FHFA’s purchase-only house price index is soaring at 10.2% YoY, thanks in part to massive money printing by The Federal Reserve (25.4% YoY).
The Biden Administration is already altering the employment landscape by cancelling the Excel Pipeline deal (killing 10,000 jobs) and trying to raise the minimum wage to $15 per hour (that the CBO claims could cause 3.7 million jobs to be lost). Let’s see how Biden and Company regulate their way to economic growth. /sarc
And good luck trying to increase homeownership rates with historic low housing inventory and skyrocketing home prices.
December’s existing home sales numbers are out for December 2020. The numbers are 6.76 million SAAR existing home sales, growing at 0.7% MoM. But on a YoY basis, existing home sales grew at 22.24%.
The troubling chart, and the chart that HUD, Fannie Mae and Freddie Mac should play close attention to, is existing home sales inventory and existing home sales median price. Inventory has plunged to an all-time low while median price fell slightly from its all-time high.
It will be tough for HUD and the GSEs to increase affordable housing (as promised by Biden) with roaring home price growth, a severely limited supply of housing available and low M2 Money Velocity.
How can the Biden administration increase “affordable” housing? Loosening credit standards is the obvious (and economically dangerous) way. Eradicate local zoning (to help relieve the supply constraint)? The Federal Reserve is already printing money at a breakneck pace, but that is helping drive home prices up and not helping low income households.
This comes as the US Congress passes $900-billion COVID-19 stimulus package as part of $2.3-trillion government spending bill. Of course, members of Congress have not read this 5,593-page bill. It’s over 5,000 pages, arrived at 2pm today, and they are told to expect a vote on it in 2 hours (5,593 pages in 2 hours???). This reminds of House Speaker Nancy Pelosi’s infamous press conference where she said that Congress has to pass the Obamacare bill in order to find out what is in it.