Be Well: Assessing the State of the Housing Market

<div class="block">We&#39;re taking a look at the current state of the housing market with Marty Cantor, CPA and economic development consultant, particularly as home construction rates climbed in May. </div>

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Be Well: Assessing the State of the Housing Market With Marty Cantor

Welcome back to be. Well, it is time now for your money with Marty. And we do start with what's really happening right now in the housing market. So home construction surged in May and the prices have picked up even with interest rates being at a 15 year high. Now new construction, it kind of tells us something about where the economy is heading. So it really suggests that things are potentially picking up Marty. Well, you know, we always, we're, we're hoping they pick up but look, this is dragging on uh this, this inflation is uh is gonna be with us until 2024. The housing costs are higher. Construction costs are higher. That that's where the inflation is and housing inflation is that the housing prices are being generated by higher cost. Plus there's a lot, there's still a lot of money out there because they're still selling homes at a higher price because the inventory is low in the cash to buy a house is available that I say is the supply is so tight. So many people when it was, you know, such a better, you know, mortgage rate, they refinance their home and now they don't want to pay that higher rate. Well, the other thing is where do you go, first of all, two things, you know, if I, if you can't go anywhere, uh, to buy, uh, to move because the cost of that, the housing is increased and the cost of the mortgage is increased and you're sitting there with a 3% mortgage or no mortgage whatsoever, then it doesn't make it economically viable for you to move. So, therefore the houses aren't on the market. And that's the only thing that's keeping the prices up, uh, is, is the lack of inventory. You know, we're on Long Island. So it's about 50% below what it was before the pandemic nationally. It's 6% below, you know, housing on the market below what they were. So, yes, it's an inventory problem. It's a higher cost problem, higher interest rate problem and higher construction cost problem or all causing home inflation. And then you have sales that ended up sinking 20.4% compared with the same time, you know, last year in May. Oh, yeah, because, because you have few homes, you have uh uh fewer uh financing uh ability because of higher mortgage rates. Housing uh sales are coming down but there's the anomaly housing sales are coming down but prices are still high. Right. Well, that's what's so weird is when you take a look at the different markets, you know, nationally, you see the sales slump more than 25%. National median home price fell 3%. Yeah. And that's, that's the largest drop since 2008. But remember, 3% all, not that much. When you consider that if you've got a 5 $600,000 home, 3% is not that much. But nonetheless, it's a sign that the housing prices are going down, but it's so difficult to make that call in this inflationary environment because, you know, it's just like the weather, wait till tomorrow, it will change, wait till tomorrow, the data could change and we'll have a whole new view of things. All right. Well, let's talk about millennials. That's America's right now. Largest generation and they're in their late twenties, early thirties, which is really those peak years from moving out and really attempting to purchase a home. Yeah. And, and millennials, the surveys that I've done uh on millennials is that, uh you know, they, they can't find jobs that meet their skill sets or their salary requirements or working in the industries where they want to work. And what that means is that there's less household income to go buy a home. And remember a lot of those have student debt and student debt is about six, about 9% of all debt that we have. So that so uh they, they don't have enough cash to do this. All right, let's talk about remote work. I feel as though, with people ending up doing, whether it's hybrid or whatever the case may be doing days, you know, at home, it changes really the value of your space. Well, yeah, because, uh, and also gives you more cash to put into a house because you're not commuting. I mean, you know, we're finding that mass transit systems have to raise rates because the ridership is down again here in, uh, in the New York area on the major uh commuter rails, they're down, uh they're down 30% from pre pandemic. And so uh unless you cut work for or things like that, they're not going to, you know, make it. But if you don't have to pay it and you're working at home, it makes the value of your home more, more valuable. And if you want to move and you need an office in the home, that's what you're looking for. So now the options for where you want to move or what you want to buy now have to include your home space. But when we talk about that space rent is actually the measure America's price measure uses rent to calculate housing costs. Yeah, and, and, and rent is going up in the New York City in the uh rent Stabilization Board increased uh rentals 2% this year, 3% next year. Uh The counties if they have rent stabilized, apartments are going up 3%. Uh leases are going up. Landlords have to pay their taxes have to pay the higher cost of maintenance. So rents uh are going up now, uh if rents get uncompetitive as compared to buying a home, if your mortgage right is gonna be the same amount of rent, then it makes sense to actually buy. Well, that's what I tell people. If you, if, if your rent will equal your mortgage, then there's no reason not to invest in a home. A home investment is the largest individual investment an individual will make in their life. So yeah, that's something to look at. If you're paying high rent, take a look at the home, uh housing market and the prices in your, in your area because you might, you might find a bargain to be able to move laterally and then make an investment in your home instead of paying rent and giving money to a landlord to help his investment grow. Absolutely. Thank you so much, Marty. I appreciate your time and expertise. Well, what you put your plant in is just as important as the plant itself. The pot and the soil really play these big roles. Meteorologist and garden guru, Alex Calvi shows us which ones are best in this week's garden guide.