SARASOTA, FLORIDA, July 25, 2018 – Some market analysts have been warning since the start of this year that the U.S. housing market looks heading towards a bubble similar to what happened prior to (and one of the triggers of) the 18-month 2007‒2009 Great Recession.
What bothers these industry observers most is the recent home price acceleration which has propelled residential property prices in some U.S. markets already at pre-recession levels.
One oft-cited measure, the S&P CoreLogic Case-Shiller National Home Price Index, indicated that prices of houses and condos across the country rose an average of 6.2 percent in January from a year earlier. Significantly, the index tops by 6.3 percent the apex of the housing bubble in July 2006 just prior to its disastrous burst. At the January levels, the index further showed that home prices have skyrocketed by 46 percent since hitting the bottom of the last housing bust.
One market-watcher fears that the current prices at the ceiling would increasingly make residential property owners jittery and start a sellout before the regime of rising home prices ends. Looking back at the recently ended spring market, it would indeed seem that these “suddenly motivated sellers” have made their presence felt.
As per industry reports, the supply of homes in the market last spring increased three times from last year’s pace. Recent market data also indicate that 30 of the largest U.S. cities currently hold more home inventory than their stock a year ago.
The jump in supply, market analysts believe, may result in stagnating prices and frustrated sellers. This scenario, they claim could be a precursor to a bust if panicky sellers start cutting prices and risk further price cuts as buyers shun the sudden turnaround of the market and at the same time spooked by prospects of higher interest rates.
Again looking at some statistics, there may be reason to believe that there are traces of a housing bubble forming. Mortgage applications for new homes, in one recent reading, was down 9 percent year-over-year, an indicator that home buyers are on the retreat.
Looking at the other side of the coin, there are housing experts too who maintain that no housing bubble is imminent, primarily because government regulations as well as private lending rules have been tightened. Loose credit that was one of the culprits of the last housing downturn has been effectively addressed, these industry pundits point out.
The current strong economic fundamentals, such as job and wage growth coupled with strong housing starts, are likewise factors contributing to the robustness of the real estate market overall, these industry insiders say.
Their optimism is further fueled by housing demand from two large demographics: the millennials maturing into homeownership and baby boomers en route to retirement. Signs of these generations market clout are evident. Last year, sales in many master-planned community which target home buyers in the age 55-plus bracket were reported to have hit record levels. More recently, the index of confidence from the National Association of Home Builders/Wells Fargo in June hit its highest level in 18 years.
Given such mixed signals from a national viewpoint and all real estate being local, engaging the market now whether as a buyer or seller more than ever calls for having an expert realtor as a partner. Be sure to partner with a real estate agent who not only possess a broad outlook of the overall market but also a hyperlocal understanding of your area’s housing sector.
SARASOTA, FLORIDA, October 7, 2019 – Property values of communities in the Sarasota-Manatee region now face lesser threat from neighborhood eyesores brought about by abandoned, foreclosed homes. Known in the real estate trade as zombie foreclosures, these properties have shrunk significantly in the region. According to an August report of ATTOM Data Solutions, abandoned […] more>>