The disingenuous reporting of economic and housing data has been extremely common this last year, especially on mainstream media.
Foreclosures are Rising Drastically
You’ve likely seen this on countless headlines and I’m going to be brief here. During the Unicorn Years there was a foreclosure moratorium as part of the CARES Act, making foreclosure illegal under broad circumstances. Naturally, you are going to see a rise in foreclosure activity once that moratorium is over. However, big picture below shows general foreclosure activity is actually trending downward and nowhere near levels of the 2006-2008 real estate bubble.
Consumer Debt is Out of Control
While not directly related to housing, the reporting of record high consumer debt continues to fan fears of economic instability. Mark Zandi, chief economist for Moody’s, provides context here, “Concern that Americans are taking on too much debt, posing a threat to the economy, is misplaced. Total debt is up only 3.5% in the year ending in August according to Moody’s data based on Equifax credit files. And the ratio of debt-to-income is low and stable, as is debt service.” How do we then translate and reconcile with the click bait? The chart below illustrates that yes, consumer debt is at all-time highs, but the more important measure is comparing to population and the percentage of debt to income which brings this all into perspective as quite unalarming.
Last Fake News Headline to DE-Myth: Housing Prices Are Crashing
Admittedly, this one is a bit more difficult to understand primarily due to the wide fluctuations in prices in the last 36 months. Simply put, if we compare pricing now to the height of the highest, wild bidding war sales during the Unicorn Years of 2% mortgage rates then yes, it would appear that prices are reduced and significantly reduced in some cases. We have also seen a confusing mix of competing bids but also price reductions in the 2023 market showing that sellers and their real estate professionals have had a difficult time finding “true market value.” The reconciliation here is not unlike the previous two issues in that the bigger picture and broader data on general market value does show a solid foundation of housing values at this time. Charts show national trends from three sources all agreeing on general trend that markets will end the year not with the wild 2022 predictions of 20, 30, 40% slashes, but most markets, including Flagstaff, will end the year in low single-digit appreciation. FBN
By Chris Hallows
For additional information or to schedule an appointment, visit ChrisHallows.Benchmark.us or call 928-707-8572. The Flagstaff location is 824 W. Rte. 66 Suite A-3. Chris Hallows is the branch manager and senior mortgage advisor of Benchmark Mortgage Flagstaff. NMLS 306345 Ark-La-Tex Financial Services, LLC NMLS 2143 |Equal Housing Lender