubble, I continue instead to find evidence of the opposite.The real estate doomsayers are getting louder in their calls for the collapse of the housing market, so I continue my quest to find supporting (or opposing) evidence in order to guide our customers.

During the buildup of the housing bubble in 2006, we saw the inventory of homes for sale continue to swell, even as new contracts on homes declined. For this reason, I keep a very close eye on the supply of homes for sale. In my pursuit to find evidence of an impending housing bubble, I continue instead to find evidence of the opposite.

Today, we'll look at this new trend and speculate on its impact on home prices. First, take a quick peek at the supply of homes for sale in Tallahassee. You will notice that as prices drop below the top 5% of the market, the percentage of homes under contract with buyers rises to levels we do not normally see in October.

Tallahassee Homes For Sale

1096 Properties
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Housing Market Collapse?

The Entire Housing Market

Chris Farley - Van down by the riverWhen we look at the overall housing market, we need to consider the options consumers face. They can buy or they can rent. They can live in a single-family home, a multi-family home, a mobile home, a dorm, an extended-stay hotel or hospital, student dorms, military barracks (or even in a van down by the river).

All of these property types must be considered when evaluating the overall health of the housing market because strength in one could very well cause weakness in another. For example, if a significant percentage of single-family home investors decided to sell their homes, it would add homes to the "for sale" market while removing homes from the "for rent market." In the short term, we might see home price growth slow down while seeing rents rise.

So it is important to study each segment of the housing market, looking for supporting or opposing trends that can provide insight into future market movements.

Recent Housing Market Reports

Signs Of A Housing Market Collapse?
When we study the US median market rent, we see signs that paint a clear picture of the future of home prices and home values.
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Pending Home Sales Report October 2021
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Multi-Family Properties - Are They Appreciating Fast Too?
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Real Estate Supply And Demand
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Luxury Home Sales July 2021
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New Construction Forecast | How New Construction Is Evolving
The evidence that points to a very clear picture of where the real estate market is heading and what is going to happen to the new home construction market specifically.
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Every article or video about mortgage interest rates conveys that rates are low, but do you really know what it means?
Housing Market 2021 And Beyond Boom Or Bust?
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A look at how home affordability is likely to change over the next twenty years. I produced the forecast by using data from the past and applying it forward, including inflation, home prices, home values, and mortgage interest rates. If you have a stake in the housing market, you don't want to miss this forecast
Are Home Sales Sustainable At Today's Pace?
The housing market is hot, but is it too hot? Can we keep selling homes at the rates we're seeing today, or is this a case of what goes up, must come down? The answer to are home sale sustainable can be found with a study of historic home sales rates and population growth trends, allowing us to forecast future home sales.
Here's Where Home Affordability Is Heading
There is a generational shift occurring in the housing market that I reveal in this video. I’m talking about how buying a home over the next twenty years will be unlike what previous generations saw since the early 1980s.
Real Estate Supply And Demand Update March 2021
Real Estate Supply And Demand Update March 2021: Prudent homeowners and prospective buyers are wise to study the supply and demand for homes in the market in which they live. Today's report on the supply and demand for homes in Tallahassee parallels what other markets are reporting. The consistent message for more than two years is that we need more homes! Today’s report focuses on the supply-side of the housing market, looking at what’s coming in and what present levels mean for home values and buyer oppor
Real Estate Market Forecast 2021
Real Estate Market Forecast 2021 - Are you curious about what will happen in the 2021 housing market? There are so many videos making a housing market forecast, many which use shocking headlines about the coming real estate market crash that I felt it would be good to produce a fact-based housing market forecast. I summarize how the market performed last year, look at current supply and demand ratios, assess the major variables impacting the market, and then conclude with a reasonable expectation from that
How Low Mortgage Interest Rates Are Shaping The Real Estate Market
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Real Estate Crash In 2021?
Are you worried about a real estate crash in 2021? For this to happen, we’ll first start to see a rise in the supply of homes for sale, so today’s housing market 2020 report is focused on the supply side of housing market conditions. In normal years, October is about the slowest month for new contracts being written and new listings entering the market. But this is 2020. This is not normal. You should know that I do provide a fair warning, for all home sellers, near the end of this video.

Rents Are Soaring Too

I have been saying that we need more homes for the past five years. The US population has increased by more than 30 million people since the housing bubble burst, yet the pace of new home production has dropped dramatically.

The lack of new home production has created scarcity in the "for sale" market, and I wondered if it was having a similar impact on the "for rent" market. The graph below plots the median market rent in the US since 2014.

Graph of median market rent October 2021

The graph above was created from a dataset produced by Zillow, created to share rental rates from most of the larger US metropolitan areas. Zillow estimates the median by cutting a slice out of the middle of the rental market (by choosing listed rents that fall into the 40th to 60th percentile range for all homes and apartments). The blue field plots the median monthly rental rate, while the red line reports the year-over-year change of this rental rate.

Does this look familiar to you? It sure does to me!

Apparently, it’s not just home prices and values that are skyrocketing, so too are rental rates. August rental rates were nearly 13% higher than were rental rates in August of last year, and that is awfully close to the runaway rate of appreciation that we’re seeing with existing home sales. This only reinforces my concerns about home affordability and a decline in the homeownership rate.

Future Housing Market Reports

I'm exploring new data sources and hope to produce an examination of rents, prices, and median incomes. When adjusted for inflation, I believe it will give us a clear view of home affordability and where the market will be heading when the Fed gets aggressive on interest rates and we see these (wonderful) historically low mortgage interest rates fade away.

If you have any thoughts or questions on how we can better explore local and US housing market conditions, just drop a comment below and I'll consider it for future posts.

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