Tag Archives: housing bubble

Is the housing market a bubble

When the Federal Open Market Committee begins its two-day meeting on Tuesday, it ought to consider whether its policies aimed to bolster housing may be having negative side effects.

With the market for new and existing homes red hot, the rationale for subsidizing the mortgage market has largely passed. Indeed, the Fed’s policies may be hurting home affordability as much as they’re helping.

Strong housing and mortgage activity argues against the Fed effectively subsidizing a sector that is near bubble territory. According to the Home Price Appreciation Index from the American Enterprise Institute, prices are up 12.6% in the 12 months through March, a doubling of the pace from a year ago. Among various markets, Phoenix was up 17.7% while the smallest gain was in the New York metro area with a 7.0% rise.

“Monetary policy that supports the extension of easy money when house prices are rising at record rates makes no sense. It’s one thing to misread the tea leaves of an asset bubble, but it’s another thing to be the enabler,” Carson writes.

One way to stop inflating home prices would be for the Fed to reduce its purchases of mortgage-backed securities. If that suggestion sounds familiar, it’s because Peter Boockvar made it in this column back in December.

Read entire article: https://www.barrons.com/articles/the-housing-market-looks-like-a-bubble-its-time-for-the-fed-to-worry-51619524804?siteid=yhoof2

Housing bubble outside USA

Home prices in the U.S. are rising to new levels, even surpassing pre-crisis levels in some metros, but home prices in the U.S. are relatively low compared to other developed nations.

Over the past few years in the U.S., home prices peaked in July 2006, troughed in February 2012 and have since returned to pre-crisis levels once again. However, this wasn’t the case for other developed nations. Other G10 economies never saw a downturn, and have continued increasing.

Now, some are concerned about broader consequences if the real estate markets go south, according to a report from Goldman Sachs. The report explains there are no imminent problems in G10 markets, but current imbalances could worsen cyclical weakness later.

read more at: http://www.housingwire.com/articles/40139-heres-how-us-home-prices-compare-to-other-developed-nations

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San Francisco’s housing market is at tipping point

San Francisco’s housing market is at a tipping point is San Diego next.

A shortage of housing inventory, with demand that has not flatlined, has jacked up home prices at a faster pace than inflation and wage growth.

Among the biggest housing markets, San Francisco was the most expensive in the fourth quarter, according to the Federal Housing Finance Agency.

But sales, and home prices, are now slowing down, according to brokerage firm Redfin.

Redfin said last week that house prices in San Francisco fell for the first time in four years in March.

Their data also showed that the month-on-month decline in home sales relative to overall inventory was the most in the city, as people had a hard time selling.

“At some point something has to give,” Redfin CEO Glenn Kelman told Business Insider.

“There’s just been a change in the market where people feel much more careful, much more sober than they did in the fall. We started to see some of that late summer, where demand started to taper off. Houses would sit on the market an extra day, only get four offers instead of fourteen.”

A few things have spurred this recent declines, including the tech sector that contributes to a swath of the demand for housing in San Francisco.

The market sell-off at the beginning of the year impacted buyer sentiment because a lot of Silicon Valley workers get compensated in stock and equity. Also, many buyers that can afford high-end homes in excess of $1 million are linked to the tech industry.

And so anything that impacts market valuations potentially affects buying, said Redfin chief economist Nela Richardson.

Richardson said San Francisco’s softening is not a sign of worse to come for the national housing market. But it is for other markets like Washington D.C. where prices are far outpacing affordability.

read more at: https://www.yahoo.com/finance/news/san-franciscos-housing-market-tipping-100000868.html

disclaimer: for information and entertainment purposes only