Reply to Federal Reserve: signs abound that housing market is entering bubble territory

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Even Redfin is saying that the “market is turning.”

https://www.redfin.com/news/housing-market-update-early-signs-of-a-slowdown/[/quote]

[quote]Still, the market still feels very hot, with homes selling faster and for more money than ever before. That’s largely because supply remains near record lows, with fewer homeowners putting their homes on the market.

“Homebuyers may not feel like the market has gotten any easier. That’s because they’re often competing against investors, all-cash buyers and migrants from expensive cities who aren’t as sensitive to mortgage rates,” said Redfin Chief Economist Daryl Fairweather. “But there are early indicators that the market is turning, and we expect the softening to become more apparent in the coming weeks, eventually causing home-price growth to slow. We’ll be watching closely to see whether the market slows from 100 miles per hour to 90 or 100 miles per hour to 75.”[/quote]

What's actionable about these predictions/observations?[/quote]

Don’t buy a house right now. Sell your house if you’re thinking about doing it soon.[/quote]

But they're not saying prices are going down, just that price increases will be slowing. At least that was my reading.[/quote]

No, they are saying, at a minimum, a correction. A correction means prices go down. The market has significantly overvalued housing, for a number of complicated reasons having to do with the pandemic, the behavior of the Fed (both interest rates and portfolio), and idiosyncratic local demographic behaviors. What is coming next is first a slow down then a correction, probably in a matter of weeks. The more conservative estimates put the correction at 2019 prices. Given unknown reaction to unusual buying trends and unusual Fed behavior, there is a nontrivial possibility of a much steeper decline. Either way, prices are going down and soon. Which should be fine for most people. Only people actively in the market or planning to enter the market really need to change their behavior based on this. Or those who are somehow counting of the artificial inflation of their house value between 2019 and now (say to pay for college or something) because that it an illusion. That money is not there for most people unless they sell at the current peak.  [/quote]

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