Posted originally on Nov 30, 2023 By Martin Armstrong
The S&P CoreLogic Case-Shiller Index reported a 3.9% year-over-year increase in home prices in September, despite a surge in mortgage rates. The growth coincided with the 30-year fixed mortgage rate’s climb toward 8%. Notably, rents are easing while home prices continue to rise. The report highlighted that of the 20 metropolitan markets, Detroit saw the largest annual increase at 6.7%, followed by San Diego at 6.5%, and New York at 6.3%. However, three cities, including Las Vegas, Phoenix, and Portland, reported lower prices compared to a year ago. The housing market’s strength has been attributed to a relative shortage of inventory for sale, which has supported prices despite the increase in mortgage rates and insurance premiums.
As I foretold in April 2021:”One of the factors that confirmed to me that we would be heading into progressive inflation long-term was the fact that this Residential Index elected a Yearly Bullish Reversal at the end of 2012. That confirmed the long-term trend had changed. However, urban condo and commercial properties were forming a divergence. I assumed that was being caused by the debt and rising taxes in cities. In that regard, I suppose I was only partially correct, for the rest has been the brain-dead response to COVID. For example, locking people down and causing them to lose jobs has resulted in a sharp rise in violence. Not just mass shootings, but all sorts of conflicts from domestic disputes to outright feuds. Cities, such as Philadelphia and New York, have sections in which the police have totally lost control. It is debatable if they will ever be able to restore civility to these regions. While Fauci claims to ignore the Constitutional violations, his agenda in helping Gates and Schwab is more than simply preparing society for the Great Reset. He is furthering the collapse of urban civility and this trend is part of what is driving this index. I would expect to see this escalate and if we make a new high on this index and close above last year’s high, single-family homes outside of urban centers will rise sharply into 2023.”
The typical analysis of sales down mortgage rates up is no longer the rulebook. As I explained in the Real Estate report provided to World Economic Conference attendees, America experienced a great migration after COVID lockdowns. People fled states with harsh COVID laws and rising crime. There has been a great wealth migration across America as both individuals and businesses are seeking refuge in red states. As taxes continue to rise to accommodate failed policies, the states with somewhat of a resemblance of taxation with representation will become more appealing.
There is a reason that Blackrock has become the largest landlord in the nation by far, in addition to plans for 15-minute cities. Institutions have also lost their confidence in the government – the 30-year fixed mortgage is more appealing than the 30-year Treasury.
For the past few years, I have heard countless realtors and brokers saying that home prices are expected to go down next quarter or the one after that. Inventory has continued to decline while prices and rates have risen. This is not the 2008 crisis as we do not have an over-leveraged market. The market can no longer be viewed from a broad perspective.
Centinel2012 