Welcome to this version of “Financial Videos,” where I comment on investment, economic and personal financial planning topics relevant to everyone! This week’s Financial Video is a housing market news video about the current state of the US housing market. Any Seinfeld fans out there? The title of this video immediately caught my attention…….“No Homes For You,” a play on words from the famous Seinfeld character, the Soup Nazi, and his catchy quote “No Soup For You.”
Housing market news has been a fascination of mine over the past few years. Why? I was looking to purchase a new home during the housing bubble and bust of recent past (depending on where you live, the timing of the gigantic upswing and collapse can vary). As such, I followed the housing market news in Atlanta and nationally very closely. I remember friends working in real estate before the bust telling me that housing in Atlanta is so tight and prices are never going to retreat. During the height of the housing boom, Metro Brokers in Atlanta had around 30,000 homes for sale…….at the bottom after prices collapsed, well over 100,000 available residences were on the market. Figures like new construction starts, existing homes for sale (and sold) and construction employment are all important housing metrics that are telling determinants of the health of an economy.
In this week’s version of “Financial Videos,” CNBC reporter Diana Olick discusses the current state of the US housing market as measured by one valuation metric. Conducted by real estate listing site RealtyTrac, their study indicates that of the 456 counties they reviewed, 9% of the homes are viewed as being “unaffordable” by historical standards. This 9% figure is up from 2% over 2015, a lofty jump. Specifically, median house price growth has outpaced wage growth in 60% of the counties reviewed. Why? The short supply of homes available for sale, low production from builders and record low mortgage rates have buyers “in a crunch.” In particular, younger people like college graduates who have been forced to move back in with the parents due to low job prospects and wages combined with housing unaffordability.
According to the study, the least affordable housing is found in San Francisco (no surprise), Austin, St. Louis, Dallas, Omaha, New York and Denver. The most affordable cities? Baltimore, Birmingham, Providence and Chicago (Chicago was surprising).
Want more economic news? Watch this video with chief economic advisor for Allianz, Mohamed El-Erian, where he describes his predictions for the future of the global economy.
