CNBC Report- inventory levels increase 35% YOY

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CNBC Article

The basics: 

For the four weeks ended June 23rd the typical home sold for slightly less than its asking price. Average home price growth slipped from 4.6% in May to 3.5% in April the slowest growth rate in seven months.

Supply is starting to build which is leading to cooling and prices. Total active listings are now 35% higher than they were at this time last year according to realtor.com.

Weitz - As I've said for a long time, I believe the biggest leading indicator by far of where we will see this market go is inventory levels. To see that they have increased 35% from a year ago likley confirms my belief in recent posts that we have reached or are very near a top. I would encourage and expect retirees to start to wake up to this in the near future, and start to try to max out their potential gains of their long term real estate holds as they head into retirement years. This will lead to a significant increase in inventory which coupled with the current interest rate environment (provided it stays relatively high) will lead to significant sluggishness in the market and market depreciation. The time bomb is slowing ticking. 

Home prices begin to come down in some pandemic boomtowns.

 

See article here: 

Home prices begin to come down in pandemic boomtowns like Austin, Tampa (yahoo.com)

The basics:

Home prices in some large US cities declined in April, according to mortgage data company ICE Mortgage.

San Antonio, Austin, and Tampa saw the biggest monthly price declines.

“The key differentiator we’re seeing in terms of growing inventory levels is a rise in Sellers willingness to list their homes for s sale”.

SW – So you mean inventory is rising?

This article is horrifically written so I’m not going to waste much time on it, but it marks the first hint of price depreciation for residential caused by the obvious factor of increased inventory. The mention this isn’t a sign of ‘market crash’. I think its just the beginning of one. Time will tell.

May, 2024: US Home sales “crumble in May” on higher rates and record prices. - Reuters

 REUTERS Residential update key facts

US Home sales in May fell to the lowest levels in the past decade, according to Redfin as both SUPPLY and DEMAND remain sluggish.

See full article here. 

Housing affordability is at an ALL TIME LOW.

The number of home sales remain roughly 25% pre-pandemic levels, according to Redfin.

In May, 407k homes were sold. Only October 2023 and May, 2020 (the heart of COVID) recorded fewer sales.

Home sales dropped 2.9% from a year earlier while pricing rose 5.1% year over year.

New listings rose .3% month over month in May, and 8.8% from a year earlier.

Weitz: No surprise here. The key items I'm looking at are 1) 8.8% increase in inventory YOY. As I've said, that will be the primary leading indicator as to where this market is going. If that continues to rise, I fully expect the market forces to tread toward negative price pressure; 2) The 3rd lowest number of sales in the past 10 years with one of those months being the start of COVID where everyone was on lock down and clearly no sales were taking place. 

I'll echo my previous call that we are fast approaching a market top. I would expect this summer will end up being the top of the market for some time. This fall will be chaotic given the political climate with political and economic tensions becoming abundantly apparently. 

My info: 

Weitz Commercial

Scott Weitz

Scott@WeitzCommercial.com

Text: 206.306.4034

Past Due CRE loans increase to 9% - highest in a decade

Update on CRE loan defaults according to Bisnow.com. Find the original article here. 

The facts: 

1) Past due nonresidential commercial real estate loans increased by 1.8B or 9% form the previous quarter according to the FDIC coupled with a 64.2B (79.5%) increase in profits. 

2) The default (or "non-current" as they call it) for non-owner occupied commercial real estate loans is not at its highest level since Q4 2013. 

3) This increase is contributing to the amount of 'problem banks' that either have low capital reserves, a high number of nonperforming loans, weak management, consistent losses or liquidity problems according to CoStar. 

The number of banks on the FDIC problem list went from 52 in Q4 '23 to 63 in Q1 '24. 

Weitz Take: 

None of this is a surprise if you follow this blog. Expect more of the same. I'd expect that we start to see bank failures making the news by end of '24/ 1st half of '25. I have to say - between wars escalating across the globe, the current situation of political weaponization of the legal system in the USA, and what I perceive as obvious economic peril quickly approaching,  I've never been more uncertain of this path of this country or the world leadership. If nothing else, it will fascinating (if not sad) to watch it play out.