Recent reports of declining mortgage applications could be the first sign of a #HousingSlowdown – one of Hedgeye’s new quarterly macro themes.
We wanted to know where you stood on this issue, so we asked in today’s poll: Do you see that the US housing market is indeed slowing?
At the time of this post, most people feel the US housing market is slowing with 69% responding YES; 31% saying NO.
Some who voted YES said they felt it so much that they (and friends) were once looking to upsize but have now backed off. Others saw slowing especially in low-end homes.
Hedgeye CEO Keith McCullough voted YES noting, “Given rates have been falling since their December highs, the MBA mortgage purchase application data is flat out scary.”
Other noteworthy YES comments included:
- “Prices [are] far outpacing capacity for first time home buyers to purchase. When funds cease to be the marginal buyer of existing homes, they may turn into a marginal seller. That would leave a vacuum of demand until the price adjusts to levels at which first time home buyers, 24-30 year olds, can afford to be owners via their incomes.”
- “Banks aren't interested in lending at these rates and they also are scared of the future economic collapse that is coming.”
- “Pent up demand and investor buying is flattening out. Wage and job growth stagnating, baby boomers trying to retire (so paying off debt, reducing RE assets & saving money) and 1st homebuyers saddled with 60 month car payments & student loans. Getting into and out of a mortgage costs have risen due to loan fees & taxes. It now costs 10% or higher just to buy/sell.”
- “[Yes] because of year over year reduced housing prices. Lack of demand is the culprit due to growth slowing in income, etc.”
- “The fundamentals of housing (demand and supply) turn well in advance of price. Demand has been rolling over for ~9 months now and prices are just beginning to show signs of deceleration. QM is a significant and underappreciated headwind for housing.”
Interestingly, one YES commenter said the US housing market’s slow growth was old news, while another said it wouldn't be a media issue for another 9-12 months “meaning most consumers and investors won't have a clue until it's too late.”
NO voters, however, said that they hadn’t specifically experienced a slowdown where they lived, further explaining why they felt it was simply location dependent.
One NO voter felt a slower housing market wouldn’t happen for another year, and a few others hoped it would benefit them when they looked for a house in terms of lower pricing. (One responder even said that because rental rates continue to go up they’re being practically forced to look for a place to buy.)
Maybe Keith can sum it up for us: “Housing $ITB -0.9% today leads losers again = US #HousingSlowdown.”