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Lance Lambert

Jun 3 • 11 tweets • 4 min read Twitter logo

The most interesting housing market in America: Austin.

During the '00s housing crash, it took Austin 43 months to fall 8.5% peak-to-trough.

This time around, Austin has fallen 10.02% in just 9 months. fortune.com/2023/06/03/aus…

Among the nation's 400 largest housing markets, 226 just hit (or re hit) their all-time high for home price in April 2023.

Among the other 174 markets, 38% are down by 5.00% or more.

Austin (-10.02%) is down the most.
fortune.com/2023/06/03/aus…

The '00s Sunbelt housing crash had, relatively speaking, one exception: The Lone Star State.

Peak-to-trough, home prices in markets like Austin and Dallas only fell -8.5% and -10.5%, respectively, while house prices tracked by ZHVI fell -63.9% in Las Vegas, -56.4% in Phoenix,… twitter.com/i/web/status/1…

While zealous lenders across the nation were allowing borrowers to take on mortgages without putting much down, Texas stuck with conservative lending practices during the '00s.

According to the Texas A&M Real Estate Center, that helped markets like Austin avoid the worst of the… twitter.com/i/web/status/1…

Texas was slow to allow home-equity lending, and when it did so in '97, it "restricted the total of all mortgage deb from exceeding 80 percent of the home's fair-market value" recenter.tamu.edu/articles/resea…

And while markets like Las Vegas and Phoenix boomed during the '00s, markets like Austin stayed fairly tame.

To some degree, that helped to insulate Austin from the '00s housing crash.

Fast-forward to the pandemic, and Austin was at the epicenter of the boom.

Between March 2020 and July 2022, Austin home prices soared 58.5%.

Keep in mind a normal year, nationally speaking, is +4.6%.

That type of home price appreciation—especially when it's driven by outside money pouring in—puts a strain on fundamentals.

Once mortgage rates spiked in '22, that went from "strain" to "pain" and Austin moved into correction-mode.

Some Austin investors, as the boom went on, were buying properties that weren't cash flowing. That can feed into a correction.

Zoomed out, markets with wide price to rent ratios have seen the sharpest corrections over the past year.
fortune.com/2023/06/03/aus…… twitter.com/i/web/status/1…

While Austin has seen the sharpest pandemic correction, most Austin homeowners are still sitting pretty.

Austin is still up +43% since March 2020.

https://twitter.com/NewsLambert/status/1657082276600070146?s=20

This should say “38” not “38%”

https://twitter.com/newslambert/status/1665057756401786882

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More from @NewsLambert

Lance Lambert

@NewsLambert

Jun 2

The average 30-year fixed mortgage rate heads into the weekend at 6.88%.

Spread: 321 bps

Two things.

1. With the debt ceiling drama over, the spread has come down from last week's peak of 333 bps.

2. We've been over 6.70% mortgage rates* for about 3 full weeks. Like @LoganMohtashami says, duration matters.

*as measured by Mortgage News Daily's average

Read 4 tweets

Lance Lambert

@NewsLambert

Jun 1

Relative to the past decade, 2023 mortgage borrowers are stretching themselves thin.

It's true that mortgage borrowers at large are doing well (see below).

It's also true that spiked mortgage rates (following a historic run up in prices) means some new borrowers are getting stretched.

The key word in the top chart is "relative." I don't have that top chart prior to 2013.

Read 4 tweets

Lance Lambert

@NewsLambert

Jun 1

We've went 9 straight months without setting an all-time high (ATH) for U.S. home prices.

IF seasonally adjusted prices, as measured by Case-Shiller, keep rising at March's pace (+0.42%), we'd set a new ATH once the September 2023 reading publishes.

IF that happened, the streak (of months without an ATH Case-Shiller) would top out at 15 months this cycle.

The early '90s correction made it 37 months, and the '00s crash went 116 months.

The early '90s correction wasn't notable for its national decline (it only saw a -2.2% seasonally adjusted peak-to-trough), instead it's remembered for how long it took to bounce back into growth mode.

Read 6 tweets

Lance Lambert

@NewsLambert

May 16

After peaking in May 1990, national home prices didn't set another all-time high until 37 months later in July 1993.

So far, the pandemic housing correction has seen us go 8 months since setting our last national all-time high (June '22).

The reason it's 8 months rather than 10 months, is because Case-Shiller runs 2 months behind. We'll get the March reading later this month.

If you have any questions about the chart above, ask away. I can see how this one might take a second to absorb.

Read 6 tweets

Lance Lambert

@NewsLambert

May 15

Just 16% of the nation's 200 largest housing markets saw a seasonally adjusted month-over-month home price decline in April 2023.

At the height of the housing correction, 79% of markets posted a month-over-month price decline in September 2022.

Zoomed in, you can clearly see the home price correction continues to lose geographical reach.

In both April 2021 and April 2022, 0% of the nation's 200 largest markets saw a seasonally adjusted month-over-month home price decline.

The 16% in April 2023, is the highest % down for an April since April 2012 (when 31% were down).

Read 4 tweets