If you look back through history, even back to biblical times, there have been two main ways for people to accumulate wealth: Through acquiring precious metals or real estate. While the precious metals wealth basket has evolved, property, as a store of wealth, has largely remained the same.
In modern times, owning property — for example, a home — has become an aspirational goal for most Americans. So much so that owning a home is now an integral part of the classic <a href="https://www.investopedia.com/terms/a/american-dream.asp#:~:text=American%20Dream-,Understanding%20the%20American%20Dream,according%20to%20ability%20or%20achievement.%22">American Dream</a>.
From rural farmhouses to urban high-rise condos, Americans, for generations, have parked some or nearly all of their <a href="https://www.pewresearch.org/social-trends/2012/08/22/chapter-7-income-and-wealth-by-income-tier/">wealth</a> in their homes.
Given the emotional significance of the American Dream, the housing market gets substantial attention in the media. As someone who has covered the industry for decades, I have had a front-row seat throughout several economic cycles. From the Savings and Loan Crisis of the 1980s to the Global Financial Crisis of 2008, real estate — and housing in particular — has seen its ups and downs.
With that historical perspective in mind and today’s economically challenging climate, I find myself asked (often on live television) if we are headed for another crash. I say no. As a student of history, I compare where we are today to the past boom-bust cycles I have witnessed. If I have learned anything about history, it’s that it repeats itself. So where better than history to find the answers about the future?
Stagflation Period Of The 1970s And 1980s 
The current economic climate, for those of us old enough to remember, is eerily reminiscent of the <a href="https://www.federalreservehistory.org/essays/great-inflation">environment in the ’70s and early ’80s</a> — spiking gasoline prices, record levels of inflation, and rising interest rates. The big difference between then and now, however, is unemployment. For much of the <a href="https://historyinpieces.com/research/us-unemployment-rates-president#:~:text=The%20first%20two%2Dand%2Da,to%20just%20under%208%20percent.">Jimmy Carter administration</a>, the unemployment rate was just under 8%, whereas <a href="https://www.bls.gov/news.release/pdf/empsit.pdf">today</a>, it sits below 4%.
To combat runaway inflation at the time, former Federal Reserve Chairman Paul Volcker aggressively increased the Federal Funds Rate, which <a href="https://fred.stlouisfed.org/series/FEDFUNDS">peaked</a> at a high of 20% in June of 1981. The Fed’s hawkish actions were designed to fight inflation by essentially putting the U.S. economy in a self-induced coma. One would think a stagnant economy coupled with high interest rates (and mortgage rates) would cool the housing market. While housing transition activity slowed, surprisingly, <a href="https://fred.stlouisfed.org/series/MSPUS">median home prices </a>rose considerably from $38,100 in the first quarter of 1975 to $78,200 in the first quarter of 1984. Inflation played a part in this, as costs for materials  spiked, however, the economics of supply and demand for homes was the primary driver of higher prices. With <a href="https://www.khanacademy.org/humanities/us-history/postwarera/postwar-era/a/the-baby-boom#:~:text=Following%20World%20War%20II%2C%20the,year%20between%201946%20and%201964.">population growth</a> from the baby boom, there was an<a href="https://scholar.harvard.edu/files/mankiw/files/baby_boom.pdf"> increased demand</a> for homes during a time when inflation made it more costly to build them.
Housing Boom And Financial Crisis
When analyzing the housing market today, one can’t avoid looking in the rear-view mirror at the most recent boom-bust cycle over the last two decades. I would note that not all rapid rises in prices are alike. Many factors contribute to higher home prices. Some are fundamental Econ 101 concepts, such as high demand in the face of low supply. 
However, in 2008 the housing market exploded due to an external factor: the reckless availability of <a href="https://mitsloan.mit.edu/ideas-made-to-matter/how-credit-conditions-affect-housing-prices-lessons-00s">credit</a>. Mortgage underwriting standards had deteriorated to the point where anyone could get a loan and buy a house. This “free money” artificially drove demand, and higher prices followed. It is worth noting that during that period, the inventory of existing homes stood at more than 14 months’ supply, whereas <a href="https://cdn.nar.realtor/sites/default/files/documents/ehs-06-2022-overview-2022-07-20.pdf">today</a> it stands at a paltry three months. 
What About Now? 
Mortgage rates have <a href="https://www.yahoo.com/video/mortgage-rates-nearly-doubling-since-130000514.html#:~:text=The%20average%20rate%20on%20a,%2C%20according%20to%20Realtor.com.">nearly doubled</a> in the past year. Inflation is wreaking havoc on the economy, and by some measures we are already in a recession. Given the circumstances, some may be thinking: This has to be a bad omen for housing. While that’s a seemingly logical thought, it’s a conclusion that I, for one, am not jumping to.
Let’s pretend for a moment that we are freshmen in college. In between playing Pong &#8211; either the video game of my day, or the red solo cup variety of today &#8211; let’s pretend we’re studying history and economics. 
As mentioned above, the housing climate today feels a lot like it did in the ’70s and early ’80s — and remember, at that time, home prices rose (history). Why? Basic supply and demand (economics). 
Currently, there is a cumulative <a href="https://www.realtor.com/research/us-housing-supply-gap-expands/">deficit</a> between household formations and housing starts of 5.8 million homes. In other words, demand for homes greatly exceeds supply. Moreover, supply constraints are expected to continue, as inflation has made it more difficult for builders to build. 
If we look at history, and consider the similar economic conditions 40 years ago, it’s fair to say that home prices could once again rise. While the pace of price gains will likely slow somewhat as the economy slows, I personally do not see a crash looming — more likely, we will experience the elusive soft landing.
Mitch Roschelle is the founding partner of Macro Trends Advisors LLC, a real estate investment and macro market strategy firm. Additionally, Mitch is an adjunct faculty member at University of San Diego’s Burnham-Moores Center for Real Estate.
The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.

Readers Pass – Johnson – Is The U.S. Headed For A Recession in 2022_ Here’s What The Experts Say_2216x9

Rising Mortgage Rates, Inflation, Put The Brakes On Housing Market

Federal Reserve

Housing

Inflation

Readers Pass

The most common origins of homebuyers moving to cities in <a href="http://dailywire.com/topic/florida">Florida</a> are residents of <a href="http://dailywire.com/topic/chicago">Chicago</a> and <a href="http://dailywire.com/topic/new-york-city">New York City</a>, according to a <a href="https://www.redfin.com/news/q2-2022-housing-migration-trends/">report</a> released last week by Redfin.
The real estate brokerage firm indicated that two Florida cities — <a href="http://dailywire.com/topic/miami">Miami</a> and Tampa — witnessed the highest net inflow of homebuyers in the second quarter of this year, followed by Phoenix, Arizona; Sacramento, California; and Las Vegas, Nevada. Other Florida cities, such as Cape Coral and North Port, are also experiencing surges in net migration.
“Tampa is still attracting a lot of out-of-state homebuyers, coming from places like New York, who can get more for their money in Florida,” Eric Auciello, a Redfin manager in Tampa, explained in the report. “The spike in mortgage rates has priced some buyers out of the market, but it has also helped ease competition and curb bidding wars between locals and out of towners.”
Florida saw the nation’s largest net domestic migration between July 2020 and July 2021, with more than 220,000 people moving to the state, according to the U.S. <a href="https://www.census.gov/newsroom/press-releases/2021/2021-population-estimates.html">Census Bureau</a>. Florida was followed by Texas and Arizona, while New York, California, and Illinois led the nation in terms of numeric decline.
According to Redfin, higher living expenses and surging real estate prices are significant factors behind Americans’ decisions to leave large metropolitan areas. While the typical home price in places such as San Francisco and San Jose is now more than $1.5 million, even as <a href="https://www.dailywire.com/news/home-prices-mortgage-rates-expected-to-stay-elevated-through-next-year">mortgage rates</a> surge above 5%, trends such as flexible remote work are driving urban residents to find more affordable cities.
Quality of life is also a salient factor behind Americans’ relocation decisions. In New York City, monthly <a href="https://www.dailywire.com/news/bank-of-america-warns-employees-to-dress-down-avoid-rise-in-new-york-city-assaults">felony assaults</a> had risen 15% year-over-year by the end of 2021, while homicides had increased by 42% over two years. Meanwhile, Chicago recorded <a href="https://www.dailywire.com/news/lightfoots-chicago-records-797-homicides-in-2021-most-among-u-s-cities">797 homicides</a> in 2021 — the highest of any other U.S. city.
Indeed, several multibillion-dollar businesses — including hedge fund Citadel, construction machinery maker Caterpillar, and airplane manufacturer Boeing — are respectively <a href="https://www.dailywire.com/news/illinois-governor-takes-parting-shot-at-states-richest-man-for-moving-to-florida">moving from the Chicago area</a> to Miami, Florida; Irving, Texas; and Arlington, Virginia.
“If people aren’t safe here, they’re not going to live here,” Ken Griffin, the founder of Citadel and formerly the richest man in Illinois, <a href="https://www.dailywire.com/news/wealthiest-man-in-illinois-moves-his-business-from-chicago-to-miami-amid-feud-with-democratic-leadership">remarked</a> earlier this year. “I’ve had multiple colleagues mugged at gunpoint. I’ve had a colleague stabbed on the way to work. Countless issues of burglary. I mean, that’s a really difficult backdrop with which to draw talent to your city from.”
&nbsp;

Ron DeSantis

New York, Chicago Residents Lead Nation In Moving To Florida

New Florida Residents Most Likely From New York City, Chicago 

Chicago

Florida

Miami

New York City

The <a href="http://dailywire.com/topic/housing">housing market</a> is expected to cool as demand moderates, according to a Wednesday report from government-backed mortgage enterprise Freddie Mac.
The company’s most recent <a href="https://www.freddiemac.com/research/forecast/20220720-quarterly-forecast-market-slowdown-will-continue-high-rates-and-prices-exacerbate">Quarterly Forecast</a> predicts that 30-year fixed-rate mortgages will average 5.0% in 2022 and 5.1% in 2023, while total home sales will slow from 6 million to 5.4 million.
“The Federal Reserve’s action to help manage inflation has created significant volatility in mortgage rates and, by extension, the housing market,” Freddie Mac Chief Economist Sam Khater said in a <a href="https://freddiemac.gcs-web.com/news-releases/news-release-details/freddie-mac-market-slowdown-will-continue-high-rates-and-prices?_ga=2.144200565.1999635517.1658409327-1899122076.1653489074">press release</a>. “Although house price appreciation will grow at a more moderate rate, home prices remain high relative to homebuyer incomes. Taken together, these factors are exacerbating affordability challenges and causing a slowdown in the housing market.”
Indeed, Freddie Mac predicts that home prices will grow at 4% in 2023 — a relative slowdown from 17.8% in 2021 and 12.8% in 2022. In the first quarter of 2022, the median sale price of a home in the United States was $428,700, according to <a href="https://fred.stlouisfed.org/series/MSPUS">data</a> from the U.S. Department of Housing and Urban Development, marking a 33% rise from $322,600 in the second quarter of 2020.
“The housing market has gone through booms and busts before,” Heritage Foundation research fellow Joel Griffith told The Daily Wire. “However, home costs now — in terms of inflation-adjusted prices and prices to median household income — are at all-time record highs. With interest rates more than doubling this past year, mortgage payments on a typical home have gone up more than 50% in many parts of the nation.”
Indeed, the 30-year fixed-rate mortgage began <a href="https://www.dailywire.com/news/pending-home-sales-unexpectedly-surge-even-as-mortgage-rates-near-6">climbing</a> at the beginning of 2022, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US">data</a> from Freddie Mac. Beginning at slightly over 3% in January, mortgage rates neared 6% in June and moderated to 5.5% as of Thursday.
Griffith pointed to monetary stimulus from the Federal Reserve as a driver behind housing market disruptions. In response to COVID and the lockdown-induced recession, the central bank lowered interest rate targets and ramped up its purchase of <a href="https://www.dailywire.com/news/watch-powell-admits-that-fed-policies-are-behind-high-home-prices">mortgage-backed securities</a>, leading to a decline in mortgage costs even as home prices continued to rise.
“The current plunge in home affordability is largely the result of continued heavy government subsidies of the housing market — thanks to mortgage giants Fannie Mae and Freddie Mac — combined with trillions of dollars of mortgage-backed securities purchased by the Federal Reserve,” Griffith continued. “To restore housing affordability, the government and central bank footprints must be diminished and regulations for new housing supply diminished. Otherwise, expect home prices to remain out of reach for far too many families.”
On the supply side, construction of new long-term housing had <a href="https://www.dailywire.com/news/is-the-housing-market-about-to-crash">already been slowing</a> over the past several decades — resulting in 6 million too few homes on the market. As costs for lumber, steel, copper, and other raw materials began to rise amid pervasive supply chain issues induced by global lockdowns, labor shortages diminished the number of builders and contractors available to work on housing projects.
“Housing inventory has rebounded somewhat from the lows earlier this year. However, future inventory will depend on housing permits being granted on the local level, borrowers retaining access to credit, and prices becoming more affordable,” Griffith remarked. “Affordability works two ways: enabling new buyers to enter the market and making it possible for sellers to purchase a new home — often larger — at a reasonable price.”

Suburban homes photo

Home Prices, Mortgage Rates Expected To Stay Elevated Through Next Year

Housing Demand Expected To Cool As Mortgage Rates Soar And Rents Rise

Economy

The asking price for Rush Limbaugh&#8217;s former <a href="https://www.dailywire.com/topic/florida">Palm Beach</a> home is reportedly starting at a whopping $150 million.
Limbaugh, the legendary <a href="https://www.dailywire.com/topic/conservatism">conservative</a> radio host, passed away on February 17, 2021. His <a href="https://www.dailywire.com/topic/housing">waterfront home</a> in the wealthy Florida county is now owned by a trust connected with his widow, Kathryn Adams Limbaugh.
The Wall Street Journal <a href="https://www.wsj.com/articles/rush-limbaughs-palm-beach-home-aims-to-sell-for-150-million-to-175-million-11657812955">reported</a> Thursday that Limbaugh purchased the home in 1998 for $3.9 million. Now, according to the paper, the home could sell for as high as $175 million, which would be one of the highest home sales ever in Palm Beach.
“The Rush Limbaugh Show” was first nationally syndicated on the radio in 1988. It spent 33 years on the air and grew into a nationally syndicated show on more than 600 stations, tallying nearly 27 million weekly listeners. He also published multiple best-selling books.
Limbaugh&#8217;s widow announced his death in 2021 by thanking his fans and expressing his gratitude for America via Facebook.
“We, the Limbaugh family, are deeply saddened to announce that our beloved Rush has died,” Adams Limbaugh <a href="https://www.dailywire.com/news/rush-limbaughs-death-certificate-says-greatest-radio-host-of-all-time">said</a> in a statement at the time. “Rush Hudson Limbaugh III will forever be the greatest of all time, a courageous, brilliant gentle giant and radio pioneer. Our entire family is so thankful to everyone who prayed and cared for Rush, especially the audience he adored. Rush’s love for our country, and for all of you, will live on eternally.”
During the 2020 State of the Union, then President Donald J. Trump <a href="https://www.dailywire.com/news/rush-limbaugh-a-look-back-at-the-man-who-became-the-voice-of-conservatism">awarded</a> Limbaugh the Presidential Medal of Freedom shortly after Limbaugh announced that he had lung cancer.
“Almost every American family knows the pain when a loved one is diagnosed with a serious illness,” Trump said during the speech. “Here tonight is a special man, beloved by millions of Americans who just received a Stage 4 advanced cancer diagnosis. This is not good news, but what is good news is that he is the greatest fighter and winner that you will ever meet. Rush Limbaugh, thank you for your decades of tireless devotion to our country.”
“Rush, in recognition of all that you have done for our nation, the millions of people a day that you speak to and that you inspire, and all of the incredible work that you have done for charity, I am proud to announce tonight that you will be receiving our country’s highest civilian honor, the Presidential Medal of Freedom,” Trump continued. “I will now ask the first lady of the United States to present you with the honor.”
In 2009, Limbaugh gave one of his most famous speeches ever in defense of conservative principles at the Conservative Political Action Conference in Washington, D.C.
“We love people,” he explained. “When we look out over the United States of America, when we are anywhere, when we see a group of people, such as this or anywhere, we see Americans. We see human beings. We don’t see groups. We don’t see victims. We don’t see people we want to exploit. What we see — what we see is potential. We do not look out across the country and see the average American, the person that makes this country work. We do not see that person with contempt. We don’t think that person doesn’t have what it takes. We believe that person can be the best he or she wants to be if certain things are just removed from their path like onerous taxes, regulations, and too much government.&#8221;
The Wall Street Journal <a href="https://www.wsj.com/articles/rush-limbaughs-palm-beach-home-aims-to-sell-for-150-million-to-175-million-11657812955">added</a> that the main house on Limbaugh&#8217;s Palm Beach property is roughly 24,000 square feet and was mostly decorated by the late radio host himself.

Rush Limbaugh

Rush Limbaugh’s Palm Beach Home Starting At $150 Million Asking Price

Rush Limbaugh's Palm Beach Home Starting At $150 Million Asking Price

conservative

Average rent in the <a href="http://dailywire.com/topic/new-york-city">New York City</a> borough of Manhattan surpassed $5,000 in the month of June, according to a recent <a href="https://millersamuel.com/files/2022/07/Rental-06_2022.pdf">report</a> from <a href="https://www.dailywire.com/topic/real-estate">real estate</a> appraisal firm Miller Samuel.
As vacancy rates remained under 2%, average rent in Manhattan reached $5,058 — a 1.7% surge since May and a 29% increase year-over-year — while the average rental price per square foot hit $82.18.
“The rental market continued to show robust conditions, with prices rising to new records as the market share of landlord concession continued to fall,” the report said.
The median rental price of a Manhattan studio apartment has increased 16.7% year-over-year to $2,900, and the median price of a one-bedroom rose 21.2% to $4,000 over the same period. Manhattan’s average weekly wage of $3,967 as of early 2021 was the highest in the country and more than triple the national average of $1,289, according to the U.S. <a href="https://www.bls.gov/regions/new-york-new-jersey/news-release/countyemploymentandwages_newyorkcity.htm">Bureau of Labor Statistics</a>.
Miller Samuel CEO and Columbia University professor Jonathan Miller told The Daily Wire that “inbound demand” is a key driver of the soaring rental prices.
“Office towers are 60% empty, yet rents are going to new highs. Remote has disrupted the tether between work and home,” he explained. “People are going to urban markets for reasons beyond work, countering the false narrative of ‘cities are dead’ that was the story during the early days of the pandemic.”
Manhattan is the economic center of New York City and home to Wall Street, the United Nations headquarters, and other important institutions. In Brooklyn — where weekly wages average $1,014 — average rental prices have increased 20% year-over-year to $3,822.
Beyond New York City, home sales are falling as the median national home sale price <a href="https://www.nar.realtor/newsroom/existing-home-sales-fell-3-4-in-may-median-sales-price-surpasses-400000-for-the-first-time">surpasses</a> $400,000 for the first time. The 30-year fixed rate mortgage began <a href="https://www.dailywire.com/news/pending-home-sales-unexpectedly-surge-even-as-mortgage-rates-near-6">climbing</a> at the beginning of 2022, according to data from government-backed mortgage company <a href="https://fred.stlouisfed.org/series/MORTGAGE30US">Freddie Mac</a>. Beginning at slightly over 3% in January, mortgage rates neared 6% in June and moderated to roughly 5.5% as of Thursday.
“The spike in mortgage rates has increased rents because the rental market was already tight from a strong economy, and conservative mortgage underwriting is pushing would-be buyers into the rental market more quickly,” Miller added. “Peak rental season doesn&#8217;t hit until the end of the summer, so there are likely more increases ahead.”
The rise in mortgage rates occurs as the Federal Reserve tapers its aggressive monetary stimulus. In response to COVID and the lockdown-induced recession, the central bank ramped up its purchase of <a href="https://www.dailywire.com/news/watch-powell-admits-that-fed-policies-are-behind-high-home-prices">mortgage-backed securities</a>, leading to a decline in mortgage costs.
In addition to jettisoning the securities from the Fed’s balance sheet, policymakers are <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">hiking interest rates</a> — most recently, by a 0.75% increment in June that represented the boldest action to combat inflation in nearly three decades. After news that the Consumer Price Index (CPI) <a href="https://www.dailywire.com/news/inflation-soars-to-new-high-of-9-1">rose</a> 9.1% between June 2021 and June 2022, two members of the Federal Open Market Committee — which determines the central bank’s policy decisions — <a href="https://www.dailywire.com/news/federal-reserve-officials-nod-toward-massive-interest-rate-hike-after-bad-inflation-news">indicated</a> that they would be open to another round of large rate hikes.
“If that data come in materially stronger than expected it would make me lean towards a larger hike at the July meeting to the extent it shows demand is not slowing down fast enough to get inflation down,” Federal Reserve Board Governor Christopher Waller said on Thursday. Meanwhile, Federal Reserve Bank of St. Louis President James Bullard told reporters that “it would make a lot of sense” to choose a 0.75% rate hike such that rates increase to around 3.5% by the end of this year.

Average Manhattan Rent Surges Past $5,000 Per Month

Manhattan Sees Average Monthly Rent Surpass $5,000 Per Month

Interest Rates

Pending <a href="http://dailywire.com/topic/housing">home sales</a> inched higher last month despite seeing declines for most of the past year.
The National Association of Realtors’ Pending Home Sales Index rose 0.7% in May — even as transactions fell year-over-year by 13.6%.
&#8220;Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,&#8221; NAR Chief Economist Lawrence Yun said in a <a href="https://www.nar.realtor/newsroom/pending-home-sales-edge-higher-0-7-in-may">press release</a>. &#8220;Contract signings are down sizably from a year ago because of much higher mortgage rates.&#8221;
Indeed, the 30-year fixed rate mortgage <a href="https://www.dailywire.com/news/mortgage-rates-hit-highest-level-in-over-a-decade">began climbing</a> precipitously at the beginning of 2022, according to data from government-backed mortgage company <a href="https://fred.stlouisfed.org/series/MORTGAGE30US">Freddie Mac</a>. Beginning at slightly over 3% in January, the mortgage rate surpassed 5.75% earlier in June.
The rise in mortgage rates corresponds with the Federal Reserve <a href="https://www.axios.com/2022/05/18/fed-mortgage-portfolio">tapering</a> its aggressive monetary stimulus. In response to COVID-19 and the lockdown-induced <a href="http://dailywire.com/topic/recession">recession</a>, the central bank ramped up its purchase of <a href="https://www.dailywire.com/news/watch-powell-admits-that-fed-policies-are-behind-high-home-prices">mortgage-backed securities</a>, leading to a decline in mortgage costs. In addition to discharging the securities, monetary policymakers are <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">hiking interest rates</a> — most recently, by a 0.75% increment that represented the boldest move to combat <a href="http://dailywire.com/topic/inflation">inflation</a> in nearly three decades.
Monthly mortgage payments for the median single-family home have increased by $800 since the beginning of the year, according to the National Association of Realtors. The organization noted that the housing market differs in various regions of the United States. While the West — where real estate is the priciest — saw the largest drop in contract activity, the Northeast and South saw increases. All four regions saw year-over-year decreases in pending sales.
Existing home sales fell by 3.4% in May, according to more National Association of Realtors <a href="https://www.nar.realtor/newsroom/existing-home-sales-fell-3-4-in-may-median-sales-price-surpasses-400000-for-the-first-time">data</a>, even as the median national sale price surpassed $400,000 for the first time.
Among other factors, high prices are driven by persistent mismatches between the supply and demand for new homes. As of last summer, the United States had an <a href="https://www.nar.realtor/newsroom/once-in-a-generation-response-needed-to-address-housing-supply-crisis">underbuilding gap</a> of 5.5 million to 6.8 million units.
&#8220;There is a strong desire for homeownership across this country, but the lack of supply is preventing too many Americans from achieving that dream,&#8221; Yun said at the time. &#8220;It&#8217;s clear from the findings of this report and from the conditions we&#8217;ve observed in the market over the past few years that we&#8217;ll need to do something dramatic to close this gap.&#8221;
Even amid the long-term shortages, analysts from the Federal Reserve Bank of Dallas <a href="https://www.dailywire.com/news/unhinged-and-abnormal-fed-warns-of-housing-bubble-as-average-cost-of-new-homes-hits-record-high">forecasted</a> a housing bubble due to “market exuberance” that is “unhinged from fundamentals” — a warning that has not been issued since the housing market crash of 2008.
“An asset — in this case, housing — is in the primary expansionary phase of a bubble when price rises are out of step with market fundamentals,” they wrote. “Rapid real house-price appreciation, such as that observed now, does not in itself signal a bubble… But real house prices can diverge from market fundamentals when there is widespread belief that today’s robust price increases will continue. If many buyers share this belief, purchases arising from a ‘fear of missing out’ can drive up prices and heighten expectations of strong house-price gains.”

Aerial photography of suburbs, NY

Pending Home Sales Unexpectedly Surge Even As Mortgage Rates Near 6%

Pending Home Sales Witness Small Surprise Uptick In May

Sentiment among home builders is <a href="http://dailywire.com/topic/recession">plummeting</a> as Americans’ <a href="http://dailywire.com/topic/economy">demand</a> for <a href="http://dailywire.com/topic/housing">properties</a> begins to slow, according to a Wednesday report.
The National Association of Home Builders and Wells Fargo’s <a href="https://eyeonhousing.org/2022/06/ongoing-decline-for-builder-confidence-signals-slowing-economic-growth/?_ga=2.124207754.1482003734.1655389989-132539847.1655389989">Housing Market Index</a> fell by two points to 67 in June, reaching its lowest level since June 2020 in its sixth consecutive month of declines. A value over 50 indicates that more builders see conditions as good rather than bad.
The drop in optimism reflects high inflation and lackluster economic activity. Material costs for residential construction are 19% greater year-over-year, while <a href="https://www.dailywire.com/news/mortgage-rates-soar-to-highest-level-since-2008">mortgage rates</a> are soaring to their highest levels since 2008 — excluding many potential home buyers from the market. As a result, total housing starts declined over 14% in May, with single-family home starts falling over 9%, according to data from the <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf">U.S. Census Bureau</a>.
Heritage Foundation research fellow Joel Griffith told The Daily Wire that although “backlogs in delivery, labor shortages, and surging input costs” are headaches for home builders, plummeting demand due to “broader macroeconomic problems” means that “builders are having difficulty unloading completed homes.”
Government-backed mortgage company <a href="https://www.freddiemac.com/pmms">Freddie Mac</a> announced on Thursday that the benchmark 30-year fixed-rate mortgage has surged to 5.78% — gaining 0.55% in a single week and marking the largest such increase since 1987. Through most of the past two years, rates have been below 3%, yet began their climb to nearly 6% in early 2022.
“A mortgage payment on a typical home with 20% down payment jumped from $1,500 to $2,355 — a stunning 57% rise in monthly payments,” Griffith remarked. “During this time, many families experience a loss of close to $2,600 annually in inflation-adjusted income. With the equities indexes officially in a bear market — a more than 20% decline across the board — families are finding that down payment resources are dwindling as well.”
Indeed, following news that the Consumer Price Index (CPI) <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">rose 8.6%</a> between May 2021 and May 2022, stock exchanges officially entered <a href="https://www.dailywire.com/news/bloodbath-on-wall-street-as-stock-market-plunges-into-bear-territory">bear market territory</a>. The Dow Jones Industrial Average <a href="https://www.dailywire.com/news/dow-plummets-below-30000-down-almost-20-this-year-under-biden">fell below 30,000</a> on Thursday for the first time since January 2021 amid an aggressive <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">interest rate hike</a> from the Federal Reserve meant to combat inflation.
Optimism among home builders remains highest in the South, which scored a three-month moving average of 78 on the Housing Market Index. The West — which is home to some of the <a href="https://www.dailywire.com/news/california-cities-see-top-rental-costs">most expensive real estate</a> in the nation — saw the most severe decline of any region, falling nine points to a value of 74.
Purchase activity for luxury homes, defined as the top 5% of the market, is <a href="https://www.dailywire.com/news/housing-prices-are-now-becoming-too-high-even-for-the-wealthy">quickly declining</a>. Sales fell 18% from February to April 2022 compared to the same period last year, according to a report from Redfin obtained by The Wall Street Journal.
Between the second quarter of 2020 and the first quarter of 2022, the median home sales price has increased from $322,600 to $428,700 — a 33% rise in less than two years, according to the <a href="https://fred.stlouisfed.org/series/MSPUS">U.S. Census Bureau</a>.
Griffith told The Daily Wire that a return to more affordability requires the federal government to “reduce its subsidies of the housing market” through the government-sponsored enterprises like Freddie Mac and Fannie Mae. Meanwhile, the Federal Reserve must “cease purchasing mortgage-backed securities” — a decision that Fed Chair Jerome Powell <a href="https://www.dailywire.com/news/watch-powell-admits-that-fed-policies-are-behind-high-home-prices">acknowledged</a> last year as a factor behind soaring home prices. Griffith also said that governments worldwide must “stop COVID-related interference with supply chains.”

Row of houses with garbage and recycling bins on roadside

Home Builders Have Trouble Selling Properties As Mortgage Rates Rise, Prices Stay Elevated

Home Builders Sentiment Plummets To Levels Seen In June 2020

Recession

Supply Chain

As the United States <a href="http://dailywire.com/topic/economy">economy</a> continues to show signs of a looming <a href="https://www.dailywire.com/topic/recession">recession</a>, the middle and lower classes are by no means the only groups struggling.
CNBC and Spectrem Group’s most recent <a href="https://www.cnbc.com/2022/06/16/millennial-millionaires-are-delaying-home-car-purchases-due-to-inflation-.html">Millionaire Survey</a> — which polls people with $1 million or more in investable assets — revealed on Thursday that 39% of millionaires under 40 years old aren&#8217;t eating out as often because of <a href="http://dailywire.com/topic/inflation">inflation</a>. Meanwhile, 36% have cut back on vacations, and 22% aren&#8217;t driving as much.
“The millennial millionaires are clearly dealing with something they’ve never experienced,” Spectrem Group President George Welper told CNBC. “As a result, they are changing their behaviors and spending plans.”
The survey comes as the Consumer Price Index (CPI) increased <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">8.6%</a> year-over-year as of May, meaning that inflation hit a fresh four-decade inflation high. Though inflation <a href="https://www.dailywire.com/news/wharton-economist-warns-that-inflation-is-hitting-poor-americans-the-hardest">especially harms</a> low-income and middle-income households — who spend a higher percentage of their income on day-to-day necessities like groceries, gasoline, and rent — 95% of American voters believe that inflation is a “somewhat serious” or “very serious” issue, according to a recent Harvard/Harris <a href="https://www.dailywire.com/news/poll-95-of-voters-say-inflation-is-somewhat-or-very-serious">poll</a>.
Another concern for respondents was the housing market, with 44% of millionaires under 40 saying: “Higher interest rates have caused them to delay purchasing a home.” However, only 6% of millionaire baby boomers between 57 and 75 said the same.
Indeed, <a href="https://www.dailywire.com/news/mortgage-rates-soar-to-highest-level-since-2008">mortgage rates</a> are soaring to their highest levels since 2008, according to a Tuesday report from the Mortgage Bankers Association, which revealed that rates increased for all loan types — including a jump to 5.65% for the benchmark 30-year fixed rate. Through most of the past two years, rates have been below 3% and began their climb to well over 5% in early 2022.
Interest in luxury homes, defined as the top 5% of the market, is <a href="https://www.dailywire.com/news/housing-prices-are-now-becoming-too-high-even-for-the-wealthy">quickly declining</a>. Sales fell 18% from February to April 2022 compared to the same period last year, according to a report from Redfin obtained by The Wall Street Journal. A <a href="https://www.dailywire.com/news/bloodbath-on-wall-street-as-stock-market-plunges-into-bear-territory">plummeting stock market</a> is likely worsening hesitation among luxury buyers — perhaps pushing them to lower their standards and compete with prospective middle-class homeowners.
There are substantial generational gaps in terms of economic prognoses. While 90% of younger millionaires are “confident” or “somewhat confident” in the Federal Reserve’s ability to manage inflation, 38% of millionaire baby boomers are “not at all confident.”
Research shows that past experiences with high inflation make one warier of current price level increases. Unpredictable prices marked the 1960s and 1970s as the Federal Reserve failed to enforce a consistent monetary policy regime. According to a 2021 <a href="https://www.sciencedirect.com/science/article/abs/pii/S0304393220300490">paper</a> from the University of Chicago and University of California-Berkeley researchers, the effect of having lived through past inflationary periods can even be seen among members of the Federal Open Market Committee, which handles the Federal Reserve’s monetary policy interventions.
The Dow Jones Industrial Average fell below 30,000 for the first time since late 2020 amid the Federal Reserve’s actions to tighten its monetary stimulus. Earlier this week, the central bank announced that it would <a href="https://www.dailywire.com/news/federal-reserve-takes-most-aggressive-action-to-fight-inflation-in-three-decades">hike interest rates</a> by 0.75% in its boldest policy action since 1994. The move follows a <a href="https://www.dailywire.com/news/the-fed-jacks-key-rate-up-half-point-as-inflation-surges">rate hike</a> of 0.5% in May — the largest such increase since 2000 — and another 0.25% rate hike from near-zero levels in March.

Houses along suburban street and overcast sky

Even Millionaires Cut Back On Buying Homes, Restaurant Food, Gas Thanks To Surging Inflation

Millionaires Reveal Pessimism Amid Poor Inflation News

The 30-year fixed <a href="http://dailywire.com/topic/housing">mortgage rate</a> hit its highest <a href="http://dailywire.com/topic/economy">level</a> since 2008, according to a Tuesday <a href="https://www.mba.org/news-and-research/newsroom/news/2022/06/15/mortgage-applications-increase-in-latest-mba-weekly-survey">report</a> from the Mortgage Bankers Association (MBA).
The group’s Weekly Mortgage Applications Survey — which covers 75% of American retail residential mortgage applications — discovered that rates increased for all loan types, including a jump to 5.65% for the benchmark 30-year fixed rate.
“Mortgage rates followed Treasury yields up in response to higher-than-expected inflation and anticipation that the Federal Reserve will need to raise rates at a faster pace,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said regarding the report.
Mortgage rates were below 3% for most of the past two years amid aggressive monetary stimulus from the <a href="http://dailywire.com/topic/federal-reserve">Federal Reserve</a>. Since the beginning of the year, rates surged from just over 3% to well over 5% earlier this month, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US">data</a> from government-backed mortgage company Freddie Mac.
The Consumer Price Index (CPI) increased <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">8.6%</a> year-over-year as of May, while the Producer Price Index (PPI) — which monitors inflation for wholesalers — increased <a href="https://www.dailywire.com/news/inflation-for-businesses-continues-at-double-digit-pace">10.8%</a> over the same period, according to the U.S. Bureau of Labor Statistics. As Kan mentioned, the Federal Reserve is currently <a href="https://www.cnbc.com/2022/06/13/fed-reportedly-may-hike-rates-by-three-quarters-of-a-point-this-week.html">weighing</a> a 0.75% interest rate hike, after <a href="https://www.dailywire.com/news/the-fed-jacks-key-rate-up-half-point-as-inflation-surges">increasing rates</a> by 0.5% last month and 0.25% three months ago.
The MBA survey also found that refinancing activity plummeted 76% from one year ago. Indeed, real estate firms Redfin and Compass announced respective 8% and 10% <a href="https://www.cnbc.com/2022/06/14/real-estate-firms-compass-and-redfin-announce-layoffs-as-housing-market-slows.html">cuts</a> to their workforces as <a href="https://www.dailywire.com/news/the-housing-market-reaches-an-affordability-turning-point">mortgage activity declines and home sales slow</a>. Indeed, purchase applications declined more than 15% compared to last year as “ongoing inventory shortages and affordability challenges have cooled demand, coinciding with the rapid jump in mortgage rates,” according to Kan.
“The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006,” Freddie Mac Deputy Chief Economist Len Kiefer <a href="https://www.dailywire.com/news/some-relief-possible-for-home-buyers-as-housing-market-poised-for-most-significant-contraction-since-2006">argued</a> earlier this week. “Mortgage applications are pointing to a large decline over summer.”
Even for luxury homes — defined as the top 5% of the market — sales fell 18% from February to April 2022 compared to the same period last year, according to a report from Redfin obtained by <a href="https://www.wsj.com/articles/even-deep-pocketed-buyers-are-starting-to-back-away-from-the-u-s-housing-market-11654806570?mod=hp_featst_pos3">The Wall Street Journal</a>. A <a href="https://www.dailywire.com/news/bloodbath-on-wall-street-as-stock-market-plunges-into-bear-territory">plummeting stock market</a> is likely worsening hesitation among luxury buyers. Other factors — including the <a href="https://www.dailywire.com/news/housing-prices-continue-to-soar-amid-supply-chain-inventory-crisis">supply chain bottlenecks</a> and <a href="https://www.dailywire.com/news/america-is-short-one-million-construction-workers">labor market shortages</a> that are applying upward pressure to overall inflation rates — continue to challenge the broader housing market.
There are also mismatches between supply and demand that continue to plague the sector. Construction of new homes has <a href="https://www.housingwire.com/articles/us-housing-market-is-short-5-5-million-homes-nar-says/">already been slowing</a> over the past several decades — resulting in 6 million too few properties on the market. As The Daily Wire’s Cabot Phillips <a href="https://www.dailywire.com/news/unhinged-and-abnormal-fed-warns-of-housing-bubble-as-average-cost-of-new-homes-hits-record-high">explained</a> earlier this year on “<a href="https://www.dailywire.com/podcasts/morning-wire">Morning Wire</a>,” many experts believe that “until the supply of houses meets the overwhelming demand that we’re seeing right now, prices will continue to rise.”
The problem worsened during COVID-19 and the lockdown-induced recession. “New construction projects were halted across the board, and that means the number of houses now up for sale is far lower than usual,” Phillips explained. “And unfortunately on that front, it will likely take years for new home construction to once again meet demand.”

Mortgage Rates Soar To Highest Level Since 2008

Mortgage Rates Hit Highest Level Since 2008 Amid High Inflation

The <a href="https://www.dailywire.com/topic/housing">housing market</a> is poised for its “most significant contraction” since 2006 as declining purchase activity makes “some relief” in <a href="http://dailywire.com/topic/inflation">prices</a> possible, according to top <a href="http://dailywire.com/topic/economy">economists</a> from government-backed mortgage company Freddie Mac.
Sharing <a href="https://twitter.com/lenkiefer/status/1534866789582217217">data</a> from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey, Freddie Mac Deputy Chief Economist Len Kiefer observed that mortgage applications had declined 40% from their seasonally adjusted peak. “The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006,” he argued. “Mortgage applications are pointing to a large decline over summer.”
Likewise, for luxury homes — the top 5% of the market — sales fell 18% from February to April 2022 compared to the same period last year, according to a report from real estate brokerage Redfin obtained by <a href="https://www.wsj.com/articles/even-deep-pocketed-buyers-are-starting-to-back-away-from-the-u-s-housing-market-11654806570?mod=hp_featst_pos3">The Wall Street Journal</a>. A <a href="https://www.dailywire.com/news/bloodbath-on-wall-street-as-stock-market-plunges-into-bear-territory">plummeting stock market</a> is likely contributing to hesitation among luxury buyers.
Persistent economic woes — such as the <a href="https://www.dailywire.com/news/housing-prices-continue-to-soar-amid-supply-chain-inventory-crisis">supply chain bottlenecks</a> and <a href="https://www.dailywire.com/news/america-is-short-one-million-construction-workers">labor market shortages</a> that are worsening <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">overall inflation rates</a> — are also giving consumers pause and directly impacting the housing market.
Kiefer also <a href="https://twitter.com/lenkiefer/status/1536381732995444743">noted</a> that “periods of rapid increases in interest rates are typically associated with contractions in home sales” due to the rising cost of borrowing funds implied by high interest rates. Indeed, the 30-year fixed-rate mortgage has surged from roughly 3% at the beginning of the year to 5.2% as of June 9, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US">data</a> from Freddie Mac.
“After little movement the last few weeks, mortgage rates rose again on the back of increased economic activity and incoming inflation data,” Freddie Mac Chief Economist Sam Khater remarked in a <a href="https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-increase-2?_ga=2.259873994.1136838410.1655228411-1899122076.1653489074">press release</a>. “The housing market is incredibly rate-sensitive, so as mortgage rates increase suddenly, demand again is pulling back. The material decline in purchase activity, combined with the rising supply of homes for sale, will cause a deceleration in price growth to more normal levels, providing some relief for buyers still interested in purchasing a home.”
Between quarter two of 2020 and quarter one of 2022, the median home sales price has increased from $322,600 to $428,700 — a 33% increase in less than two years, according to the U.S. Census Bureau <a href="https://fred.stlouisfed.org/series/MSPUS">data</a>.
Despite the elevated prices and declining purchase activity, most economists do not believe that the United States is presently experiencing a housing bubble, according to a recent <a href="https://www.zillow.com/research/zhpe-q2-2022-not-a-bubble-31093/">survey</a> from Zillow. The 60% of respondents who denied bubble conditions pointed to rationales such as scarce inventory, low credit risk, and other factors divorced from speculative behavior.
Earlier this year, however, analysts from the Federal Reserve Bank of Dallas <a href="https://www.dailywire.com/news/unhinged-and-abnormal-fed-warns-of-housing-bubble-as-average-cost-of-new-homes-hits-record-high">forecasted</a> a housing bubble amid “market exuberance” that is “unhinged from fundamentals” — a warning that has not been issued since the housing market crash of 2008.
“An asset — in this case, housing — is in the primary expansionary phase of a bubble when price rises are out of step with market fundamentals,” they wrote. “Rapid real house-price appreciation, such as that observed now, does not in itself signal a bubble… But real house prices can diverge from market fundamentals when there is widespread belief that today’s robust price increases will continue. If many buyers share this belief, purchases arising from a ‘fear of missing out’ can drive up prices and heighten expectations of strong house-price gains.”

‘Some Relief’ Possible For Home Buyers As Housing Market Poised For ‘Most Significant Contraction’ Since 2006

Housing Market Headed Toward 'Most Significant Contraction' Since 2006

The <a href="https://www.dailywire.com/topic/economy">slowdown</a> in <a href="https://www.dailywire.com/topic/housing">home purchases</a> is impacting the luxury market as well.
Since the beginning of 2022, 30-year fixed mortgage rates have <a href="https://fred.stlouisfed.org/series/MORTGAGE30US">surged</a> from slightly over 3% to well over 5% — causing a drop in demand for new purchase loans and refinancing services. Sales of <a href="https://www.dailywire.com/news/the-housing-market-reaches-an-affordability-turning-point">new single-family homes</a> in April fell to 591,000 — falling far short of the 750,000 expected by analysts, as well as 16.6% below home sales in March.
For luxury homes — the top 5% of the market — sales dropped 18% from February to April 2022 in comparison to the same period last year, according to a report from real estate brokerage Redfin obtained by <a href="https://www.wsj.com/articles/even-deep-pocketed-buyers-are-starting-to-back-away-from-the-u-s-housing-market-11654806570?mod=hp_featst_pos3">The Wall Street Journal</a>. Prices, however, still remain elevated.
“Many home seekers are deciding that it’s simply not worth it to purchase a luxury home at a time that both purchasing price and lending costs are so high,” Heritage Foundation research fellow Joel Griffith told The Daily Wire.
Indeed, persistent economic factors — such as the <a href="https://www.dailywire.com/news/housing-prices-continue-to-soar-amid-supply-chain-inventory-crisis">supply chain bottlenecks</a> and <a href="https://www.dailywire.com/news/america-is-short-one-million-construction-workers">labor market shortages</a> that worsen <a href="https://www.dailywire.com/news/inflation-reaches-8-6-setting-new-four-decade-high">overall inflation rates</a> — are giving consumers pause and directly impacting the housing market. A <a href="https://www.dailywire.com/news/stock-market-sees-worst-week-since-january-after-gas-hits-5-inflation-reaches-new-high">plummeting stock market</a> is also producing hesitation among luxury buyers.
“Relative to lower-priced homes, a greater percentage of purchase price is paid for in cash — rather than utilizing a mortgage since the cost often exceeds conforming loan limits,” Griffith continued. “Many purchasers are balking at cashing out of stocks at depressed levels in order to purchase real estate at inflated — possibly bubble — levels.”
Earlier this year, the Federal Reserve Bank of Dallas predicted a <a href="https://www.dailywire.com/news/unhinged-and-abnormal-fed-warns-of-housing-bubble-as-average-cost-of-new-homes-hits-record-high">housing bubble</a> amid a “market exuberance” that is “unhinged from fundamentals” — a warning that has not been issued since the housing market crash of 2008.
Griffith observed that home prices are now growing faster than household income.
“The home price-to-median income ratio stands exceeds 7.2, eclipsing the 7.03 peak in late 2005. Compare that to a ratio of well under 5.0 from 1980 to 2000,” he remarked. “In just 12 months, mortgage payments based on median home prices have increased more than 40% due to the rise in prices combined with a near doubling of mortgage rates. The mortgage payment-to-income ratio hit 34.9% in February — the bleakest affordability levels since 2008.”
More broadly, inflation has led to a precipitous decline in real average hourly earnings — even though unemployment <a href="https://www.dailywire.com/news/new-jobless-claims-hit-highest-rate-since-january">remains low</a> in the United States. Even as wages nominally grew between May 2021 and May 2022, real wages <a href="https://www.bls.gov/news.release/realer.nr0.htm">dropped</a> by 3% due to the faster rate of inflation. For a person earning $50,000 per year, rising price levels have functionally induced a $1,500 annual pay cut.
Wealthy Americans who still want to buy property may lower their gaze on middle-class homes — creating even more pressure on American families.
“As higher-income, wealthier home buyers find themselves deterred from purchasing luxury homes, this may place yet more buying pressure on smaller, more modest homes,” Griffith said. “Middle-class families may find themselves increasingly competing with wealthier families for lower-prices homes.”
Beyond current market conditions, there are mismatches between supply and demand that continue to plague the residential real estate sector. Construction of new long-term housing has <a href="https://www.housingwire.com/articles/us-housing-market-is-short-5-5-million-homes-nar-says/">already been slowing</a> over the past several decades — resulting in about 6 million too few homes on the market.

Ariel Skelley / The Image Bank / Getty Images

Housing Prices Are Now Becoming Too High Even For The Wealthy

Even The Wealthy Are Now Hesitant To Buy Homes

A recent analysis of how much of Americans’ income <a href="https://ktla.com/news/california/heres-how-many-hours-you-need-to-work-to-afford-rent-in-these-california-cities/">they are spending on rent</a> put several California cities at the top of the list.
SmartAsset looked at the country’s 25 biggest cities to figure out the number of hours a person would have to work in order to pay for housing. The group <a href="https://smartasset.com/data-studies/hours-of-work-needed-to-pay-rent-2022">used</a> “average annual take-home pay, average hours worked per year and median monthly rent” to measure the data.
Overall, it found that an average of 56 hours of work were needed in order to pay rent in the 25 largest cities in the United States. Detroit, Michigan, was the only location where one week of full-time work covered a month of an employee’s rent.
The California cities of San Jose, Los Angeles, and San Diego ranked in the top three of how many work hours were needed to cover rent, with San Francisco, California, coming in at fifth place under Boston, Massachusetts.
In San Jose, 77.4 hours of work were necessary to cover the cost of rent where the monthly average cost of rent is $2,232. In Los Angeles, 72.3 hours were needed to cover the average rent of $1,523, whereas San Diego’s rent was higher than Los Angeles — at $1,770 per month — but it took slightly fewer hours to cover at 72.2 hours due to the higher estimated hourly earnings. San Francisco also has a fairly high estimated hourly wage at $31.74, so it would take an employee 63.3 hours to cover the average monthly rent of $2,010.
Rental <a href="https://ktla.com/news/california/san-diego-now-5th-most-expensive-rental-city-in-us-report/">prices in the Golden State</a> have increasingly been an issue. A Zumper <a href="https://www.zumper.com/blog/rental-price-data/">report</a> noted that its National Rent Index surged to an all-time high in May, with the growth of rent in 2022 going faster than in 2021. With the recent spike in interest rates, however, the housing market is starting to cool off, which could impact rent and push down costs.
Not all areas of California were seeing the spike in the May report. The San Francisco Bay region has historically seen some of the priciest rental costs in the nation for most of the twenty-first century, however, the rental market is one of the only places that hasn’t gone back to its pre-pandemic rates — even two years after the COVID-19 pandemic started.
Potential reasons could be the increase in crime and homelessness in the San Francisco area in the last several years. The crime wave was a driving factor in pushing San Francisco DA Chesa Boudin out of office <a href="https://www.dailywire.com/news/san-fran-votes-overwhelmingly-to-oust-woke-soros-prosecutor-from-office-in-major-rejection-of-far-left">in a recall election earlier this week</a>.
“Voters strongly endorsed ousting the reform-minded D.A. as partial returns showed about 60% of voters supporting the recall,” The Wall Street Journal <a href="https://www.wsj.com/articles/san-francisco-district-attorney-chesa-boudin-faces-recall-election-11654603200">reported</a>. Ever since Boudin came into office in January 2020 “burglaries have risen 45%” and “homicides have increased 37%.”

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