Ya know it’s weird,
Monetary conservatives (Monetarists, gold bugs, Austrians, supply-siders etc.) Keep saying all these fancy programs from the Fed create more, not less boom-to-bust.
The median price for all types of homes fell 1.7% in March from a year earlier, according to Redfin Corp. data going back to 2012.
The post-pandemic influx of out-of-state buyers has faded, pressuring demand. Home sales have fallen. Inventory is now at a record high in the data going back to 2012. Rising insurance costs and high mortgage rates have strained affordability.
The state’s condo market has also been buckling under soaring costs and new requirements for the upkeep of aging buildings. The cost of owning a condo has skyrocketed after the state began requiring more inspections and adequate reserves for repairs in the wake of the 2021 Surfside collapse. Many people trying to sell units are struggling because of special assessments to cover expensive maintenance. . . . .
Free market: “I’m not gonna buy that piece of crap mortgage. Not at that low rate. Not while home prices are spiraling upward.”
Fed: “Free markets are stoopid. We must buy the things the free market refuses to buy. Home prices are up only 10-30%. ‘Price stability’ means we must jack them up even higher . . . just like tulip bulbs.”
Ya see 7, I think -->YOU<-- would do a better job running the Fed than the print-happy yahoos who are there now.
.
.
.
.
POV:
It’s January 2021.
The COVID recession is already 6-8 months behind us.
Mortgage rates are under 3%.
Home prices are already up more than 11% in a single year.
The free market hates the bubble-like prices, and
hates the teen tiny rate and won’t buy any more MBS.
You are the Fed chair and you have to decide
A. Stop buying MBS & give the free market a fighting chance
or
B. Keep expanding the balance sheet. Keep buying the MBS that no sane individual in the free market will buy, and drive home prices even higher.
So why is Florida being hit harder than other states?
(Hint: it’s government-sponsored insurance. The stream of payments to own a house in Florida have gone up considerably due to insurance - which is what should happen if you ask me. That of course drives the value of homes down. I am against the whole flood insurance program)
I will confess that the Fed MBS purchases in 2022 are puzzling to me. I default to assuming I don’t understand something they do, or they have info I don’t. But of course I could be wrong…
Insurance might be part of it, (probably is)
but we should explore a couple ideas before just conceding to that media narrative. I think when we do that. We will find that
“Insurance prices are driving the decline in Florida home prices” to be an inadequate narrative.
1
Home prices rose a lot more in some states than in others, and Median home prices rose a lot more than Case-Shiller (weighted average.)
Visualcapitalist shows median home prices growing in ONE YEAR
A housing bear on my twitterfeed says Florida is not at all alone on seeing home price declines and in the other states, the decline in home prices seems to be unrelated to insurance costs.
I’m not making a comparative argument or a difference in difference argument. I’m making a simple stream of payment argument: the total cost of home ownership in Florida has increased. When prices increase people buy less. When People buy less prices fall.
Agreed, and (flood) insurance probably has something to do with it.
but it is happening many places, including place where (flood) insurance is not a factor.
against the whole flood insurance program)
