- “Austin just became overbuilt really fast,” he said of the capital city of Texas. “From 2009 or 2010 to 2015, Austin doubled in population and continued to grow beyond that. Residential developers and landlords are trying to keep up with the demand, and may have overshot themselves. Right now in Austin, renting is a better deal than buying.”
- Phoenix was highly touted as an affordable city to live in, he noted. But living there is not what it’s cracked up to be for many. “Phoenix got a nice boom during COVID because it was one of those affordable areas,” Korangy said. But the intense heat during summer has turned many would-be transplants off to the idea of living there. “They started building a lot, but a lot of people realized Phoenix was not the city promised to them. It’s uninhabitable for several months of the year.” Beyond the heat, the city lacks a robust cultural hub. “It’s not an easy city to be new in, and a lot of people realized that.”
- In San Francisco, Korngy described the environs as something akin to a ghost town during a recent visit. Mass layoffs in the tech industry have left the city in distress, he said. “I was in San Francisco a few months ago and walked around the financial district,” he recalled. “I walked two-and-a-half blocks without seeing a single person on a Wednesday at 11 a.m.” A similar scene was encountered at the fancy restaurants catering to the high-paid workers – once bustling eateries were seen serving a mere handful. “It was just very sad to see what a great city looks like now. All these companies all of a sudden depleted their commercial office space. It’s dirty. It seems like nobody’s watching it. It seems the like the government there has just given up or something.”
- Seattle’s woes have been well-documented as one of the cities seeing the sharpest decline. According to Redfin, the city is one of the fastest-cooling housing markets in the US. A Redfin economist predicts Seattle prices could fall faster than the national trend – as much as 10%.
Korangy citied the cyclical nature of such market shifts. But if history is any guide, homeowners eventually will return to routines despite higher mortgage rates. “There’s always that initial shock to people,” he said. “‘Oh my God, it’s not 3% anymore; oh, it’s 5% – that’s terrible!’ You see people go through the shock. The fact is, people can afford to pull out of the market for only so long; the fact is people can afford not to sell a house for so long; the fact is, people can afford not to sell their house only for so long and buy another one for an upgrade or they’re getting a divorce or somebody died or they’re moving.”
What are mortgage rates right now?
He noted higher mortgage rates from past years – much higher than those today – failed to prevent people from participating in the market. “People who are old enough and transacted in those periods realize how high it can go but there’s always this initial shock when interest rates go up and people pull back,” he said. “But they can only pull back for so long.”
A recent period of historically low rates led to abundant transactions before screeching to a halt:
“You had a record number of transactions in 2020 and then you had a record number of transactions again in 2021,” he said. “And then 2022 wasn’t bad either. So you had all these records happening one after the other. Those people who came in bought at a time when interest rates very low.”