Scribbler Logo

    You have 4 summaries left

    Odd Lots

    Are We About to See the Shortest Housing Cycle Ever?

    Mon Jul 24 2023
    Bank of AmericaParis expansionhousing inventorymortgage marketaffordabilitydemand and supply dynamicsshadow inventory

    Description

    Bank of America's expansion in Paris, housing inventory, mortgage market activity, affordability, demand and supply dynamics, and shadow inventory are discussed in this episode.

    Insights

    Bank of America's Expansion in Paris

    Bank of America expanded operations in Paris to serve European clients seamlessly.

    Mortgage Market and Affordability

    Mortgage rates have a significant impact on demand and affordability is influenced by incomes, rates, and home prices themselves.

    Demand and Supply Dynamics

    Demand is a more potent variable than supply on the upside, but a harder landing could lead to lower prices and increased supply.

    Home Price Appreciation and Other Factors

    Home price appreciation varies in different zip codes due to high demand, low mortgage rates, and tight supply. Institutional investors' impact on home prices has been marginal.

    Shadow Inventory and Housing Activity

    Shadow inventory of foreclosures has decreased, affordability levels have improved slightly, and housing activity is expected to remain relatively flat.

    Chapters

    1. Bank of America's Expansion in Paris
    2. Inventory and Housing Market Activity
    3. Headship Rates and Affordability
    4. Demand, Mortgage Market, and Supply
    5. Home Price Appreciation and Other Factors
    6. Shadow Inventory, Affordability, and Housing Activity
    Summary
    Transcript

    Bank of America's Expansion in Paris

    00:00 - 07:02

    • Bank of America expanded operations in Paris in 2019 following the Brexit vote.
    • The bank wanted to serve its European clients seamlessly and be a one-stop shop for them.
    • House prices experienced a small dip but are now rising again.
    • Unemployment and forced sellers, which are indicators of a housing downturn, are currently lacking in the market.
    • Housing inventory is at record lows due to homeowners not listing their homes for sale.

    Inventory and Housing Market Activity

    06:40 - 13:28

    • Inventory is divided into three categories: existing listings, new home builds, and shadow inventory.
    • Mortgage credit standards have remained tight, reducing the likelihood of substantial defaults and foreclosures.
    • Existing listings still make up the majority of monthly transactions despite being at 40-year lows.
    • Home builders have increased activity despite rising interest rates.
    • New home sales, housing starts, and home builder confidence have been increasing.
    • Single-unit starts now account for a smaller share of housing starts due to multi-unit construction.
    • Household formation and headship rates have increased but are starting to slow down.

    Headship Rates and Affordability

    13:07 - 20:07

    • Headship rates vary by age group, with higher rates in the late 20s to mid-30s.
    • The base case forecast for house prices is a flat 0.0% by the end of the year.
    • Deep-fake videos are causing disinformation overload, but Intel has developed a real-time deepfake detection platform.
    • Improved affordability and other factors like inflation and interest rates could lead to higher home prices.
    • Affordability is influenced by incomes, rates, and home prices themselves.
    • Mortgage rates have a significant impact on demand.

    Demand, Mortgage Market, and Supply

    19:37 - 26:37

    • Demand is a more potent variable than supply on the upside.
    • A harder landing with higher unemployment could lead to lower prices and increased supply.
    • The mortgage market structure has changed since 2008, with more foreclosure mitigation options available.
    • Banking regulations may impact mortgage rates and lending standards.
    • High-income individuals leaving cities during the pandemic contributed to price appreciation.
    • Supply and population migration are important factors for future home prices.

    Home Price Appreciation and Other Factors

    26:18 - 33:46

    • Home price appreciation varies in different zip codes due to high demand, low mortgage rates, and tight supply.
    • Bank of America expanded operations in Paris to serve European clients seamlessly.
    • Intel has developed a real-time deepfake detection platform powered by AI and Xeon processors.
    • The potential decrease in demand for Airbnb rentals may lead some hosts to sell their properties.
    • Institutional investors' impact on home prices has been marginal.
    • Baby boomers own a significant portion of the housing stock.

    Shadow Inventory, Affordability, and Housing Activity

    33:18 - 40:25

    • Shadow inventory of foreclosures has decreased due to older homeowners who have paid off their mortgages.
    • A harder landing in the economy could lead to increased supply as older homeowners start listing their homes.
    • Affordability levels have stopped deteriorating and have even improved slightly.
    • The supply of homes is close to a 40-year low and is no longer setting new historic lows every month.
    • There is not expected to be a substantial increase in supply moving forward.
    • Housing activity, sales, and starts are expected to remain relatively flat with year-over-year growth becoming more attractive in the second half of 2023.
    1