US Housing Market Warnings: Vacant Homes, Fewer Buyers, and Declining Affordability

Mounting Housing Market Concerns

• ⚠️ Warnings about the US housing market are increasing, with some headlines describing the situation as a "lose-lose" and realtors hitting a "panic button."
• 🏠 A "vacant property zombie report" indicates 1.4 million residential properties are vacant, representing 1.3% of all US homes, a number that has remained elevated for 13 consecutive quarters.

Shifting Market Dynamics

• 📉 Mortgage applications have declined for three consecutive weeks, affecting both refinances and purchases.
• 📊 There are now significantly more sellers than potential buyers, with 1.9 sellers for every 1.45 buyers, indicating a shift towards a buyer's market.
• 💡 During the pandemic housing boom, low rates, increased money supply, and remote work led to overheated prices due to insufficient supply.
• 📈 As mortgage rates increased, the market is now experiencing rising active inventory and completed unsold new construction, shifting power from sellers to buyers.

Regional Corrections and Builder Influence

• 📍 Areas that were previously hot markets, such as Florida, Texas, and Phoenix, are now seeing price corrections.
• 🏗️ Builders of multi-family and single-family homes are discounting properties and offering buy-downs to move inventory, creating a cooling effect on the resale market.
• 💰 The total value of homes for sale has increased by over 20% from a year ago, reaching $700 billion.

Role of Institutional Investors

• 🏢 Institutional capital, which surged during the pandemic housing boom, has significantly pulled back, now representing only a third of 1% of the market compared to 2% previously.
• 📉 These large investors are not actively buying due to unfavorable returns and concerns about downside risk in the market.

Affordability Crisis and Future Outlook

• 🏠 When accounting for US incomes, home prices, and mortgage rates, housing affordability is at a 40-year low.
• 🔑 Buyers are gaining more power as the market remains constrained, and the existing home sales market is experiencing low turnover.
• 💰 The advice for potential buyers is to save money, as their dream home may become available again.