Real U.S. House Prices UP 4% in 2023

Prices were up 4% in 2022, too.

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Top & Bottom Cities for 2023 Home Price Increases

Case-Shiller’s 20 Cities (nominal prices, not inflation-adjusted, real prices)

Top
9% - San Diego
8% - Los Angeles
8% - Detroit

Bottom
2% - Dallas
2% - Denver
0% - Portland

It’s not often that Los Angeles and Detroit real estate prices are in sync.

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U.S. Real Mortgage Payment Price is 18% HIGHER Than 2006 Bubble Peak

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2 Years Ago You Could Borrow Almost $100,000 MORE with a $1,000 Monthly Mortgage Payment

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The Market Always Sees Lower Inflation Coming

Examining the Recent Inflation Episode, the Fed’s Response, and Effects on Markets

Looks like "transitory" inflation wasn't just the Fed's view.

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Investors Bought 26% of the Country’s Most Affordable Homes in the Fourth Quarter —the Highest Share on Record - Redfin

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A Little History (Real Estate Geeks Only!)

Mortgages in 1930

#1 – Savings and Loans (including building and loan associations, and mutual savings banks)

• 45% of all outstanding mortgages in 1930
• 40% average down payment (average, so often lower)
• 11 years average length (max 15 years)
• 95% partially or fully amortized (no balloon payment at end)

S&L interest rates were a bit higher and you had to have a long track record of saving with them before they would lend you money to buy a house.

#2 – Individuals (family, friends, individual investors and, especially, house sellers)

• 37% of all outstanding mortgages in 1930
• Average terms unknown

It was common for house sellers to be the “bank” for their house buyers. The buyer would pay a down payment, and for the rest of the money, the buyer and seller would negotiate a seller “carryback” mortgage.

Or, the buyer might use two mortgages. For example, the buyer might pay the seller 20% in a cash down payment, get a first mortgage for 50% from a regular lender, and borrow the last 30% directly from the seller in a second mortgage. Back then, second mortgages were widespread.

#3 – Banks

• 10% of all outstanding mortgages in 1930
• 47% average down payment
• 4 years average length
• 10% of bank mortgages were fully amortized (you owed nothing at the end)
• 39% of bank mortgages were partially amortized (you owed less at the end of the mortgage than at the beginning)
• 51% of bank mortgages (or 5% of all outstanding mortgages) were “straight” mortgages where you only paid interest until the end when you paid back the original amount you borrowed. Today, we would call these short-term, interest-only, balloon mortgages.

Refinancing was usually assumed to be certain and consecutive renewal of short-term mortgages was quite common... at least until the Great Depression hit.

Financing Home Ownership, Fisher, 1951.
Capital Formation in Residential Real Estate: Trends and Prospects, Grebler, Blank & Winnick, 1956.
Long-Term Changes in Cost and Terms of Mortgage Financing, Grebler, Blank & Winnick, 1956.

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