The Craziest - Good And Bad - Housing Data You’ll Ever See - InvestingChannel

The Craziest – Good And Bad – Housing Data You’ll Ever See

Proprietary Data Insights

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Rank Name Searches
#1 Home Depot 31,477
#2 Lowe’s Companies 12,130
#3 Lumber Liquidators Holdings 483
#4 Restoration Hardware 74
#5 Mattress Firm 15

Crazy Housing Data That Keeps Getting Crazier 

In today’s edition of The Juice, we go from bad to worse on housing then offer a flicker of hope to make things – sort of – better again. 

Because there’s really no way to rose color real estate. 

From an investment perspective, it’s frightening to see, for example, what this crazy market – stock and housing market – has done to a stalwart like Home Depot (HD)

Source: Google Finance 

The optimistic view screams once-in-a-lifetime opportunity to buy this blue chip stock at a P/E ratio of just 17. Collect a nice dividend – HD currently yields just 2.8% – while you wait for the stock to rebound. 

The pessimist wonders if even Home Depot has further to fall. 

Because amid talk of a cooldown, it’s probably not going to be cool enough to make this housing market look anything close to pretty for quite some time. Which doesn’t bode well for large swaths of the population from a personal finance standpoint. 

Crazy Data That Gets Crazier

Source: Oregon Office of Economic Analysis

The data there tells us that 168,000 households have been priced out of the Portland real estate market since December.

Think that’s bad? You ain’t seen nothing yet. 

What a difference a month makes. 

Consider Los Angeles. At the end of last month, the mortgage payment on the typical home there was $3,834. Today, you’ll pay $4,038 – a 5.3% pop – thanks to month-over-month increases in both the median housing price (now $900,000) and 30-year mortgage rate (5.75%, at the moment). 

But wait. There’s more. It gets worse, then better. Sort of. We promise.

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Do Housing Bargains Still Exist? And How To Get Them

Key Takeaways:

  • We’re waiting for the supposed housing cooldown to translate into a hint of affordability. 
  • That said, you can still find relative bargains if you’re willing to sacrifice. 
  • The Juice presents an option for homebuyers that actually might look attractive. 


San Francisco Makes Los Angeles Look Cheap 

In part, because LA County is massive, covering dozens of cities. Meantime, the City of San Francisco is the County of San Francisco. No other cities. But still. 

At San Francisco’s typical home price of just over $1.5 million, you’d pay $7,700 a month, 49% more than this time last year. 

This calculation assumes you’re able to come up with a 20% down payment. Twenty percent of $1.5 million equals $300,000, in case you’re too weary-eyed to do the math. 

Drop the down payment to 5% ($75,000) and, using data from Zillow, you’re on the hook for closer to $8,000 a month. 

Nationally, the payment on the typical home is up 47% year-over-year at $2,031

Looking for relief? 

You could always head to a smaller city. Or, more precisely, an up-and-coming neighborhood within a smaller city. 

Like, maybe in Buffalo? 

The Good News

Hope exists. 

In places such as Los Angeles and San Francisco, real estate runs on a spectrum from expensive to uber-expensive. 

There’s little relief, even if you travel outside the core. For goodness sake, the median sale price of a home in Ventura County, California (adjacent to massive LA County) is $880,000. In the Bay Area, parts of Silicon Valley are even more costly than San Francisco proper. 

The good news – in some cities, you only pay top dollar in the hottest neighborhoods. 

Consider Buffalo, New York

Source: Zillow 

This map shows two adjacent Buffalo neighborhoods. 

On the right – Elmwood Village, the city’s hottest urban neighborhood. On the left, Grant-Ferry, a still gentrifying section on Buffalo’s West Side. 

In long-rejuvenated Elmwood Village, a median price home fetches $537,384, considerably higher than Buffalo’s overall median of $214,262 and Grant-Ferry’s median of $188,144. 

Two city neighborhoods literally right next to one another with considerable divergences in housing prices and number of listings. 

Grant-Ferry isn’t a dump. In fact, it’s about where Elmwood Village was 10-15 years ago in the gentrification process. 

So, if you’re willing to be a 10-minute walk from Elmwood Village, you can own a home for a relative bargain in Grant-Ferry. You just have to wait for the neighborhood to catch up with Elmwood Village in terms of cosmetic desirability and real estate value. 

As for the hard numbers. 

In Elmwood Village —

  • 20% down payment on a $537,000 property = $107,400
  • Monthly payment on a $429,600, 30-year mortgage at 6% = $2,576

Go with, say, the $249,000 property in Grant-Ferry close to the Elmwood Village border and it looks like this —

  • $49,800 down payment
  • $1,194 monthly mortgage payment

The Bottom Line: No matter how crazy this market is, real estate almost always comes back to location, location, location

We hear so much about regular people priced out of home ownership. While the narrative holds true, you can find options if you look hard enough. 

The situation The Juice highlighted in Buffalo certainly exists elsewhere, particularly in small-to-medium size cities. You just gotta dig and consider the compromises you’re willing to make to become a homeowner. 

Some optimism in what feels like an unavoidable sea of bad economic news.

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