Courtesy of Mish.
Bidding Wars Stop
With cash-paying investors on full retreat, existing home sales dropped 1.8% in August, according to the National Association of Realtors.
Lawrence Yun, NAR chief economist says that's a good thing because "first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country.”
While I agree it's a good thing that bidding wars stopped, the fact of the matter is home prices are once again in la-la land, especially for cash-strapped millennials loaded up with student debt, in low-paying jobs.
Pent Up Demand?
Yun states, "As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying.”
There is arguably a pent-up demand for homes by millennials if wages do catch up, but that assumes millennials have the same value-set and attitudes towards debt as their parents.
In reality, median wages have not gone up much but home prices have. More importantly, attitudes of millennials are not the same as that of their boomer parents.
Millennials Leave Their Parents' Basements, But Not For Homes
Fortune reports Millennials Finally Leave Their Parents' Basements.
Jed Kolko, chief economist at Trulia, put together this graph, which shows that Millennials are finally moving out of their parents’ houses, after years of living at home:
