Housing Analysis

[Liar Loan]

Calculated Risk: Most Housing Units Under Construction Since 1973

Red is single family units. Currently there are 769 thousand single family units under construction (SA). This is the highest level since February 2007.

For single family, most of these homes are already sold (Census counts sales when contract is signed). The reason there are so many homes is probably due to construction delays. Since most of these are already sold, it is unlikely this is ?overbuilding?, or that this will impact prices (although the buyers will be moving out of their current home or apartment once these homes are completed). 

Blue is for 2+ units. Currently there are 750 thousand multi-family units under construction.  This is the highest level since July 1974! For multi-family, construction delays are probably also a factor. The completion of these units should help with rent pressure.

Combined, there are 1.519 million units under construction. This is the most since November 1973.

https://calculatedrisk.substack.com/p/december-housing-starts-most-housing

 

[Ready2Downsize]

Calculated Risk: Most Housing Units Under Construction Since 1973

Red is single family units. Currently there are 769 thousand single family units under construction (SA). This is the highest level since February 2007.

For single family, most of these homes are already sold (Census counts sales when contract is signed). The reason there are so many homes is probably due to construction delays. Since most of these are already sold, it is unlikely this is ?overbuilding?, or that this will impact prices (although the buyers will be moving out of their current home or apartment once these homes are completed). 

Blue is for 2+ units. Currently there are 750 thousand multi-family units under construction.  This is the highest level since July 1974! For multi-family, construction delays are probably also a factor. The completion of these units should help with rent pressure.

Combined, there are 1.519 million units under construction. This is the most since November 1973.

https://calculatedrisk.substack.com/p/december-housing-starts-most-housing

I think you have to look at the housing under construction as local. Certainly we don't have record construction here in the OC.

AZ OTOH has a HUGE amount of new construction but that state has companies moving there, building chip plants, EV industry, amazon (which won't be open for a while), etc etc and they are having household formation to add to the immigration they have seen for years. It may seem like they have land all around them, but Native Americans own 28% of the state's land, and the government owns over half. That leaves something like 18%.

 

[Liar Loan]

We have entered the traditionally hot selling season, post-Super Bowl, and yet mortgage applications are tanking.

Mortgage applications drop to lowest level in over 2 years

Climbing mortgage rates are hitting both potential homebuyers and refinance candidates. Total mortgage applications decreased 13.1% last week to the lowest level since December 2019, according to the Mortgage Bankers Association. Applications to refinance dropped 15% weekly and were 56% lower than one year ago.

"Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022," said Joel Kan, MBA's associate vice president of economic and industry forecasting.

Those higher mortgage rates combined with high prices and low inventory pushed applications to purchase a home down 10% weekly and 6% lower than one year ago. This was the third straight week of declines for purchase applications.

Rising mortgage rates will pose a challenge for some buyers, likely leading to less demand. Lazzara predicts that price growth will soon slow in reaction to higher rates.

https://www.msn.com/en-us/money/rea...op-to-lowest-level-in-over-2-years/ar-AAUcCKC

 

[Cares]

We have entered the traditionally hot selling season, post-Super Bowl, and yet mortgage applications are tanking.

Mortgage applications drop to lowest level in over 2 years

Climbing mortgage rates are hitting both potential homebuyers and refinance candidates. Total mortgage applications decreased 13.1% last week to the lowest level since December 2019, according to the Mortgage Bankers Association. Applications to refinance dropped 15% weekly and were 56% lower than one year ago.

"Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022," said Joel Kan, MBA's associate vice president of economic and industry forecasting.

Those higher mortgage rates combined with high prices and low inventory pushed applications to purchase a home down 10% weekly and 6% lower than one year ago. This was the third straight week of declines for purchase applications.

Rising mortgage rates will pose a challenge for some buyers, likely leading to less demand. Lazzara predicts that price growth will soon slow in reaction to higher rates.

https://www.msn.com/en-us/money/rea...op-to-lowest-level-in-over-2-years/ar-AAUcCKC

Don't need to apply for a mortgage if there's nothing to buy. Supply still low.

 

[Mety]

Meanwhile the rent price is at the highest in history. I wrote last time you need $5000 for an SFR in Irvine, but it doesn't seem that way anymore. You need $6000-7000 for anything decent. At this point, how would you decide? Rent or Buy?

 

[eyephone]

Meanwhile the rent price is at the highest in history. I wrote last time you need $5000 for an SFR in Irvine, but it doesn't seem that way anymore. You need $6000-7000 for anything decent. At this point, how would you decide? Rent or Buy?

Why would a person spend $5k for rent?
Do you think it is the best education in Orange County or LA?

 

[eyephone]

Meanwhile the rent price is at the highest in history. I wrote last time you need $5000 for an SFR in Irvine, but it doesn't seem that way anymore. You need $6000-7000 for anything decent. At this point, how would you decide? Rent or Buy?

Why would a person spend $5k for rent?
Do you think it is the best education in Orange County or LA?

If you cant answer or the answer is NO. Then it is not worth it.

 

[Liar Loan]

We have entered the traditionally hot selling season, post-Super Bowl, and yet mortgage applications are tanking.

Mortgage applications drop to lowest level in over 2 years

Climbing mortgage rates are hitting both potential homebuyers and refinance candidates. Total mortgage applications decreased 13.1% last week to the lowest level since December 2019, according to the Mortgage Bankers Association. Applications to refinance dropped 15% weekly and were 56% lower than one year ago.

"Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022," said Joel Kan, MBA's associate vice president of economic and industry forecasting.

Those higher mortgage rates combined with high prices and low inventory pushed applications to purchase a home down 10% weekly and 6% lower than one year ago. This was the third straight week of declines for purchase applications.

Rising mortgage rates will pose a challenge for some buyers, likely leading to less demand. Lazzara predicts that price growth will soon slow in reaction to higher rates.

https://www.msn.com/en-us/money/rea...op-to-lowest-level-in-over-2-years/ar-AAUcCKC

Don't need to apply for a mortgage if there's nothing to buy. Supply still low.

Purchase applications dropped 10% in a week!!!!!  Coincidentally, the week after rates breached 4%.

Maybe everybody was still hung over from Snoop Dog's performance at the Superbowl.

 

[CalBears96]

We have entered the traditionally hot selling season, post-Super Bowl, and yet mortgage applications are tanking.

Mortgage applications drop to lowest level in over 2 years

Climbing mortgage rates are hitting both potential homebuyers and refinance candidates. Total mortgage applications decreased 13.1% last week to the lowest level since December 2019, according to the Mortgage Bankers Association. Applications to refinance dropped 15% weekly and were 56% lower than one year ago.

"Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022," said Joel Kan, MBA's associate vice president of economic and industry forecasting.

Those higher mortgage rates combined with high prices and low inventory pushed applications to purchase a home down 10% weekly and 6% lower than one year ago. This was the third straight week of declines for purchase applications.

Rising mortgage rates will pose a challenge for some buyers, likely leading to less demand. Lazzara predicts that price growth will soon slow in reaction to higher rates.

https://www.msn.com/en-us/money/rea...op-to-lowest-level-in-over-2-years/ar-AAUcCKC

Don't need to apply for a mortgage if there's nothing to buy. Supply still low.

Purchase applications dropped 10% in a week!!!!!  Coincidentally, the week after rates breached 4%.

Maybe everybody was still hung over from Snoop Dog's performance at the Superbowl.

What part of "supply still low" don't you understand?

 

[Mety]

We have entered the traditionally hot selling season, post-Super Bowl, and yet mortgage applications are tanking.

Mortgage applications drop to lowest level in over 2 years

Climbing mortgage rates are hitting both potential homebuyers and refinance candidates. Total mortgage applications decreased 13.1% last week to the lowest level since December 2019, according to the Mortgage Bankers Association. Applications to refinance dropped 15% weekly and were 56% lower than one year ago.

"Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022," said Joel Kan, MBA's associate vice president of economic and industry forecasting.

Those higher mortgage rates combined with high prices and low inventory pushed applications to purchase a home down 10% weekly and 6% lower than one year ago. This was the third straight week of declines for purchase applications.

Rising mortgage rates will pose a challenge for some buyers, likely leading to less demand. Lazzara predicts that price growth will soon slow in reaction to higher rates.

https://www.msn.com/en-us/money/rea...op-to-lowest-level-in-over-2-years/ar-AAUcCKC

Don't need to apply for a mortgage if there's nothing to buy. Supply still low.

Purchase applications dropped 10% in a week!!!!!  Coincidentally, the week after rates breached 4%.

Maybe everybody was still hung over from Snoop Dog's performance at the Superbowl.

What part of "supply still low" don't you understand?

LL is just trying to scare Irvine buyers.

 

[Liar Loan]

We have entered the traditionally hot selling season, post-Super Bowl, and yet mortgage applications are tanking.

Mortgage applications drop to lowest level in over 2 years

Climbing mortgage rates are hitting both potential homebuyers and refinance candidates. Total mortgage applications decreased 13.1% last week to the lowest level since December 2019, according to the Mortgage Bankers Association. Applications to refinance dropped 15% weekly and were 56% lower than one year ago.

"Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022," said Joel Kan, MBA's associate vice president of economic and industry forecasting.

Those higher mortgage rates combined with high prices and low inventory pushed applications to purchase a home down 10% weekly and 6% lower than one year ago. This was the third straight week of declines for purchase applications.

Rising mortgage rates will pose a challenge for some buyers, likely leading to less demand. Lazzara predicts that price growth will soon slow in reaction to higher rates.

https://www.msn.com/en-us/money/rea...op-to-lowest-level-in-over-2-years/ar-AAUcCKC

Don't need to apply for a mortgage if there's nothing to buy. Supply still low.

Purchase applications dropped 10% in a week!!!!!  Coincidentally, the week after rates breached 4%.

Maybe everybody was still hung over from Snoop Dog's performance at the Superbowl.

What part of "supply still low" don't you understand?

The "supply still low" mantra has been repeated by realtors for the past 10-12 years to explain any downturn in demand.  It's one of those cliches like "Anytime is a great time to buy" that you hear realtors fall back on when they can't deal with contrary data.

It doesn't explain why purchase applications, a leading indicator of demand, would show such a drastic weekly decline at the beginning of the hot Springtime selling season.

 

[CalBears96]

We have entered the traditionally hot selling season, post-Super Bowl, and yet mortgage applications are tanking.

Mortgage applications drop to lowest level in over 2 years

Climbing mortgage rates are hitting both potential homebuyers and refinance candidates. Total mortgage applications decreased 13.1% last week to the lowest level since December 2019, according to the Mortgage Bankers Association. Applications to refinance dropped 15% weekly and were 56% lower than one year ago.

"Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022," said Joel Kan, MBA's associate vice president of economic and industry forecasting.

Those higher mortgage rates combined with high prices and low inventory pushed applications to purchase a home down 10% weekly and 6% lower than one year ago. This was the third straight week of declines for purchase applications.

Rising mortgage rates will pose a challenge for some buyers, likely leading to less demand. Lazzara predicts that price growth will soon slow in reaction to higher rates.

https://www.msn.com/en-us/money/rea...op-to-lowest-level-in-over-2-years/ar-AAUcCKC

Don't need to apply for a mortgage if there's nothing to buy. Supply still low.

Purchase applications dropped 10% in a week!!!!!  Coincidentally, the week after rates breached 4%.

Maybe everybody was still hung over from Snoop Dog's performance at the Superbowl.

What part of "supply still low" don't you understand?

The "supply still low" mantra has been repeated by realtors for the past 10-12 years to explain any downturn in demand.  It's one of those cliches like "Anytime is a great time to buy" that you hear realtors fall back on when they can't deal with contrary data.

It doesn't explain why purchase applications, a leading indicator of demand, would show such a drastic weekly decline at the beginning of the hot Springtime selling season.

You seem to conveniently ignore the fact that builders are releasing 2-4 homes a month. That's what "supply still low" means.

 

[Mety]

The "supply still low" mantra has been repeated by realtors for the past 10-12 years to explain any downturn in demand.  It's one of those cliches like "Anytime is a great time to buy" that you hear realtors fall back on when they can't deal with contrary data.

It doesn't explain why purchase applications, a leading indicator of demand, would show such a drastic weekly decline at the beginning of the hot Springtime selling season.

To be fair, the hot spring time selling season is usually from April to June. There aren't usually much movement from November to March. But maybe it's different this time? ;D

 

[Liar Loan]

LA TIMES June 7, 2002 https://www.latimes.com/archives/la-xpm-2002-jun-07-fi-homes7-story.html

?There just aren?t enough homes on the market for sale,? said James Pugash, chairman of Hearthstone, a San Francisco-based provider of capital for home builders. ?If there was more inventory available, there would be many more home sales, I have no doubt about that.?

Lack of supply is ?a phenomenon across all regions of the country,? said David Lereah, chief economist for the National Assn. of Realtors.

But with such significant hurdles as high land costs and zoning restrictions now blocking new construction, analysts widely believe that there will be no ramp-up of production this time.

?I have never seen the inventory as low as it was at the beginning of the year, and it?s still hovering about as low as I?ve ever seen it,? said Bob Waldron, a longtime agent at Coldwell Banker in Westchester.

 

[Liar Loan]

The "supply still low" mantra has been repeated by realtors for the past 10-12 years to explain any downturn in demand.  It's one of those cliches like "Anytime is a great time to buy" that you hear realtors fall back on when they can't deal with contrary data.

It doesn't explain why purchase applications, a leading indicator of demand, would show such a drastic weekly decline at the beginning of the hot Springtime selling season.

To be fair, the hot spring time selling season is usually from April to June. There aren't usually much movement from November to March. But maybe it's different this time? ;D

April sales start with February mortgage pre-approvals.

 

[Mety]

The "supply still low" mantra has been repeated by realtors for the past 10-12 years to explain any downturn in demand.  It's one of those cliches like "Anytime is a great time to buy" that you hear realtors fall back on when they can't deal with contrary data.

It doesn't explain why purchase applications, a leading indicator of demand, would show such a drastic weekly decline at the beginning of the hot Springtime selling season.

To be fair, the hot spring time selling season is usually from April to June. There aren't usually much movement from November to March. But maybe it's different this time? ;D

April sales start with February mortgage pre-approvals.

Maybe that's what most people do, but February pre-approvals might not rate lock until April. I personally got the mortgage pre-approvals in a day after I see a home I liked so I could offer pretty quick anyways.

 

[Liar Loan]

Mortgage rates have spiked up again today with the 30 Yr Fixed sitting at 4.19%.

BUT IT'S ALL GOOD BECAUSE SUPPLY IS SO LOW.

Rates are now at May 2019 levels when $1 Million+ housing was in a lull, and Irvine was in the midst of its 2018-2020 price decline.

 

[usctrojancpa]

Mortgage rates have spiked up again today with the 30 Yr Fixed sitting at 4.19%.

BUT IT'S ALL GOOD BECAUSE SUPPLY IS SO LOW.

Rates are now at May 2019 levels when $1 Million+ housing was in a lull, and Irvine was in the midst of its 2018-2020 price decline.

Completely different time my friend.  We didn't have the work from home buyers like we do now.  I'd say at least 1/4 to 1/3 Irvine buyers are moving from LA, the Bay Area, and out-of-state to Irvine.  I know because I see it on both sides of the table.  Rates will need to go higher to cool the market offer.  I'll say it again for you....

I WANT MORE INVENTORY OF HOMES!!!!!!!

 

[OCtoSV]

Martin - remote work will swing back in a couple years once offices are re-opened, at least in the Bay area. The huge amount of new office space being built up here tells the tale. So many buildings coming online in 24/25 including the huge downtown SJC Google Village. It will take a couple of performance review cycles for people to get the message, or accept the massive pay cuts for moving out of the Silicon Valley salary market.

I think 2 years from now you'll have plenty of inventory but a smaller pool of qualified buyers due to changing job market and higher rates. Everything finds equilibrium and a pro like you will always be in front of the transaction train.

 

[CalBears96]

Martin - remote work will swing back in a couple years once offices are re-opened, at least in the Bay area. The huge amount of new office space being built up here tells the tale. So many buildings coming online in 24/25 including the huge downtown SJC Google Village. It will take a couple of performance review cycles for people to get the message, or accept the massive pay cuts for moving out of the Silicon Valley salary market.

I think 2 years from now you'll have plenty of inventory but a smaller pool of qualified buyers due to changing job market and higher rates. Everything finds equilibrium and a pro like you will always be in front of the transaction train.

That really depends on which side wins out. With the shortage of talents, management is also concerned about these engineers taking their talents to competitors. Remote work or at least hybrid will most likely become a norm.