The housing market is about to get a lot more expensive for millennials and Gen Z

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Estimated read time: 2 minutes 40 seconds.

Inflation sped up again in August link

• The Consumer Price Index (CPI) saw a year-over-year rise of 3.7% in August, surpassing July's 3.2% increase.

• Gasoline's index was a major factor, accounting for over half of the month-over-month surge. The gas index jumped 10.6% month over month.

• Core CPI, excluding food and energy, rose by 0.3% month over month and 4.3% year over year, indicating persistent inflationary pressures.

✅ Fed Still Expected to Hold Rates Steady, Despite August Inflation Uptick link

• The Consumer Price Index (CPI) increased by 0.6% in August, equating to a 3.7% rise year-over-year. This aligns with consensus estimates.

• A significant factor behind the headline inflation was energy prices, especially gasoline. This marks the most substantial price surge this year.

• Core inflation, excluding fluctuating food and energy prices, went up by 0.3% month-over-month, slightly surpassing the expected 0.2%. Annually, core inflation rose by 4.3%.

• CBRE anticipates the Federal Reserve to maintain the current rate levels (5.25% to 5.50%) in their upcoming meeting. However, there's potential for another rate increase later in the year if inflation exceeds expectations.

• Investment activities are projected to remain muted for the rest of 2023, with a recovery expected in the first half of 2024.

✅ Rents Continue to Dip, While Home Prices Rebound to All-Time Highs link

• The U.S. rental market saw rapid price increases in 2021 and 2022, with rent growth reaching nearly 20%. However, home prices surged even more, making the cost of owning significantly higher than renting by the end of 2022.

• In 2023, while home prices bounced back from a short decline, rents decreased year-over-year and continued to soften.

• During the first year of the pandemic, home prices skyrocketed while rents remained mostly unchanged. By the end of the year, home prices had risen by 13.5%.

• By March 2022, rent prices had increased by 16.3% since March 2020, while home prices had surged by 33.5% in the same period.

• The Federal Reserve's actions against inflation led to increased mortgage rates, impacting the housing market. Home prices peaked at 43.3% growth in June 2022 but dropped 5% by the end of the year.

The housing market is about to get a lot more expensive for millennials and Gen Z link

• Student loan payments, paused since March 2020, are resuming in October, adding financial strain to young adults.

• Moody's Analytics indicates that around 5 million borrowers will start paying an average of $275 monthly, equivalent to about 0.25% of GDP.

• The housing market's current state shows near two-decade high mortgage rates and a tight inventory, with the income required to buy a typical starter home rising by 13% from the previous year to $64,500.

Home values fell in 21 of the 50 largest US metros in August link

• Home values in Austin, Texas, have dropped by over 10%, marking a significant decline from the highs seen during the pandemic.

• While nationwide home values saw a slight growth of 0.2% from July to August, this growth rate is notably slower than the previous four months. The overall increase compared to August 2022 is 1.3%.

• Despite a 4% rise in new listings from July to August, the total number of new listings in August 2023 was 12.7% less than in August 2022, indicating a continued shortage in housing inventory.

Foreclosures Tick Up, Especially in These Cities link

• Nearly 34,000 properties faced foreclosure filings in August, a 7% increase from July, but 2% lower than the same period last year.

• Roughly 1 in every 4,113 homes had a foreclosure filing in August.

• Nevada had the highest foreclosure rate, with 1 in every 2,224 homes facing foreclosure.

• Despite the rise, experts don't foresee a new wave of foreclosures due to stricter lending qualifications and a stronger buyer financial position.

• Foreclosure filings have been improving since December 2022, indicating a positive trend for the housing market.