US homebuyers are becoming older as millennials get priced out of the market. Meanwhile, Redfin and Morgan Stanley expect housing conditions to improve in 2024. Is now a good time to buy a house?
In the UK, housing prices for first time buyers have remained high as well as deposits so it’s much the same as the US. For millennials and younger, housing is often a dream that cannot be realised. I’m lucky that we live in my husband’s childhood home and he purchased it about fifteen years ago for a good rate and we are almost mortgage free (I’ll be 40 and he will be 50 when that happens) which will allow us amazing financial freedom that many of our peers cannot have. For me, it’s by luck and chance that I’m in this position as I couldn’t have afforded a house on my own without my husband. When I did live in the US, I was an adjunct English prof so wasn’t getting out of the renter’s market in any foreseeable future.
You are indeed in a very fortunate spot. Being mortgage free just exponentially improves financial freedom. The housing market is in a worse gridlock in Canada and we don't ever even think about owning for similar reasons that I have mentioned in my post.
Thanks for sharing your thoughts and also pointing out that for many, it’s okay to rent and invest in other ways as people have to adapt to the market they live in!
100%. I have never objected to the idea of rent, as long as it is inflation controlled, it has indeed allowed me to not ever think of maintenance costs and other things that can always drive up costs and anxiety.
Hi Amrita, well done on another excellent article. A few thoughts to share as I was reading it...
First, looking at and thinking about the national real estate market is very different than looking at your own home and /or investment properties, as real estate is (obviously) very local. The national, mean, median, or trends do not necessarily represent local conditions. For readers who want to dig deeper into local data, check out https://www.reventure.app/.
Second, it was interesting to learn that a third of all owner-occupied homes are owned by boomers over age 65. What will the impact be as those homes are vacated with aging? Have you or anyone else come across any longer-term models or forecasts on the effects of the transfer of ownership from the boomers?
Third, you stated that there are 84.6M owner-occupied homes. How many single-family houses are occupied by renters or, said another way, how many are owned by investors? Investors have been buying a lot recently, but I couldn't find a quick answer for the total ownership number. I am also curious about the potential impact if investors are not making the anticipated returns and turn from net buyers to net sellers or worse. Or, on the flip side, what if investors become more aggressive and significantly increase their share of housing purchases?
Those questions may be good future topics for future articles...
1. Thanks for sharing the link, and yes, I fully agree that the state of the housing market at the end of the day will be different from city to city.
As for 2 and 3, let me back to you by the weekend with well-formed answers, as both of them are very insightful questions, and yes they absolutely could transform into future posts.
Europe will be interesting, I am sure there are markets that are better or worse off than others, will definitely do some macro work outside of US market next year.
Brilliant post again Amrita. The real estate and housing market are areas I know very little about. This three-part series has helped me to begin to gain an understanding about the present situation. Thank you for your work.
Thanks Dylan, I am glad my series was useful. To be honest, I feel the same way, as writing about it, has definitely helped me straighten out my own concepts.
Here in Dallas, TX home prices are still rising but at a much slower pace. The economy here is very strong, with a mixture of oil companies and technology. The only way for housing to bust in 2024 is for unemployment to go to 7-8%.
Isn't there a lot of new construction in Dallas too? May be that will help with some modest declines in prices next year, but I am fully with you on the unlikelihood of a housing bust, similar to 2008, unless unemployment spikes through the roof like you said. Imo, that's not likely, given current dynamics, unless of course, I am completely wrong on the AI thesis.
In the UK, housing prices for first time buyers have remained high as well as deposits so it’s much the same as the US. For millennials and younger, housing is often a dream that cannot be realised. I’m lucky that we live in my husband’s childhood home and he purchased it about fifteen years ago for a good rate and we are almost mortgage free (I’ll be 40 and he will be 50 when that happens) which will allow us amazing financial freedom that many of our peers cannot have. For me, it’s by luck and chance that I’m in this position as I couldn’t have afforded a house on my own without my husband. When I did live in the US, I was an adjunct English prof so wasn’t getting out of the renter’s market in any foreseeable future.
You are indeed in a very fortunate spot. Being mortgage free just exponentially improves financial freedom. The housing market is in a worse gridlock in Canada and we don't ever even think about owning for similar reasons that I have mentioned in my post.
Thanks for sharing your thoughts and also pointing out that for many, it’s okay to rent and invest in other ways as people have to adapt to the market they live in!
100%. I have never objected to the idea of rent, as long as it is inflation controlled, it has indeed allowed me to not ever think of maintenance costs and other things that can always drive up costs and anxiety.
Very impressive, Amrita.
Thank you so much Stephen, glad you enjoyed it.
Hi Amrita, well done on another excellent article. A few thoughts to share as I was reading it...
First, looking at and thinking about the national real estate market is very different than looking at your own home and /or investment properties, as real estate is (obviously) very local. The national, mean, median, or trends do not necessarily represent local conditions. For readers who want to dig deeper into local data, check out https://www.reventure.app/.
Second, it was interesting to learn that a third of all owner-occupied homes are owned by boomers over age 65. What will the impact be as those homes are vacated with aging? Have you or anyone else come across any longer-term models or forecasts on the effects of the transfer of ownership from the boomers?
Third, you stated that there are 84.6M owner-occupied homes. How many single-family houses are occupied by renters or, said another way, how many are owned by investors? Investors have been buying a lot recently, but I couldn't find a quick answer for the total ownership number. I am also curious about the potential impact if investors are not making the anticipated returns and turn from net buyers to net sellers or worse. Or, on the flip side, what if investors become more aggressive and significantly increase their share of housing purchases?
Those questions may be good future topics for future articles...
Hi, all relevant points.
1. Thanks for sharing the link, and yes, I fully agree that the state of the housing market at the end of the day will be different from city to city.
As for 2 and 3, let me back to you by the weekend with well-formed answers, as both of them are very insightful questions, and yes they absolutely could transform into future posts.
Monday Macroviews is one of my favourite weekly series, thanks for the consistent, high-quality content.
It would be nice to see a similar analysis for the European housing market too.
Europe will be interesting, I am sure there are markets that are better or worse off than others, will definitely do some macro work outside of US market next year.
Brilliant post again Amrita. The real estate and housing market are areas I know very little about. This three-part series has helped me to begin to gain an understanding about the present situation. Thank you for your work.
Thanks Dylan, I am glad my series was useful. To be honest, I feel the same way, as writing about it, has definitely helped me straighten out my own concepts.
That’s one of the wonderful things about writing isn’t it. Nothing helps organise the ideas in my head more than writing does.
Interesting series of articles about the US housing market, even for non US residents like me.
Thanks @Kroker Equity Research for restacking. Glad to hear that the concepts covered here are relevant for broader housing markets as well.
Great and straight to the point article
Thank you Michael, glad you enjoyed the post.
Here in Dallas, TX home prices are still rising but at a much slower pace. The economy here is very strong, with a mixture of oil companies and technology. The only way for housing to bust in 2024 is for unemployment to go to 7-8%.
Isn't there a lot of new construction in Dallas too? May be that will help with some modest declines in prices next year, but I am fully with you on the unlikelihood of a housing bust, similar to 2008, unless unemployment spikes through the roof like you said. Imo, that's not likely, given current dynamics, unless of course, I am completely wrong on the AI thesis.
There is a lot of new construction, but the builders are able to give good interest rates on new houses so prices are not going down.
That makes perfect sense.