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Tag: Housing Prices

  • Peter Schiff predicted the 2008 housing crisis, and he’s warning of a ‘housing emergency’. Is he right this time?

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    Economist Peter Schiff made his name by predicting the 2008 housing crash. Now he’s sounding the alarm on another potential crisis in America’s housing market — one that could see a wave of homeowners mailing back their keys.

    “Why are housing prices so high? Because for a long time, the Fed kept interest rates at zero, and so a lot of people were able to get really low mortgages, 3% mortgages, 4% mortgages,” Schiff explained in a 2025 YouTube video (1).

    “And because homes are bought — not based on what the home cost — but based on the monthly payment, the lower the monthly payment, the more somebody could pay for a house. Now you have a problem where housing prices went way up, but then mortgage rates went way up, and home prices never came back down to levels consistent with more expensive mortgages.”

    Indeed, mortgage rates have surged. The average rate on a 30-year fixed mortgage has climbed from below 3% just a few years ago to more than 6.1% today (2). Normally, higher borrowing costs can cool down the market, but prices remain stubbornly high: the S&P Cotality Case-Shiller Home Price Index, which tracks the price of single-family homes in the U.S., jumped more than 43% over the past five years (3).

    Schiff believes prices will “eventually” fall to match today’s higher rates — a painful adjustment that, he warns, could trigger “a housing emergency.”

    “It’s going to create a bunch of defaults and a lot of people are going to walk away and mail in their keys because they can’t sell their houses for more than they owe,” he said.

    The scenario sounds familiar. During the 2008 bust, many underwater homeowners — those who owed more than their homes were worth — simply mailed their keys to the lender and walked away.

    Today’s market is different. Lending standards are tighter than during the subprime era, making widespread negative equity less common. Supply constraints are also a factor: Zillow estimates the U.S. is short roughly 4.7 million homes, a gap that has helped keep prices elevated (4).

    Schiff argues that many owners are staying put only because they locked in ultra-low mortgage rates, which are now limiting the number of homes for sale.

    “But at some point, there are people that have to sell their houses for whatever reason and if they have to slash the prices to do it, they may not have enough money to repay the mortgages. And so this could have a cascading effect,” he warned.

    According to December 2025 sales data from the National Association of Realtors (NAR), pending home sales were down 3% on the previous year and had plunged 9.3% since November (6). While seasonality could be a factor here, the NAR suggests that the decline in pending home sales could be the result of consumers facing a lack of inventory and feeling like they don’t have a lot of good options on the table.

    Read More: Approaching retirement with no savings? Don’t panic, you’re not alone. Here are 6 easy ways you can catch up (and fast)

    While Schiff is wary of the U.S. homeownership market, he acknowledges one persistent trend: “Rents go up every year,” he noted on his show.

    America’s housing affordability crisis is, in part, a reflection of broader cost-of-living pressures — and it underscores how real estate can serve as a hedge. As inflation drives up the cost of materials, labor and land, home values tend to rise as well. Rental income often follows suit, giving landlords a stream of cash flow that adjusts with inflation.

    In fact, investing legend Warren Buffett has often pointed to real estate as a prime example of a productive, income-generating asset. In 2022, Buffett remarked that if you offered him “1% of all the apartment houses in the country” for $25 billion, he would “write you a check (8).”

    Of course, you don’t need billions of dollars — or to even buy a house outright — to benefit from real estate investing. Crowdfunding platforms like Arrived offer an easier way to get exposure to this income-generating asset class.

    Backed by world-class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants.

    The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase and then sit back as you start receiving any positive rental income distributions from your investment.

    In a recent J.P. Morgan report, Al Brooks, the vice chair of Commercial Banking at J.P. Morgan said, “I think multifamily housing is absolutely where you want to be as an investor.” He added, “The multifamily rental market may still feel the impact of a recession, but to a lesser degree than other asset classes (9).

    If diversifying into multifamily rentals appeals to you, you could consider investing with Lightstone DIRECT, a new investing platform from the Lightstone Group, one of the largest private real estate companies in the country with over 25,000 multifamily units in its portfolio.

    Since they eliminate intermediaries — brokers and crowdfunding middlemen — accredited investors with a minimum investment of $100,000 can gain direct access to institutional-quality multifamily opportunities. This streamlined model can help reduce fees while enhancing transparency and control.

    And with Lightstone DIRECT, you invest in single-asset multifamily deals alongside Lightstone — a true partner — as Lightstone puts at least 20% of its own capital into every offering. All of Lightstone’s investment opportunities undergo a rigorous, multi-stage review before being approved by Lightstone’s Principals, including Founder David Lichtenstein.

    How it works is simple: Just sign up with your email, and you can schedule a call with a capital formation expert to assess your investment opportunities. From here, all you have to do is verify your details to begin investing.

    Founded in 1986, Lightstone has a proven track record of delivering strong risk-adjusted returns across market cycles with a 27.6% historical net IRR and 2.54x historical net equity multiple on realized investments since 2004. All told, Lightstone has $12 billion in assets under management — including in industrial and commercial real estate.

    As such, even if multifamily rentals don’t appeal to you, Lightstone could still serve you well as an investment vehicle for other real estate verticals.

    Get started today with Lightstone DIRECT and invest alongside experienced professionals with skin in the game.

    We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

    Peter Schiff (1, 7); Federal Reserve Bank of St. Louis (2); S&P Global (3); Zillow (4); Gold Price (5); National Association of Realtors (6); J.P. Morgan (7, 9); CNBC (8)

    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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  • ‘Quiet luxury’ is coming for the housing market, The Corcoran Group CEO says. It’s not just the Hamptons, Aspen, and Miami anymore | Fortune

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    While people have different definitions for luxury, the word typically elicits extravagance, grandeur, and exclusivity. And in the housing market, it usually prompts visions of a massive mansion dripping with amenities. 

    But the definition of today’s luxury housing is changing, according to Pamela Liebman, CEO of The Corcoran Group, the real estate firm founded by Shark Tank star Barbara Corcoran in 1973. In fact, many wealthy buyers are leaning into the trend of understated “quiet luxury” when purchasing a home.

    “When it comes to home buying, quiet luxury doesn’t have to be the biggest estate on the block,” Liebman told Mansion Global. “It could be a place that makes you so happy and it may have all your favorite bells and whistles, which could be something like a beautiful porch where you sit and have tea or a cocktail at the end of the day versus being a major estate that everyone drives past and wants to know who lives there.”

    “Quiet luxury is luxury that makes you happy,” she continued. “Luxury in your face might be spitting it out to the rest of the world.”

    In fact, a July report from vacation-home co-ownership platform Pacaso shows smaller homes are becoming more luxurious and are gaining popularity among high net-worth individuals. The average new-home size dropped from 2,314 square feet in Q4 2022 to 2,169 square feet in Q4 2024, U.S. Census Bureau data shows. 

    “Affluent buyers are prioritizing convenience and financial flexibility, seeking homes that require less maintenance without sacrificing those high-end finishes we all love,” according to Pacaso. Plus, they’re choosing smaller homes because they’re easier to purchase in cash instead of taking out a mortgage while rates are still high.

    Where ‘quiet luxury’ buyers are looking

    Quiet luxury is also about where you buy. While the major luxury housing markets include the Hamptons, New York City, Los Angeles, Miami, Palm Beach, and Dallas, there are several emerging markets now on the radar. 

    On the West Coast, Liebman noted Sonoma County, specifically Healdsburg, Calif., “is an interesting spot” where luxury home sales have surged 150% year-over-year and 20% of homes have received multiple offers. 

    According to Zillow, the average home price there is nearly $1.1 million, about a 17% increase during the past five years. And as of late July, the average listing price was more than $1.5 million. Sonoma County has become a hot spot for buyers from urban areas like San Francisco and Los Angeles, according to Daniel Casabonne of Sotheby’s International Realty, because of its vineyard views and smaller-town vibe.

    Park City, Utah, has also become a popular destination to buy a luxury home, particularly for people seeking a skiing destination, Liebman said—and it’s easier to get to than Aspen via a commercial flight.

    “You know, not everybody has a private plane,” she said. Still, the average home price in Park City is a cool $1.5 million, according to Zillow. Namely, the Park City new-construction luxury condo market has been growing, and median sales prices rose 23% in Q2 to $1.85 million, data from Park City Investor shows.

    On the East Coast, Lake Burton, Ga.; Asheville, N.C.; parts of South Carolina, and Florida’s panhandle have also become popular for luxury homebuyers, Liebman said. In Lake Burton, many 2024 listings exceeded $5 million, and Mayfair International Realty recently exclusively listed a $10 million private island there. 

    Meanwhile, the luxury market in Florida’s panhandle is continuing to grow and inventory levels are on the rise. Specifically, Inlet Beach, Santa Rosa Beach, and Destin all are emerging as luxury markets with new upscale beachfront properties boosting overall prices. The average home price in Inlet Beach is $1.7 million, according to Zillow.

    “Legacy destinations remain as timeless as ever, [but] Florida’s panhandle is solidifying its status as a favorite for vacationers,” Pacaso CEO and cofounder Austin Allison wrote in the company’s list of the top 20 luxury vacation home markets of 2024. 

    A version of this story was published on Fortune.com on September 9, 2025.

    More on luxury real estate:

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  • More than half of U.S. homes have dropped in value over the last year — and nearly all houses in these cities have seen losses | Fortune

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    The share of U.S. homes that have lost value in the past year is the highest since the aftermath of the Great Recession, according to Zillow.

    In October, 53% of homes saw their “Zestimates” decline, the most since 2012 and up from just 16% a year earlier. Losses were most widespread in the West and South.

    In fact, those regions have housing markets where nearly all homes declined in value over the last year. Denver topped the list with 91%, followed by Austin (89%), Sacramento (88%), Phoenix (87%) and Dallas (87%).

    The Northeast and Midwest, by contrast, have largely avoided such losses, but declines are spreading to more homes in all metros, Zillow said.

    In addition, most homes also dropped from their peak valuations, with the average drawdown hitting 9.7%. While that has soared from 3.5% in the spring of 2022, it’s still well below the 27% average drawdown in early 2012.

    To be sure, lower home values are just losses on paper and aren’t realized by homeowners unless actual sale prices undercut their initial purchase prices.

    By that score, homeowners are still ahead as Zillow data shows that values are up a median 67% since the last sale, and just 4.1% of homes have lost value since their last sale.

    “Homeowners may feel rattled when they see their Zestimate drop, and it’s more common in today’s cooler market environment than in recent years. But relatively few are selling at a loss,” Treh Manhertz, senior economic researcher at Zillow, said in a statement. “Home values surged over the past six years, and the vast majority of homeowners still have significant equity. What we’re seeing now is a normalization, not a crash.”

    Zillow

    The lower values come as the housing market has been frozen for much of the past three years after rate hikes from the Federal Reserve in 2022 and 2023 sent borrowing costs higher, discouraging homeowners from giving up their existing ultra-low mortgage rates.

    But the dearth of new supply kept home prices high, shutting out many would-be homebuyers who were also balking at elevated mortgage rates.

    With demand weak, the housing market has been shifting away from sellers and toward buyers. The pendulum has swung so far the other way that delistings soared this year as sellers become fed up with offers coming in below asking prices and just take their homes off the market.

    But the National Association of Realtors sees a turnaround coming next year. NAR Chief Economist Lawrence Yun predicted earlier this month existing-home sales will jump 14% in 2026 after three years of stagnation, with new-home sales rising 5%. Those sales will support a 4% uptick in home prices.

    “Next year is really the year that we will see a measurable increase in sales,” Yun said at a conference on Nov. 14. “Home prices nationwide are in no danger of declining.”

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    Jason Ma

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  • Zohran Mamdani’s signature housing policy is widely loathed by economists. Here’s why | Fortune

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    New York City Mayor-elect Zohran Mamdani swept to victory Tuesday evening on a platform of affordability, anchored by a plan to freeze rents across nearly 2 million rent-stabilized apartments. 

    But economists, universally, hate rent control. In a 2012 poll of top economists, just 2% agreed that rent-control laws have had “a positive impact” on the supply and quality of affordable housing. The Nobel laureate Richard Thaler even quipped in the survey that the next question should be: “Does the sun revolve around the Earth?”

    Why do economists revile a plan that seems to promote fairness and equity in a housing market that is clearly broken

    Seductive simplicity

    To most voters, freezing rents looks like common sense: If prices are out of reach, stop them from rising. But to economists, that’s like treating a fever by breaking the thermometer: It suppresses the symptom without curing the disease, the persistent shortage of housing.

    “Freezing rents doesn’t fix scarcity,” said David Sims, a Brigham Young University economist whose research on Massachusetts rent control remains a touchstone. “It just reshuffles who bears the cost.”

    Sims’s work examined the rent-control regime that once governed Cambridge, Mass., where tenants could stay indefinitely at below-market rents. The policy was meant to keep housing affordable, but it led to what he calls misallocation. 

    “People who could do better by moving tend to stay,” he told Fortune. “Older households hang on to large units they no longer need, while young families can’t find space. Over time, you end up with the wrong people in the wrong apartments.”

    When Massachusetts voters repealed rent control in 1994, property values in Cambridge rose 45%—not only for the deregulated apartments, but for entire neighborhoods. It turned out that years of capped rents had discouraged investment and dragged down surrounding property values, meaning that when controls were finally removed, landlords were empowered to upgrade and renovate their apartments. Neighborhoods that had been frozen along with the rents suddenly seemed to revitalize.  

    That dynamic is already visible in New York. According to the city’s Housing and Vacancy Survey, roughly 26,000 rent-stabilized apartments are sitting empty, many uninhabitable because renovation costs far exceed what landlords can legally recover. The state’s 2019 Housing Stability and Tenant Protection Act caps recoverable renovation expenses at $50,000 spread over 15 years. Rehabilitating a century-old tenement can cost twice that, leaving owners little incentive to do anything but lock the door.

    Short-term relief, long-term pain

    Rent control’s immediate benefits, for current residents, are undeniable. It offers stability to tenants living paycheck-to-paycheck and reduces the risk of displacement. But over the long term, economists argue it functions the same way as throwing sand in the gears of the housing market. Landlords defer maintenance they can’t recoup, new construction slows, and the available housing stock quietly erodes.

    A 2018 Stanford study led by Rebecca Diamond, one of today’s leading experts in housing markets, found that when San Francisco expanded rent control in the 1990s, the supply of rental housing fell 15% over the next decade. Many landlords converted apartments to condos or owner-occupied housing to escape regulation. The policy helped existing tenants, but ultimately raised market rents citywide and accelerated gentrification, causing the opposite of what policymakers intended.

    “It’s not about pitying landlords,” Sims said. “It’s about understanding incentives. You can’t expect people to invest in something if they’ll never break even—just like you can’t expect tenants to volunteer to pay more rent.”

    For economists, the deeper problem with rent freezes is conceptual: They imply that affordability can simply be decreed against the logic of supply and demand. 

    “It creates this belief that the problem can be solved by fiat,” Sims said. “But rents are high because people want to live in New York. The only lasting fix is to make it easier to build more housing that people actually want.”

    He offers a visceral analogy of market pressures: Black Friday. People don’t wait in line for stores anymore on Black Friday, Sims said, but there was a time when, for a $1,000 TV at $200, there’d be a line around the block at 4 a.m., and only a few lucky people would get the TV.

    “But housing isn’t like a $200 TV,” Sims observed. “Everyone kind of needs a place to live, but if housing is priced like the $200 TV, then there’s a bunch of people in that line who don’t get it.”

    That’s the thing about rent control, economists say: It benefits insiders at the expense of outsiders. Over time, it can deepen inequality by keeping younger, lower-income, or newly arrived residents locked out of regulated neighborhoods that effectively become closed clubs.

    Band-Aid policy in a broken market

    Supporters of Mamdani’s plan counter that New York’s crisis is so severe, temporary freezes are a moral necessity. 

    With median rents above $4,000, they argue, the city cannot wait for zoning reforms and construction projects that take years to materialize. But even sympathetic economists warn that without parallel measures to boost supply, a freeze simply defers the reckoning.

    “If you don’t pair a rent freeze with a credible plan to add housing,” Sims said, “you’re not solving the problem. You’re just pushing off accountability without really solving the underlying problem.”

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  • AI startups are leasing luxury apartments in San Francisco for staff and offering large rent stipends to attract talent  | Fortune

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    The AI boom is bringing a wave of startups to San Francisco, and employees are receiving generous benefits in one of the country’s priciest housing markets. 

    Roy Lee, CEO of AI tech startup Cluely, which makes software for job interviews and work calls, told The New York Times that he leased eight apartments for employees in a recently-built luxury complex situated just a one-minute walk away from the office. The rents in the 16-story building range from $3,000 to $12,000 a month. 

    “Going to the office should feel like you’re walking to your living room, so we really, really want people close,” Lee told The Times on Thursday.

    Flo Crivello, CEO of Lindy, another AI startup, said he offers his approximately 40 employees a $1,000 rent stipend every month if they live within a 10-minute walk of the company’s office.

    “People are so much happier and healthier when they live close to work,” he told The Times. “This makes them stick around for longer, perform better and work longer hours.”

    The AI boom has drawn a flood of money and talent to San Francisco, inflating rent in the process. The Bay Area has attracted 70% of AI venture capital funding nationwide since 2019, according to data from Pitchbook. 

    Across the U.S. and Canada, the pool of tech workers with AI skills jumped more than 50% to 517,000 from mid-2024 to mid-2025, according to a September CBRE report. The San Francisco Bay Area, New York metro and Seattle are the top U.S. markets for AI-specialty talent, accounting for 35% of the national total, the report said.

    Meanwhile, fully remote working arrangements for open positions have declined, and more employers are adopting hybrid arrangements requiring tech talent to spend three or more days in the office. In San Francisco alone, 1 out of every 4 square feet of office space was leased by an AI company over the last two and a half years, according to CBRE.

    Tightness in the office market is also seen in the residential sector. Over the past year, apartment prices in San Francisco rose 6%, on average, more than twice the 2.5% increase experienced in New York City and the highest rate in the nation, according to real estate tracker CoStar data cited by The Times. In hot spots like Mission Bay, near OpenAI’s headquarters, rents climbed 13% recently.

    Average rent for a San Francisco apartment is now $3,315 a month, just below New York City’s, the nation’s highest at $3,360.

    A September report from real estate tech company Zumper said San Francisco’s housing market bucked the national trend of flat or falling prices and instead saw the strongest annual growth across the country for two-bedroom rent, which surged 17.1%. One-bedroom rent climbed 10.7%, the third-highest increase in the nation, the report said.

    The report points to a “perfect storm” of tech-sector hiring and stricter return-to-office mandates driving more renters into the city as well as supply-chain constraints. The city’s vacancy rate has fallen back to pre-pandemic levels, and new housing construction is at its weakest pace in a decade, the report added.

    Will Goodman, a principal at Strada Investment Group, which developed the luxury complex where Cluely leased its eight apartments, told The Times that half of the 501 units in the complex were leased within two months of its May opening.

    “Honestly, I’ve never seen anything like it before,” he said

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  • Trump Victory Could Ignite Massive Refinance Boom And Record Home Sales, Experts Say

    Trump Victory Could Ignite Massive Refinance Boom And Record Home Sales, Experts Say

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    Trump Victory Could Ignite Massive Refinance Boom And Record Home Sales, Experts Say

    Many Americans, who are generally not satisfied with today’s economy, are focusing on the 2024 presidential election. The U.S. real estate industry and many other sectors are speculating on the implications of a potential second term for Donald Trump.

    Many economists have considered what a second presidential term under Trump would mean. They’ve provided insight on everything from interest rates and tax cuts to housing prices and inflation.

    Don’t Miss:

    Marty Harlee, president and CEO of First Trust Financial, said he expects Trump to recommend to the Federal Reserve that it lower interest rates to keep the economy moving quickly.

    “If former President Donald Trump should win the upcoming election, we would see another massive refinance boom along with a record number of home sales,” Harlee told GOBankingRates. “Lowering rates would move every other industry upward as well.”

    Dennis Shirshikov, a professor of finance, economics, and accounting at the City University of New York, said that the Trump administration’s economic policies would likely focus on deregulation and tax cuts. These could stimulate economic growth and increase disposable income for many Americans. They could also benefit the housing market by increasing demand for homes.

    “For instance, the Tax Cuts and Jobs Act of 2017, which Trump signed into law during his first term, led to an increase in after-tax income for many individuals and businesses, providing more capital for home purchases and investments in real estate,” Shirshikov said.

    Trending: This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, and you only need $100.

    With the rising cost of living and affordability among the major concerns many Americans have, housing and construction are being discussed more in the political arena, said Kateryna Odarchenko, a political strategist who also has a real estate license in Maryland.

    “Donald Trump’s 2024 campaign includes several initiatives related to the housing market and construction sector, building on the policies from his previous term,” Odarchenko said.

    During his first term, Trump worked on increasing homeownership rates, extending eviction moratoriums during the pandemic, and proposing the privatization of Fannie Mae and Freddie Mac.

    “These efforts have implications for future homebuyers and the housing market at large,” Odarchenko said. “His administration also introduced tax reforms such as opportunity zones to stimulate investment in underdeveloped areas and capped property, income and sales tax deductions, affecting homeowners differently across the country.”

    Trending: Commercial real estate has historically outperformed the stock market, and this platform allows individuals to invest in commercial real estate with as little as $5,000 offering a 12% target yield.

    If Trump is reelected, the real estate market could suffer. If rates come down, housing prices will increase, and the available supply will decline, Harlee said.

    “In general, interest rates and the housing market always do well with Republicans in office,” Harlee said. “I think it’s safe to say the same would be true if Trump wins reelection.”

    Shirshikov said that deregulation and tax cuts can stimulate economic activity. Still, they can also lead to inflation, which could cause the Federal Reserve to raise interest rates to control it. That may make mortgages more expensive and reduce housing affordability.

    “Trump’s tenure was marked by significant market volatility, partly due to his unconventional approach to policy and communication,” he said. “This unpredictability can create uncertainty in the housing market, causing potential buyers and investors to hesitate.”

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    This article Trump Victory Could Ignite Massive Refinance Boom And Record Home Sales, Experts Say originally appeared on Benzinga.com

    © 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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  • The cost of owning a home is officially the highest on record, Redfin says. Here’s how bad it is out there

    The cost of owning a home is officially the highest on record, Redfin says. Here’s how bad it is out there

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    The average 30-year fixed mortgage rate reached 7.50% this week, the highest all year. It’s because of a “hotter-than-expected inflation report and the Fed’s confirmation that interest rate cuts will be delayed,” Redfin’s data journalist, Dana Anderson, wrote today in a housing market update

    But it’s not only mortgage rates; home prices are rising too. The median home sale price rose 5% over the last year in the four weeks ending April 14, to $380,250. It’s lower than the all-time high reached in June 2022 in the pandemic housing boom, but only by $3,095, according to Redfin.

    “The combination of high mortgage rates and prices have brought homebuyers’ median monthly housing payment to a record $2,775, up 11% year over year,” Anderson wrote. 

    Data released today shows that existing home sales dipped 4.3% from a month earlier and 3.7% from a year earlier. “Home sales are stuck because interest rates have not made any major moves,” NAR’s Chief Economist Lawrence Yun said in a statement accompanying the release. 

    Things didn’t seem like they could get much worse. Already, home prices swelled more than 50% in a matter of four years; the salary Americans need to afford a starter home has nearly doubled since the start of the pandemic to almost $76,000 a year; the typical household makes almost $30,000 less than what’s needed to buy a median-priced home; and renting will be cheaper than buying for years (and don’t be fooled, rents are still high). 

    It’s not clear when or if mortgage rates will drop, but they might never fall to the historical lows seen throughout the pandemic. Toward the end of last year, some forecasts predicted mortgage rates would end the year lower than last year, and there was at one point anticipation of three interest rate cuts this year, but that no longer seems likely. Federal Reserve Chair Jerome Powell said it himself earlier this week, that interest rates aren’t coming any time soon. “Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work,” Powell said. 

    Sometimes it can seem like a never-ending cycle. When mortgage rates are high, relative to what they were years before, people stop selling their homes. No one wants to lose a 3% mortgage rate, let alone for one that’s 7%; it’s why existing home sales fell to their lowest point in nearly three decades last year. But when people stop selling their homes, there’s less supply, and really not enough to meet demand when coupled with our existing housing crisis (and still, fewer homes are being built). So it becomes about simply supply and demand dynamics; more demand than supply pushes home prices up, worsening affordability. Redfin’s data shows there’s more than three months of supply; in a healthy housing market, four to five months of supply is the norm.

    The median home sale price only declined in one of 50 of the most populous metropolitan areas, according to Redfin. That was in San Antonio, and it was still just a 1% decline. Whereas, one metropolitan area saw its median home price increase almost 25%: Anaheim. 

    Some expect home prices to continue rising, although it varies by how much. Zillow sees home prices increasing less than 2% this year, but Capital Economics sees them climbing 5% this year. And none of this accounts for insurance woes, the sort of dark horse in the housing market that seems to be becoming more and more of an issue, especially in California and Florida. 

    Maybe the pivot spring season, or simply this year’s mini version, is coming to an early end—or maybe, the housing market isn’t really thawing meaningfully.

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  • Guess how many homes under $300,000 are on the market in Denver

    Guess how many homes under $300,000 are on the market in Denver

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    The Elisabetta apartments in Globeville. Aug. 1, 2023.

    Kevin J. Beaty/Denverite

    The median price of a Denver area home rose to $595,000 in March — nearly 5% higher than homes were sold for at this time last year. 

    Realtors, gleeful spring finally came, had a good month, selling 3,512 homes — over 13% higher than in February. The industry earned nearly $2.45 billion in sales. 

    As summer approaches, things are looking up, according to the March Denver Metro Association of Realtors monthly Market Trends Report, covering market activity in Denver, Boulder, Broomfield, Gilpin, Clear Creek, Park, Jefferson, Douglas, Arapahoe, Adams and Elbert Counties. 

    More people are putting their homes on the market. 

    Home sellers have “begun to take the golden handcuffs off,” wrote Libby Levinson-Katz, the chair of the Market Trends Committee for the Denver Metro Association of Realtors

    “In many cases, these sellers have chosen to downsize,” she wrote. “The goal for these sellers is to sell their home and use the equity in their home to either purchase the next with their current equity or to obtain a significantly smaller loan. Regardless of their plans, buyers are very happy to see additional inventory.”  

    Maybe so, but when it comes to affordable houses, there aren’t nearly enough available to meet the demand.

    At the end of March, 19 houses under $299,000 were on the market in the Denver metro — a steep but imaginable home price for working people.

    For attached properties, like apartments and condos that often come with high homeowners association fees that have been steadily rising along with inflation, there were just 353 such homes on the market at the end of the month.

    Even the $300,00 to $499,999 market for houses had just 478 active listings at the end of the month, while the attached home market had 794. 

    The real estate industry is still making sense of a $418 million settlement in the National Association of Realtors litigation in the Sitzer-Burnett case, an anti-trust lawsuit. 

    As part of the case, the organization has axed a rule that mandates sellers offer to pay realtor fees for both buyers and sellers, conceivably dropping the price of buying homes. 

    How the market performs depends on the Federal Reserve’s next moves. 

    Over the past year, the central bank raised interest rates well above historic lows in recent years. 

    “Their mission is to cool inflation without causing a significant economic slowdown,” explained realtor and mortgage expert Nicole Rueth. “Striking this balance requires careful calibration of monetary policy.” 

    Federal Reserve Chair Jay Powell indicated the bank would be lowering interest rates three times this year. That’s been good news for sellers and buyers alike, as high mortgage interest rates have kept many people out of the housing market. 

    But chances are that won’t happen until after the summer home-buying season. Raising interest rates hasn’t yet curbed inflation caused, in part, by strong job growth and consumer spending, Rueth noted. 

    On Wednesday, at Stanford University, Powell indicated the central bank would be holding off cutting interest rates until he was confident inflation was under 2%.

    Despite these uncertainties, the Denver Metro Association of Realtors predicts a hot late spring and summer market. 

    “We will continue to see increased inventory, increased buyer demand and the potential for competition,” explained Andrew Abrams, a realtor and member of the Denver Metro Area Realtors Market Trends Committee, in a statement. “While interest rates will pace the market, the seasonality will undoubtedly have a big impact.”

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  • Homebuyers expecting big savings after realtor settlement likely in for letdown: ‘Everyone is turning this ruling into what they want it to be’

    Homebuyers expecting big savings after realtor settlement likely in for letdown: ‘Everyone is turning this ruling into what they want it to be’

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    Consumers expecting big savings from a National Association of Realtors’ class-action settlement over agent commissions may instead be in for a letdown.

    The agreement drew cheers from President Joe Biden, who said it “could save homebuyers and home sellers as much as $10,000” in one example, and former Treasury Secretary Larry Summers, who said that breaking the “Realtor cartel” could save US households $100 billion over time. But the true benefits remain unclear, especially for first-time buyers who need help the most.

    It comes at a precarious time for the housing market, with higher mortgage rates pushing sales last year to the lowest level in nearly three decades. It’s especially tough for first-time buyers looking to jump into one of the most unaffordable markets in history. In theory, the settlement could translate into lower home prices by pushing commissions down. But experts say that’s not a given, especially in the short run.

    “No seller I’ve encountered will lower the price just because their transaction cost went down,” said Steve Murray, senior adviser to data provider and consultant Real Trends. “That will not happen.”

    The NAR said in a statement responding to Biden’s remarks that commissions were already negotiable before the settlement agreement and will continue to be.

    “Real estate agent commissions are driven by the market and are not the cause of the affordability crisis,” the NAR said.

    How the changes ripple out and impact the market is a subject of heated debate, in part because nobody really knows.

    The decades-old system for how US agents are compensated has long been controversial. Sellers typically pay a commission to their agent of 5% or 6%. The listing agent then splits the money with the buyer’s representative. Critics argue that the structure inflates costs and creates bad incentives.

    In October, a Missouri jury handed down a $1.8 billion verdict that found the NAR and others liable of colluding to keep prices high. To settle that case and others, the NAR agreed earlier this month to pay sellers roughly $418 million and said it would change some of its rules. In the most important shift, the trade group would bar sellers from including compensation details on the multiple-listing service, which has long been the most important tool for marketing homes.

    That change, to take effect this summer subject to a court’s approval, could encourage sellers to negotiate lower commissions. But the industry is rife with speculation that agents will find ways to discuss commission splits through other methods, for example, on brokerage websites.

    “I expect commissions to get bid down to 4% to 5% over time with variation by home price and geography,” Moody’s Analytics Chief Economist Mark Zandi said. “It’s a significant change but will likely be gradual. I expect most of the gain to be captured by the seller, so the impact on home prices will be small.”

    Possible Outcomes

    The settlement was a hot topic at the American Real Estate Society’s annual gathering of academics in Orlando this week. Ken H. Johnson, a real estate professor at Florida Atlantic University and a former broker, was in attendance, gaming out the possible outcomes with colleagues.

    Even the question of who is getting the benefit from lower commissions — buyer or seller — doesn’t have a simple answer, he said. In theory, the seller should pass on some savings to the buyer, but maybe not as much in a seller’s market.

    And it may encourage more first-time homebuyers, who sometimes lack the cash to pay brokers upfront, to go it alone, according to Johnson. More buyers are likely to go directly to listing agents to avoid having to shell out for commission costs. But that might result in more agents with potential conflicts of interest, representing buyers and also the sellers who pay them.

    “Now some buyers are going to have to pay out of pocket, or maybe buy less expensive homes,” Johnson said.

    Another huge question looms over the industry. The Department of Justice has taken aim at commission sharing, arguing for a full decoupling of compensation for sellers’ and buyers’ representatives. It remains to be seen if the NAR settlement satisfies regulators.

    New Rules

    Agents are already adapting to the new rules under the proposed settlement. In New York, broker Keith Burkhardt is working on a new flat-rate service to provide help valuing properties, negotiating deals, and navigating the city’s co-op and condo boards. He figures pricing will be critical and estimates charging buyers between $5,000 and $7,500.

    Meanwhile, buyers’ agents will also have to work harder to explain how they’ll add value to any deal, according to Iain Phillips, a real estate agent in California.

    The settlement is a start, said Larry Summers, a paid contributor to Bloomberg Television, on Wall Street Week with David Westin. But most observers don’t expect huge changes to happen overnight.

    “Right now, everyone is turning this ruling into what they want it to be,” said Mike DelPrete, who teaches courses on real estate technology at the University of Colorado Boulder. “Some people are saying not much is going to change. Others want the story to be that it’s a seismic shift for the industry. The whole thing is being driven by fear and uncertainty.”

    — With assistance from Jennifer Epstein, Paulina Cachero, and Chris Anstey

      Subscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up for free.

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    1. Lenders Offer Buy Now, Refinance Later Free—What’s the Catch? | Entrepreneur

      Lenders Offer Buy Now, Refinance Later Free—What’s the Catch? | Entrepreneur

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      Mortgage rates have soared over the past year and now stand at 7.79% for a 30-year fixed-rate mortgage, per Freddie Mac. Amid the skyrocketing rates, many would-be buyers have been priced out, and the housing market has experienced a decline from the competitive market seen for much of 2021 and 2022.

      Now, lenders have a proposition for those deterred by the nearly 8% rates — buy the house now, and refinance later at no cost.

      Typically, under a “buy now, refinance later at no cost” deal, buyers are given the option to refinance their mortgage if rates decrease, without bearing a significant portion of the closing costs — which were an average of $2,375 in 2021, according to Closing Corp, per The Wall Street Journal.

      The specifics of the deal vary, as some lenders with the “buy now, refinance later” option cover all closing costs, while others may only waive their fees or roll the costs into the loan.

      Related: High Mortgage Rates Are Fueling Record Housing Pessimism—So Why Are Experts Saying Now Is the Time to Buy?

      While the offer may seem enticing, there are caveats.

      “Nothing is free,” Bradley Hilton, a financial planner in Atlanta, told the WSJ.

      For example, some of the offers possess time restraints and short expiration dates, resulting in no real savings as failing to refinance within the timeframe means missing out on the deal and potentially incurring full closing costs out of pocket, Investopedia notes. Also, if the lender’s credits expire after a year or two, they may lose their value if rates don’t decrease within that period, making refinancing unfeasible.

      Instead of taking a “refinance free” deal now, opting for the lowest mortgage rate available without strings attached and later searching for the most competitive refinancing deal may actually yield more savings down the line, Bankrate analyst Ted Rossman told the WSJ.

      Plus, a “buy now, refinance later” deal doesn’t necessarily mean a buyer will be eligible to cash in on the offer by the time they’re ready to refinance. If credit deteriorates or the property’s value significantly drops, one may not be able to refinance later as they hoped, Laurie Goodman, a fellow at the think tank Urban Institute, told WSJ.

      Related: ‘Everybody’s Scared’: Barbara Corcoran Says Now Is the ‘Very Best Time to Buy a House’ — Here’s Why

      Some lenders may also use unclear terms in the agreement that could result in hidden fees or costs rolled into the loan, impacting long-term interest payments, Business Insider reported.

      Furthermore, to benefit from the “buy now, refinance later” deal, borrowers must refinance with the same lender and may need to wait at least six months to be eligible. Such restrictions to work with the original lender may also limit the borrower’s ability to access better rates elsewhere.

      “There’s really two aspects of [buy now, refinance later]. One is to unlock buyers who are on the sidelines right now,” Dan Richards, executive vice president of mortgage lender Flyhomes Mortgage which began offering a “buy now, refinance for free later” product in January, told Insider. “Secondly, it endears these borrowers to become long-term customers of Flyhomes.”

      So, what’s one to do? Rossman told the WSJ that he recommends focusing on what you can afford at the time you’re looking to buy, rather than banking on future rate drops, because “sometimes things don’t go according to plan.”

      Related: Zillow Launches 1% Down Payment Mortgage Program Amid Housing Affordability Crisis

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    2. U.S. Homeowners’ Wealth Soars, Average a Millionaire: Report | Entrepreneur

      U.S. Homeowners’ Wealth Soars, Average a Millionaire: Report | Entrepreneur

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      Despite the economic challenges brought about by the pandemic, the median net worth of the average American family surged by 37% between 2019 and 2022, according to the Federal Reserve’s consumer finance survey released last week.

      The mean net worth of an average American household, which is easily influenced by billionaires who can rake up the entire average, adjusted for inflation, stood at $1.06 million in 2022, a 23% increase compared to 2019, which was $868,000.

      Meanwhile, the median net worth, which represents the midpoint in the ranking, for a typical American household was $192,900.

      Households in the top 10% of income earners have a mean net worth of $6.63 million, according to the Fed survey, while households in the bottom 10% had a mean net worth of $5,300 in 2022.

      Related: 58% of All Americans Are Stuck in a Common Financial Trap, Survey Reveals — Are You One of Them?

      The survey also revealed a decline in the percentage of families filing for bankruptcy, dropping from 2% in 2019 to just 1.3% in 2022.

      Homeownership played a pivotal role in the financial surge of American households. In 2022, nearly two out of every three American families were homeowners, reflecting a slight increase from the previous three years. Rising home values significantly contributed to the overall increase in household wealth during this period, and the average net worth of homeowners stood at $1.53 million in 2022.

      However, the surge in home prices has also created challenges for those aspiring to be homeowners.

      Last year, the median home cost was over 4.6 times the median family income, making homeownership less accessible for many Americans. In another Fed survey released in May, it found that 65% of Americans who rent are doing so because they can’t afford a down payment to buy a home.

      Related: The Inability to Afford a Down Payment Is Why Renters Keep Renting, According to a New Report from the Federal Reserve

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      Madeline Garfinkle

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    3. Housing Market Pessimism Peaks Due to High Mortgage Rates | Entrepreneur

      Housing Market Pessimism Peaks Due to High Mortgage Rates | Entrepreneur

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      When it comes to the current housing market, the outlook for many Americans is grim.

      In a Fannie Mae survey last month, 84% of respondents expressed that now is an inopportune time to buy a house — a record high for the monthly report that surveys 1,000 consumers with over 100 questions about the current market.

      In contrast, a mere 16% considered it a favorable time to make a home purchase, matching the all-time low recorded last year.

      Doug Duncan, Fannie Mae’s senior vice president and chief economist, noted that high mortgage rates are intensifying consumer apprehension about the housing market.

      “Mortgage rates persistently over 7 percent appear to be deepening the malaise consumers feel about the home purchase market,” Duncan said in the report. “In fact, high mortgage rates surpassed high home prices as the top reason why consumers think it’s a bad time to buy a home, a survey first.”

      Related: ‘All Hell Is Going to Break Loose’: Barbara Corcoran Issues Warning About Real Estate Market, Interest Rates

      Duncan added that unfavorable mortgage rates were also the top reason respondents considered it a bad time to sell a home.

      Is it a good time to buy a home?

      Despite high interest rates and a grim outlook from the most recent survey respondents, some experts suggest it is a good time to buy — before the rates eventually go down again.

      “When mortgage rates drop, and more buyers come back into the market, home prices will rise,” Melissa Cohn, regional vice president of William Raveis Mortgage, wrote in a newsletter obtained by Bankrate. “Remember, you ‘Marry the house and date the rate.’” (Meaning buyers may take on a rate now but can always refinance later.)

      In June, “Shark Tank” star Barbara Corcoran said that buyers should seize the day, because when rates inevitably drop, the market will quickly pick up again.

      “Right now, what everybody’s afraid of is the high-interest rates,” Corcoran said in an interview with FOX’s “The Claman Countdown.” “But the minute those interest rates come down, all hell is going to break loose, and prices are going to go through the roof.”

      If you are in the market, Emma Hernan, real estate agent at The Oppenheim Group and star of Netflix’s “Selling Sunset,” told CNBC in August that real estate is the “best investment” one can make, and that buyers should be intentional — in any market — about where they purchase.

      “It’s best to buy the smallest home in the best neighborhood because you’re buying into the neighborhood. Your value will go back up a lot faster,” Hernan told the outlet. “You never buy the best home in the worst neighborhood.”

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      Madeline Garfinkle

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    4. Florida Ousts New York as No. 2 Most Valuable Housing Market | Entrepreneur

      Florida Ousts New York as No. 2 Most Valuable Housing Market | Entrepreneur

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      According to a recent report by real estate marketplace Zillow, Florida has surpassed New York as the second most valuable housing market in the United States.

      While California still takes the lead with a total residential housing market value of $10.243 billion, Florida comes in second at $3.810 billion, followed by New York at $3.650 billion.

      Overall, the U.S. housing market has experienced a significant resurgence, surpassing its pre-pandemic value by 49%, the report found. Leading the growth are the major metropolitan areas of New York, Los Angeles, San Francisco, Boston, and Miami, which have emerged as the most valuable housing markets.

      Florida is now the second most valuable housing market in the U.S., and Miami is the fifth most valuable metropolitan housing market. Alexander Spatari | Getty Images.

      Florida’s second-place spot was also driven by the fact that four of the six housing markets that have gained the most value since the pandemic are all in the state: Tampa (+88.9%), Miami (+86.6%), Jacksonville (+82.4%), and Orlando (+72.3%).

      Another factor driving the increase is the population surge, Zillow noted in the report, sparking both new construction of real estate and increased competition for existing properties. While the four most valuable metropolitan housing markets in the country (New York, Los Angeles, San Francisco, and Boston) have held steady over the past five years, according to Zillow, Miami has emerged in fifth place — taking Washington D.C.’s former spot, and also jumping from its ninth place rank in 2021.

      Related: The Inability to Afford a Down Payment Is Why Renters Keep Renting, According to a New Report from the Federal Reserve

      The appeal of warm weather, low taxes, and remote work flexibility has contributed to the population growth in Florida.

      “Where is the population growing? Florida, Texas, the other kind of warm weather, low-cost, low-tax states,” Craig Lazzara, managing director at S&P Dow Jones Indices, told Yahoo Finance in June.

      The data checks out, as Florida experienced a 4.3% increase in housing market value over the past year, and Texas a 1.5% jump, while high-tax states like California and New York experienced 3.3% and 0.2% declines respectively, according to the Zillow report.

      Related: In 20 U.S. Cities, Buying a Single Family Home Is Cheaper Than a Condo

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      Madeline Garfinkle

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    5. Living in Phoenix Makes Perfect Sense

      Living in Phoenix Makes Perfect Sense

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      In Phoenix, a high of 108 degrees Fahrenheit now somehow counts as a respite. On Monday, America’s hottest major city ended its ominous streak of 31 straight days in which temperatures crested past 110. The toll of this heat—a monthly average of 102.7 degrees in July—has been brutal. One woman was admitted to a hospital’s burn unit after she fell on the pavement outside her home, and towering saguaros have dropped arms and collapsed. Over the past month, hospitals filling up with burn and heat-stroke victims have reached capacities not seen since the height of the pandemic.

      “Why would anyone live in Phoenix?” You might ask that question to the many hundreds of thousands of new residents who have made the Arizona metropolis America’s fastest-growing city. Last year, Maricopa County, where Phoenix sits, gained more residents than any other county in the United States—just as it did in 2021, 2019, 2018, and 2017.

      At its core, the question makes a mystery of something that isn’t a mystery at all. For many people, living in Phoenix makes perfect sense. Pleasant temperatures most of the year, relatively inexpensive housing, and a steady increase in economic opportunities have drawn people for 80 years, turning the city from a small desert outpost of 65,000 into a sprawling metro area of more than 5 million. Along the way, a series of innovations has made the heat seem like a temporary inconvenience rather than an existential threat for many residents. Perhaps not even a heat wave like this one will change anything.

      My first morning in Phoenix, more than 20 years ago, the sun broke the horizon two miles up a trail in South Mountain Park, one of the largest municipal parks in the United States. I had arrived the previous night from Michigan, leaving behind the late-March dreariness that passes for spring in the Midwest for several months of research that would become my book, Power Lines. As the sun turned the mountain golden and I stripped down to short sleeves for the first time in months, I realized the Valley of the Sun’s charms.

      Outside the summer months, the quality of life in Phoenix is really quite high—a fact that city boosters have promoted stretching back to before World War II. They traded the desiccated “Salt River Valley” for the welcoming “Valley of the Sun.” Efforts to downplay the dangers of Phoenix’s climate go back even further. In 1895, when Phoenix was home to a few thousand people, a local newspaper reported that it had been proved “by figures and facts” that the heat is “all a joke,” because the “sensible temperature” that people experienced was far less severe than what the thermometers recorded. “But it’s a dry heat” has a long history, one in which generations of prospective newcomers have been taught to perceive Phoenix’s climate as more beneficial than oppressive.

      Most people surely move to Phoenix not because of the weather, but because of the housing. The Valley of the Sun’s ongoing commitment to new housing development continues to keep housing prices well below those of neighboring California, drawing many emigrants priced out of the Golden State. Subdivisions have popped up in irrigated farm fields seemingly overnight. In 1955, as the home builder John F. Long was constructing Maryvale, then on Phoenix’s western edge, he quickly turned a cantaloupe farm into seven model homes. Five years later, more than 22,000 people lived in the neighborhood; now more than 200,000 do. Even today, the speed of construction can create confusion, as residents puzzle over the location of Heartland Ranch or Copper Falls or other new subdivisions that include most of the 250,000 homes built since 2010.

      Even in the summer, you might not always notice just how harsh of a terrain Phoenix can be. Developers engage in a struggle to secure water rights, tapping groundwater aquifers, drawing water from the Colorado River brought to the city by aqueduct, and purchasing water from local farmers. Air-conditioning is the lifeblood of Phoenix, as much a part of the city as the subway system is in New York. In 1961, Herbert Leggett, a Phoenix banker, spoke of his normal summer day to The Saturday Evening Post: “I awake in my air-conditioned home in the morning … I dress and get into my air-conditioned automobile and drive to the air-conditioned garage in the basement of this building. I work in an air-conditioned office, eat in an air-conditioned restaurant, and perhaps go to an air-conditioned theater.”

      In the kind of air-conditioned bubbles Leggett described, it is actually possible for people like me, who work indoors, to forget the heat and oppression of Phoenix’s summer—that is, until we have to scurry across a parking lot or cross concrete plazas between buildings. Starting in late April, when high temperatures regularly hit over 90, many residents fire up their AC, using it until October, when highs once again drop into the 80s. At the height of summer, Phoenix becomes virtually an indoor city during the day. Remote car starters become valuable amenities for taking the edge off the heat. Runners wake before dawn to exercise, and dogs are banned from hiking trails in city parks on triple-digit days. With air-conditioning, the benefits of Phoenix outweigh the drawbacks for many residents.

      But this lifestyle comes with a cost. Electricity consumption has soared in Phoenix, almost doubling in the average home from 1970 to today. At the height of its operation, Four Corners Power Plant, only one of five such coal-fired power plants built north of Phoenix to help power the region’s growth, emitted 16 million tons of carbon annually, equivalent to the annual emissions of more than 3.4 million cars. Even today, with most coal-fired generation retired, Phoenix relies heavily on carbon-emitting natural gas for its electricity. Both the past and present of Phoenix’s energy worsens the very heat its residents are trying to escape.

      Air-conditioning protects most people, but especially as the heat intensifies, those without it are left incredibly vulnerable. Elderly women living alone, many of whom struggle to maintain and pay for air-conditioning, are particularly susceptible, accounting for the majority of indoor heat-related deaths. Unhoused people, whose population in Phoenix has increased by 70 percent in the past six years, suffer tremendously and make up much of the death toll. One unhoused man recently compared sitting in his wheelchair to “sitting down on hot coals.”

      This heat wave will end, but there will be another. Still, the horror stories of life in 115 degrees is hardly guaranteed to blunt Phoenix’s explosive growth. There are currently building permits for 80,000 new homes in the Phoenix metro area that have not yet commenced construction—homes that will require more water, more AC, and more energy.

      But in a sense, nothing about Phoenix is unusual at all. The movement from air-conditioned space to air-conditioned space that Leggett described—and the massive energy use that makes it all run—is now typical in a country where nearly 90 percent of homes use air-conditioning. Clothing companies such as Land’s End advertise summer sweaters that “will come to your rescue while you’re working hard for those eight hours in your office, which might feel like an icebox at times.” And heat has claimed lives in “temperate” cities such as Omaha, Seattle, and Boston. Indeed, one 2020 study concluded that the Northeast had the highest rate of excess deaths attributable to heat.

      “Why would anyone live in Phoenix?” serves as nothing more than a defensive mechanism. It makes peculiar the choices that huge numbers of Americans have made, often under economic duress—choices to move to the warm climates of the Sun Belt, to move where housing is affordable, to ignore where energy comes from and the inequalities it creates, and, above all, to downplay the threats of climate change. In that way, Phoenix isn’t the exception. It’s the norm.

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    6. Home Prices Fall By 3.3%, Biggest Annual Drop Since 2012 | Entrepreneur

      Home Prices Fall By 3.3%, Biggest Annual Drop Since 2012 | Entrepreneur

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      The median home price in the U.S. dropped by 3.3% in March (after a 1.2% dip in February) — marking the largest fall in prices year-over-year since 2012, according to a new report from Redfin.

      The biggest drop from a year before was Boise, ID at -15.4%, followed by Austin, TX (-13.7%), Sacramento, CA (-11.9%), San Jose, CA (-10.5%) and Oakland, CA (-9.7%).

      “I was consistently busy in the fall, but things got really quiet in March after the collapse of Silicon Valley Bank,” said Boise Redfin real estate agent Shauna Pendleton in the report. “There’s this fear that everything will crash. There are bank failures, inflation, recession fears, mortgage-rate volatility, a war in Ukraine, spy balloons—some people are wondering if they should pull their money out of the bank and park it in a safe rather than spend it on a new home.”

      Related: While Rent Prices Dropped Around the Country in March, Manhattan Hit a New Record High

      Out of the homes sold in the U.S. in March, only 28.5% sold for more than the final listing price — a steep decline from 54.1% in March 2022.

      Rising mortgage rates have caused both buyers and sellers to stall, and new listings fell by 23.3% in March compared to a year prior. With fewer homeowners looking to sell, it’s sparked a lack of inventory, further contributing to the decline in home sales.

      “One of my sellers recently got multiple offers on their home, but pulled the listing off the market when they found out their interest rate was going to double,” said Nashville Redfin real estate agent Jennifer Bowers, in the report. “There are a lot of homeowners who don’t want to give up their 2.5% or 3% rate for a 6.5% rate. Both buyers and sellers are having a tough time adjusting because rates are swinging up and down so quickly.”

      Related: Some Banks Lost An Average of $301 on Every Mortgage Financed in 2022

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    7. Single-Family Homes Cost Less Than Condos in 20 U.S. Cities | Entrepreneur

      Single-Family Homes Cost Less Than Condos in 20 U.S. Cities | Entrepreneur

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      The housing market has experienced a series of changes over the past couple of years — from record-high prices to ruthless competition. But now, with some signs signaling a cooling market (in certain places, at least), other areas are seeing shifts, notably a rise in demand for condominiums.

      In February, the average cost of a single-family home went down by 0.7% from the same period last year, while a median-priced condo experienced a 2.5% increase, per data from the National Association of Realtors.

      In some areas, condos are even more expensive for buyers than median-priced homes. According to real estate analysts at Point2, there are as many as 20 U.S. cities where this is happening, including Detroit, Michigan, which took the top spot, with the average home price of $58,000 versus the average condo price of $229,000 — a 75% difference.

      Related: Apartment Building Sales Are Dropping — But Renters May Benefit From Investor Slump

      Detroit led the rankings by a long shot. Second was Birmingham, Alabama, where the average home price is $174,000 versus $246,000 for condos — a gap of 29%.

      While there are several reasons people are attracted to condos versus homeownership — less maintenance, upkeep and utility costs — condo living isn’t for everyone. So if you’re looking to make the move from a building to a home, one of these 20 cities may be worth looking into.

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      Madeline Garfinkle

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    8. Apartment Building Sales Dropping at Fastest Rate Since 2009 | Entrepreneur

      Apartment Building Sales Dropping at Fastest Rate Since 2009 | Entrepreneur

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      Apartment building sales are dropping at the fastest rate in 14 years.

      Rising interest rates and regional banking disarray is contributing to the drastic fall in demand, The Wall Street Journal reported. Citing data from the firm CoStar Group, the outlet reported that $14 billion worth of apartment buildings were purchased in the first quarter of 2023, marking a 74% decrease from the same period the previous year and a 77% decrease since 2009.

      Following record highs for rent and home purchases in 2021, the housing market began to cool in 2022 and has continued to decrease since the beginning of the year despite minor upticks in buyer interest following slight decreases to mortgage rates. Still, rising interest rates have also made real estate a less attractive investment because financing a building is more pricey than it was one or two years ago.

      “Nobody wants to take a loss when they don’t have to,” Graham Sowden, chief investment officer at real estate investment firm RREAF Holdings, told The Wall Street Journal.

      Related: Home Builders Are Taking a New Approach To Excess Inventory: Targeting Investors

      Sowden told the outlet that his firm has pivoted to other property investments — such as recreational-vehicle parks — while buyers and sellers remain ambivalent on what apartment buildings are truly worth in the current and near-future market.

      However, while investors pull back on apartment building purchases, one group may benefit: renters.

      With less demand and purchasing, landlords are less likely to raise the rent for tenants — a phenomenon that swept American cities following a housing boom during and shortly after the pandemic. While rent across the country rose by 2.6% in March as compared to a year earlier, the rate at which rent is going up is far slower than the pandemic highs, according to a report by Apartment List.

      “This month marks the lowest year-over-year growth rate that we’ve seen since April 2021 and represents a return to a level of rent growth that was the norm in the years leading up to the pandemic,” the report said.

      Related: In the ’80s, Mortgage Rates Were Almost Three Times As High — But It’s Still Harder To Buy a Home Now

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      Madeline Garfinkle

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    9. Report: Housing Affordability Is at an All-Time Low | Entrepreneur

      Report: Housing Affordability Is at an All-Time Low | Entrepreneur

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      Although the housing market has shown signs of cooling in certain areas after all-time highs throughout 2022, new data has found that housing affordability is still a widespread issue for Americans.

      According to the Atlanta Fed’s Housing Affordability Monitor, housing affordability is worse today than it was more than a decade ago during the housing bubble of 2008. As of December 2022, the average American household would need to spend 42.9% of its income to afford a median-priced home. This marks a new high since August 2006, when it was 41.1%. The data also found that affordability declined 24% year-over-year.

      Related: In the ’80s, Mortgage Rates Were Almost Three Times As High — But It’s Still Harder To Buy a Home Now

      The steep decline in housing affordability could be the result of ongoing high prices for housing coupled with rising mortgage rates. When the housing market boomed during the pandemic into 2021 and much of 2022, home prices reached record highs across the country.

      Over the past year, as prices began to box out millions of would-be buyers and the Fed raised interest rates, demand finally began to slow. Still, despite the decline in home prices, housing affordability is at an all-time low, and the total value of American homes is still up 6.5% from the same period a year ago, according to the data. Although mortgage rates are high, they’re not as high as they were at the peak of November 2022 at 7.08%, so the slight decline sparked a minor uptick in homebuyers at the beginning of 2023, demonstrating just how competitive the housing market still is.

      Related: Declining Mortgage Rates Spark Uptick in Interest from Would-Be Homebuyers

      For those looking to buy a home, it might be wise to wait it out for a few more months.

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      Madeline Garfinkle

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    10. Here Are 20 Major Cities Where Home Prices Are Dropping The Most

      Here Are 20 Major Cities Where Home Prices Are Dropping The Most

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      Topline

      Data released by the S&P Corelogic Case-Shiller index, a leading measure of U.S. home prices, shows home prices continued to drop across the U.S. through December, with major cities like Seattle and San Francisco among those showing the biggest declines.

      Key Facts

      On Tuesday, S&P Dow Jones Indices reported home prices have ticked down about 0.8% on a monthly basis, but have fallen harder in 20 of the nation’s largest cities, and S&P’s Craig Lazzara says home prices “may well continue to weaken” given the prospects for ongoing economic weakness.

      Top 20 Major Cities With Monthly Home Price Declines

      • Phoenix (-1.9%)
      • Portland (-1.9%)
      • Las Vegas (-1.8%)
      • Seattle (-1.8%)
      • San Francisco (-1.8%)
      • Denver (-1.3%)
      • San Diego (-1.3%)
      • Minneapolis (-1.2%)
      • Chicago (-1.2%)
      • Dallas (-1.1%)
      • Detroit (-1.1%)
      • Charlotte (-1.0%)
      • Boston (-0.9%)
      • Tampa (-0.9%)
      • Cleveland (-0.8%)
      • Los Angeles (-0.8%)
      • Atlanta (-0.7%)
      • Washington (-0.4%)
      • Miami (-0.3%)
      • New York (-0.2%)

      Tangent

      In February, the median U.S. home-sale price fell 0.6% year over year, according to a report from real estate brokerage Redfin, marking the first annual drop since 2012 at a time when daily average mortgage rates hit 7.1%, pricing out buyers and forcing sellers to lower their asking prices to adjust to high mortgage rates. Home prices were likely to come down since mortgage rates rose, pushing borrowing costs to 16-year highs and crushing home-buyer demand, according to Redfin.

      Contra

      The average monthly mortgage payment for homebuyers today is at a record high of $2,520 due in part to high mortgage rates, according to Redfin.

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      Anthony Tellez, Forbes Staff

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    11. Is the American Dream Really Dead? Yes, Here’s Why | Entrepreneur

      Is the American Dream Really Dead? Yes, Here’s Why | Entrepreneur

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      Opinions expressed by Entrepreneur contributors are their own.

      The United States of America was built on one main principle: one’s inherited socioeconomic status is nothing more than a circumstance of the past that is to be rectified by their true destiny. The U.S. used this simple ideology to propel itself as one of the five great power nations of the world socially, economically and politically. This principle attracted countless immigrants who fled their countries of origin to escape a predestined fate.

      It might be incomprehensible to those born into America’s idealistic regime, but on other continents such as Asia or Africa, it’s pretty common for a person’s future to be relegated to that of their ancestors. This is not an accident but a product bred out of extreme centralization and the elite pushing self-serving agendas. As a testament to this activity globally, Author Vasuki Shastry eloquently demonstrates:

      “Asia’s billionaire class is a toxic addition to this mix. There is strong evidence in developing Asia that the political and business class often collude at the expense of public interest, aggravating already rising inequality and low social mobility, such as India’s tendering of major infrastructure projects to favored business groups.”

      Centuries of strategic American propaganda have done an inconceivably good job at luring immigrants with the promise of a lucrative life built upon the foundations of hope and opportunity. I posit that it’s becoming increasingly difficult for the vast majority to achieve Thomas Jefferson’s American dream, underpinned by a person’s right to the pursuit of life, liberty and happiness.

      Related: Is the American Dream Dead?

      ‘The rent is too damn high!’

      It’s no secret that the cost of living in America has been exorbitant for quite a while now, and the pace at which this has been increasing is historic. In 2021, we saw YoY inflation jump from 1.4% in 2020 to a blistering 7% — the steepest increase in YoY inflation since 1950, when we saw a delta of 8%. A year later, 2022 YoY inflation held strong at 6.5%, signaling a slight improvement. Concurrently, house prices increased by a record 16.9% in 2021.

      To put things into perspective at a micro level, the price of eggs rose a staggering 60% in 2022. Considering the rising cost of basic necessities, a reflected increase in wages would be expected. However, little evidence points to any impending meaningful increases, with wage growth holding relatively steady between 5 and 5.5% since the beginning of 2021.

      Related: The Cheapest States To Live in 2023

      ‘Just put it on my card’

      To make ends meet, Americans are now more than ever electing to shift their expenses to credit cards and other lines of credit. American households currently hold $11.67 trillion in debt — a 25% increase from the $9.31 trillion they held before COVID-19. While inflation certainly contributes to the rapid rise of this number, inflation within itself isn’t the most concerning piece of data when analyzing the financial health of the average American.

      Younger generations, millennials in particular, are struggling to buy homes despite taking on this debt. In fact, the median age for homebuyers in America today is about 47 years of age, eight years older than the median age prior to the financial crisis. To add salt to this wound, the average American currently has just $5,300 in savings, solidifying that this picture will likely worsen before it gets any better.

      Related: Is the American Dream Attainable?

      The secret behind true wealth creation

      We’re in a transitionary period, teetering on the edge of a new digital economy. With this, we’ve witnessed quick, lucrative returns when trading stocks or cryptocurrencies, compared with returns on property ownership. This makes it more effective to chase 10 to 100x returns in capital markets instead of buying your first home, and although this might seem intuitive on the surface, this only applies to a certain demographic.

      Suppose you’re a Wall Streeter or a software engineer at a leading technology company in a major city like New York or San Francisco. Given the entry point to the housing market is grossly higher than that of an individual living in Des Moines, the capital required to have any skin in the game is a barrier to entry within itself. Sure, you could buy a property in another city, but the cost, both monetarily and operationally, of having real estate that isn’t yours in combination with your own expenses is a tall order. You might have to sacrifice a few thousand dollars on rent by not owning property, but your net income in this scenario is best spent building a diversified portfolio of non-real estate assets.

      In an alternate scenario, where someone holds a modest job — making an honest living like the vast majority of Americans — and resides in an affordable city, one’s dollars are best spent investing in the property they live in, given that their entry point is likely accessible. Buying a house is the only investment you can easily pull off with 90+% leverage, meaning your upfront investment costs are subsidized. Conversely, buying stocks requires you to front 100% at the time of investment. What’s more, the two-way volatility of the stock market is far harder to track compared to the housing market, which, for the past few decades, has generally moved upwards more consistently. You can certainly buy stocks, but due to the availability of leverage, assuming you have access to credit, real estate can more likely yield higher returns off of a small investment.

      In contemporary society, the level of difficulty in achieving the American dream has skyrocketed. This picture-perfect life is visually synonymous with happily married couples with two children, a beautiful home and a white picket fence. However, the reality of this is vastly different. The latest numbers suggest people are no longer getting married, buying homes or having children nearly as much as in previous generations. Wealth disparity is at an all-time high, and divisions continue growing. The American dream is dead.

      Why they want you to believe the dream

      While the vast majority of Americans are feeling the pain of the Federal Reserve’s tight monetary policy, the nation’s elite are not. Elon Musk lost over $200 billion in net worth to kick off this year, yet he is still one of the wealthiest people ever to live. After a certain point, more money does little to change your quality of life.

      In capitalist regimes, the rich remain rich because a willing middle class submits to their ideals. The rich own the credit card companies that the poor borrow from. The rich own the banks that pay out fractions of a percent in yield while making enormous profits via capital markets activities. The rich are also friends and lobbyists of the lawmakers that determine the fate of the majority in this country. The American dream wasn’t designed to make you rich; it’s a narrative spun by a coterie comprised of the nation’s elite. It’s a strategic and intricate device crafted to keep you where you are. It’s a donkey and carrot model built to serve the system. While you’re too busy chasing financial freedom through hard work and dedication, the American dream is adding more weight to your saddlebags.

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      Solo Ceesay

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