Data Show you’re not alone.
Single-family home sales in September fell to a seasonally adjusted annual rate of 4.22 million – a 0.9 percent slower pace than the 4.26 million sold in August.
Another staggering statistic, single-family home sales last month fell 23% compared to September 2021, data Issued by the National Association of Brokers.
This means that many potential buyers are sitting out, likely waiting until interest rates (currently 7.08%, 20-year high) drop, or they are waiting for a bust. something in the housing market, like the 2008 mortgage crisis.
But, not as fast – have you heard of the “paradox of value”, also known as the “diamond-water paradox”? This is where it gets difficult.
The paradox of value is the contradiction that, although water is generally more useful than diamonds, diamonds command a higher price in the market because there is more water than diamonds.
Michael Ashtonan investment manager at Enduring Investments told Barron’s that the current housing market is like a paradox of value, this is what he means.
“If you have the same amount of real assets, such as houses, and more dollars, the house price will go up because those dollars are worth less and a house is worth more dollars.” .
According to Ashton, since housing is a real asset, a fall in M2 – a measure of the money supply that includes cash, deposits and stocks in retail money market mutual funds – would be required. required before problems can occur.
M2 is still very close to a record high even as its growth has slowed significantly, reaching 1.7% year-on-year in early October compared with a 13% gain at the beginning of last year.
Some analysts forecast a 20% drop in housing prices next year, but according to money theory, price and quantity equate to the velocity of money supply or the rate of money spending.
Accordingly, the 20% decrease that economists predict would require a 20% decrease in the money supply, all other things being equal. That’s very unlikely, according to Ashton.
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