The Blubber

Per Bloomberg

The US housing market has reportedly shrunk by a significant 4.9% during the second half of 2022, meaning it dropped by $2.3 trillion in the total value of homes, per Redfin data. During the housing crisis, this drop was just 0.9% shy of its historical 5.8% decline from June to December of 2008.

This came as multiple factors resulted in certain real estate prices dropping significantly. For example, the median US home price was $433,133 in May 2022, but in January, it dropped to just $383,249.

Chen Zhao, the economics research lead of Redfin, shared how the housing market has lost a significant chunk of its value, but homeowners were still benefitting. Compared to February 2020, it was found that home values were still $13 trillion higher.

Zhao: “The housing market has shed some of its value, but most homeowners will still reap big rewards from the pandemic housing boom,”

Certain cities like San Francisco and New York, however, saw the largest declines. Despite the changes, US home prices were still found to be 6.5% higher year-over-year in December 2022.

Other locations saw massive spikes in home prices, including Florida and Miami. The latter, for example, saw its total home values increase by 20% year-over-year to $468.5 billion in December 2022.

A Redfin real estate agent in Palm Beach, Florida, Elena Fleck, shared more about the Florida market, saying it was sustained mostly by people moving from the north and even the West Coast.

Ian Shepherdson, the chief economist at Pantheon Macroeconomics and one of the people who called the housing bubble in 2008, shared how real estate prices could drop by 20% this 2023.

A previous FED study found that remote work played a huge part in the increase in housing prices. It found that every 1% increase in remote work resulted in a 0.9% increase in housing prices.

See flow at unusualwhales.com/flow.

Other News:

• U.S. home prices could fall as much as 20% next year
• FED Study Found 1% Increase in Remote Work Equals 0.9% House Price Increase, Shift Attributed to 60% of the Pandemic Markup

Resources:

Bloomberg

Redfin