Health & Fitness
There's Another Housing Bubble? Really?
The housing market in the United States isn't just recovering – it's RECOVERING.
There’s Another housing bubble? Really? The housing market in the United States isn’t just recovering – it’s RECOVERING. Tight inventories, fewer foreclosures, low mortgage rates, and rising demand have helped push home prices significantly higher. Year-over-year sales data shows home prices increased by about 15 percent through the end of May, according to the National Association of Realtors (NAR). That’s the strongest year-over-year improvement since October 2005, and it marks the 15th month of gains in a row. In many cases, cities that had experienced the biggest declines in prices during the housing crisis realized some of the biggest gains.
Double digit price gains have some believing the housing market is getting frothy and a new housing bubble may be forming. Fitch, a ratings service, recently said home price gains in some markets are outpacing improvements in underlying fundamentals, which could cause prices to stagnate or fall again.
Find out what's happening in Ridgewood-Glen Rockwith free, real-time updates from Patch.
So, is it a bubble? It depends on who you ask, but credible sources suggest otherwise. According to an article in an early June issue of The Economist:
Find out what's happening in Ridgewood-Glen Rockwith free, real-time updates from Patch.
“To qualify as a bubble, an asset must not simply appreciate; it must decouple from its intrinsic value. For houses, The Economist each quarter compares the
ratio of prices to household income and rents against their long-run average in
20 countries. We have now done the same for the 20 metropolitan areas in the
Case-Shiller index. The verdict: in most markets, houses are at or near their long-run values, but none looks bubbly.”
One thing that’s keeping home prices high is limited supply. The Chief Economist for the NAR recently said one way to moderate future price growth is to create additional supply by building more new homes.
It seems clear from the markets’ response to the Fed Chairman’s comments during last week’s press conference and speculation about bubbles – investors are feeling a lot of fear and uncertainty.
Weekly Focus – Think About It
“It is evident that skepticism, while it makes no actual change in man, always makes him feel better.”
--Ambrose Bierce, American Journalist
The rest of the report can be found here.
Please be sure to visit the Parks Wealth Management website at www.parkswm.com.
Best regards,
James T. Parks, CFP®, AEP, AIF
President and Wealth Advisor
Parks Wealth Management
216 E. Ridgewood Ave., 2nd Fl | 201-689-2020
