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There’s a Huge Warning Sign That the Housing Market Could Be Headed For Trouble

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The housing market could face even greater trouble in the future as both supply and demand slip following low mortgage rate applications and a tight supply of homes, according to multiple sources.

The number of mortgage applications declined 2.9% in the week ending Sept. 1 compared to the previous week, bringing it to the lowest level since 1996 and showing a drop in the demand for new homes, according to a Mortgage Bankers Association (MBA) press release. The supply of new homes for sale is also dropping and inventories have remained below pre-pandemic levels, culminating in a drop in both supply and demand and indicating possible danger in the housing market.

“The decline in mortgage applications reflects the reality that the income for many families simply cannot shoulder the mortgage payments of a new home given the combined impact of sharply higher mortgage rates combined with the surge in home prices,” Joel Griffith, a research fellow at the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation, told the Daily Caller News Foundation.

Existing home sales fell 2.2% in July from June and 16.6% year-over-year, coming to only 4.07 million sold in the month, according to the National Association of Realtors (NAR). Part of that drop in demand can be attributed to rising costs for existing homes, which increased 1.9% in July year-over-year and exceeded $400,000 — which it has only done in three other months.

“When you go from record low mortgage rates to levels that we haven’t seen for almost 20 years, you destroy both the demand and supply,” Mohamed Aly El-Erian, an economist and chief economic advisor at Allianz, told CNBC in August. “And that’s the irony, that supply has come down and demand has come down as well. That is the way you destroy a housing market.” (Read more from “There’s a Huge Warning Sign That the Housing Market Could Be Headed For Trouble” HERE)

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Americans Packing Up In Search of Lower Taxes, Housing Costs

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Photo Credit: ThinkstockWhere are Americans moving, and why? Timothy Noah, writing in the Washington Monthly, professes to be puzzled. He points out that people have been moving out of states with high per capita incomes — Connecticut, New York, Massachusetts, Maryland — to states with lower income levels.

“Why are Americans by and large moving away from economic opportunity rather than toward it?” he asks.

Actually, it’s not puzzling at all. The movement from high-tax, high-housing-cost states to low-tax, low-housing-cost states has been going on for more than 40 years, as I note in my new book Shaping Our Nation: How Surges of Migration Transformed America and Its Politics.

Between 1970 and 2010 the population of New York state increased from 18 million to 19 million. In that same period, the population of Texas increased from 11 million to 25 million.

The picture is even starker if you look at major metro areas. The New York metropolitan area, including counties in New Jersey and Connecticut, increased from 17.8 million in 1970 to 19.2 million in 2010 — up 8 percent. During that time the nation grew 52 percent.

Read more from this story HERE.

Liberal Ideology’s Price

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Photo Credit: National Review

Photo Credit: National Review

One of the many unintended consequences of the political crusade for increased homeownership among minorities, and low-income people in general, has been a housing boom and bust that left many foreclosed homes that had to be rented because there were no longer enough qualified buyers.

The repercussions did not stop there. Many homeowners have discovered that when renters replace homeowners as their neighbors, the neighborhood as a whole can suffer.

The physical upkeep of the neighborhood, on which everyone’s home values depend, tends to decline. “Who’s going to paint the outside of a rented house?” one resident was quoted as saying in a recent New York Times story.

Renters also tend to be of a lower socioeconomic level than homeowners. They are also less likely to join neighborhood groups, including neighborhood watches to keep an eye out for crime. In some cases, renters have introduced unsavory or illegal activities into family-oriented communities of homeowners that had not had such activities before.

None of this should be surprising. Individuals and groups of all sorts have always differed from one another in many ways, throughout centuries of history and in countries around the world. Left to themselves, people tend to sort themselves out into communities of like-minded neighbors.

Read more from this story HERE.

Foreclosure ‘Solution’ Smacks of Crony Capitalism

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Photo Credit: human Events The real-estate market is reviving so quickly that talk of the busted housing bubble is passé. These days, when real estate investors talk about bubbles, they are referring to the new one that might now be inflating as home sellers sift through a frenzy of offers.

Even cities that bore the brunt of the foreclosure crisis are seeing massive price jumps and many homeowners who were “under water” in their mortgages can start talking “home equity” again.

Yet some government officials seem to live in a time warp as they pursue a murky deal to “solve” the dissipating housing crisis by marrying government power with private enrichment. The Bay Area city of Richmond is the first one to sign on to an idea that lenders fear could sweep the state.

City officials would use eminent domain — i.e., the power to take property by force, upon the payment of “fair compensation” to the owner — to wrest control of hundreds of mortgages held by private-equity firms. They’re not taking the actual property, mind you, but grabbing the notes held by those who financed the homes.

Advocates see it as a way to halt foreclosures, but foreclosures are working their way out of the system — so much so that first-time home buyers struggle to compete with cash-paying investment groups that are grabbing these properties.

Read more from this story HERE.

Obama Administration Imposing Diversity (+video)

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In a move some claim is tantamount to social engineering, the Department of Housing and Urban Development is imposing a new rule that would allow the feds to track diversity in America’s neighborhoods and then push policies to change those it deems discriminatory.

The policy is called, “Affirmatively Furthering Fair Housing.” It will require HUD to gather data on segregation and discrimination in every single neighborhood and try to remedy it.

HUD Secretary Shaun Donovan unveiled the federal rule at the NAACP convention in July.

“Unfortunately, in too many of our hardest hit communities, no matter how hard a child or her parents work, the life chances of that child, even her lifespan, is determined by the zip code she grows up in. This is simply wrong,” he said.

Data from this discrimination database would be used with zoning laws, housing finance policy, infrastructure planning and transportation to alleviate alleged discrimination and segregation.

Read more from this story HERE.

Former Reagan Budget Director Warns Of New Housing Bubble

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Photo Credit: Daily CallerThe market may be rising, but according to one expert, all is not well on the home front.

David Stockman, former director of the Office of Management and Budget in the Reagan administration, insists that the housing market outlook is not as cheery as some say.

“I would say we have a housing bubble … again,” Stockman told the Daily Ticker. “We don’t have a real organic sustainable recovery, because in a world of medicated money by the central bank, things aren’t what they appear to be.”

Stockman pointed to artificially low interest rates and speculation in the real-estate market as culprits.

“It’s happening in the most speculative subprime markets, where massive amounts of ‘fast money’ is rolling in to buy, to rent, on a speculative basis for a quick trade,” he said. “And as soon as they conclude prices have moved enough, they’ll be gone as fast as they came.”

Read more from this story HERE.

Chinese Buyers Lead Foreign Investment in US Housing Market (+video)

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As the U.S. housing market slowly starts to recover, foreign investment is helping it along.

According to the National Association of Realtors, non-American buyers accounted for $82 billion in home sales last year. More than $7 billion of that is by the Chinese, who are now the second largest foreign home purchasers after Canadians. They’re buying high-end, multimillion-dollar homes from California to New York and paying cash.

“They’re probably the top 1 percent of the Mandarin speakers that are coming from China,” said Brent Chang, a Coldwell Banker realtor in Southern California. “They’re really the people who have their own businesses or maybe were part of the government.”

Some of these homes are specifically catered to Chinese buyers. Fox News visited a home listed at $8 million in Pasadena, Calif., that had two kitchens, the smaller one had ventilation for the cooking for aromatic or “stinky” foods like fish. It also has a lower level in-law suite and even a koi pond.

“People from China do a lot more business in their homes so they want their homes to really scream that they’ve made it and they’re successful, ” said Chang.

Read more from this story HERE.