Ingo Winzer of Local Market Monitor has performed real estate analysis for more than 20 years and his predictions are, in my experience, better than those of financial media. In 2005, he warned that many housing markets were dangerously over-priced. He is making similar warnings today and such warnings should be heeded. He produces in depth research of inventory and absorption for multiple individual cities.
In his September report on the national economic outlook, he noted that home prices in the second quarter were on average 20 percent higher than last year, but that there is no economic underpinning for this. The number of jobs in the economy is now the same as before the pandemic. At best, we have recovered. But there has not been growth. Income is about the same as then or lower even though inflation is 9% or higher, depending on how you measure it.
The majority of people can’t afford to buy a home or pay higher rents. He believes that this means that the recent home price increases can’t last, even in hot markets like Austin, Tampa or Phoenix. He believes that we are facing a deflation of the bubble and it may happen soon.
The FHFA monthly home price index was flat in June, for the first time in two years. He believes, and I agree, that there’s a good chance we’ve already passed the peak of the market, and are facing a long slide in prices before us.