Signs of a housing bubble are brewing, prices rising to point of "exuberance

[Demovictory9]

https://www.cnn.com/2022/03/30/homes/us-housing-market-bubble/index.html



"Our evidence points to abnormal US housing market behavior for the first time since the boom of the early 2000s," the researchers wrote. "Reasons for concern are clear in certain economic indicators ... which show signs that 2021 house prices appear increasingly out of step with fundamentals."


------------------------
But this time, the economists said they are worried about a different scenario.

Just because home prices are rising wildly does not always mean housing is in a bubble. And there are lots of reasons why home prices have risen steadily over the past decade -- and shot up even more significantly in the past two years -- including supply and demand imbalances in the market, rising labor and construction costs and how high or low the interest rates are for a mortgage, the researchers pointed out.

But they said prices may be rising to a point they call "exuberance," in which prices become increasingly out of sync with the economic fundamentals underpinning the market.


One possible reason, they suggested, is that buyers may believe prices will continue to climb and fear they will miss out on snagging a lower price on a home now and get stuck paying more later.
This fear of missing out, or FOMO, effect can drive up prices and heighten expectations of higher prices ahead. That can create a self-fulfilling prophecy, researchers said, in which price growth can become exponential.

https://www.cnn.com/2022/03/30/homes/us-housing-market-bubble/index.html

[PSPS]

1. Um, they overlook those "starter" $1 million 2-bedroom houses are getting all-cash buyers

These aren't people who need a mortgage. And they still get bidding wars.

[PortTack]

3. That would be the corporations doing that!

[uponit7771]

9. +1, same as last time

[PortTack]

2. And if it happens I hope the GD corporations buying up houses and driving prices even higher

Get their due comeuppance!

[Demovictory9]

4. zillow already got its ass handed to it

[uponit7771]

10. Whoa !!! Didn't know about this. Do you think Zillow has change anything we go off Zillow ...

... estimates all the time on our house

[MissB]

16. That part of Zillow is ok

It’s the part that was buying and flipping houses that is done. They’ve stopped buying and flipping. Which is good for actual home buyers. And folks that want to remodel. Zillow was sucking the available air out of some markets.

[uponit7771]

18. +1,

[Demovictory9]

19. Zillow closed its house flipping unit

[PortTack]

20. Yes they did! Althou Zillow was planning on the continued rise in values so they could flip

These evil corporate jerks are buying to permanently rent, that is until the property is destroyed from lack of upkeep dragging property values in neighborhoods down overall. It’s really ugly

[Samrob]

5. They need to study the impact of foreign investment in housing in the US.

Every recent immigrant I know (8 to be exact) 1 Asian, 4 Russians, 3 Croatians, purchased homes within months of arriving. I know them from the special Ed school my grandsons attend. I do not know them well enough to know how their homes were financed. All but two speak pretty good English. And all are very friendly. Among them they have 19 children. The homes they purchased seem to be in zones where their ethnicities are prevalent. I live in an area close to DC but on the Maryland side. One of the Russian girls was the star basketball player for the high school last year. They seem to all have MONEY. I am just wondering if this is happening all over the US and contributing the rash of over-priced, paper thin town homes and mini mansions springing up all over?

[uponit7771]

11. +1, Russia would love to buy up US houses to push up prices and dump them on banks ...

... causing 2009 again

[exboyfil]

13. They should actually investigate how they can build affordable housing stock

with accompanying better rail service into metropolitan areas.

As far as foreign investment. Let them invest. Just shift the tax burden a bit to increase the value of the homestead exemption.

Sounds like good immigrants to me especially if they are living in their own homes instead of just owning a bunch of rental properties. So long as we are not reaching fifth column numbers and intent (is that what you are implying?) then I don't see a problem.

[secondwind]

6. My stepson bought a townhouse in San Francisco several years ago

for 1.2 million, fireplaces on each floor, back yard with beautiful Japanese maple, etc

It’s worth several times over now, he has rented the first floor for $5,500 a month, can you imagine.

[iluvtennis]

7. Crazy, $5500 a month for rent - that's SF for you :-) n/t

[uponit7771]

12. +1, wow and that's only ONE FLOOR !!!

[exboyfil]

8. My mom just listed her house

Her final cash out as she moves into a retirement community.

She also lives on the Daytona barrier pennisula/island. I really do think it is time to cash out before the big one shows up.

My sister in law wants her to keep the house as a vacation destination for the family. My mom needs the cash for the rest of her life.

[iluvtennis]

15. Cool. Your mom should cash out as she needs the funds. I did it

couple of years ago and downsized as kids are grown and gone.

[leftyladyfrommo]

14. One of my neighbors just sold her house at auction.

It was a really cute house all fixed up.

I haven't seen anyone sell their house that way but it might be a way to get a good price without all the fees.
It sold right away.

[MissB]

17. I've noticed several homes in the last month

in our little neighborhood that have sold without being listed. Usually there are 3-5 homes for sale at any one time. To have three of those homes sell without hitting the market is very unusual.

It also means it would be easy to sell my home if I wanted to.

[mnhtnbb]

21. There is no supply!

The realtor we used when we moved to Chapel Hill in 2000 has his own office. We continued to use him--after the fire--and I looked at property with him in 2019 when I was thinking about buying. He has quite a few agents in his office and his website normally would have multiple pages of listings with those agents at this time of year. He has a grand total of three (3) listings on his website right now which are all under contract. I imagine there were multiple offers for each of them.

This is being repeated in desirable communities all over the country, which is part of the reason prices are being bid up. Owning a home is beneficial for many reasons, not the least of which is the ability to build equity instead of tossing money at rent every month.

[Coventina]

22. It's insanity, I get letters offering 600,000+ for my 900 sq. ft. dump

I definitely have the shabbiest place on the block, because I just don't have time or money to do a lot of cosmetic stuff.
Plus, I confess to liking the "lived in" look. I'm not interested in being featured in Architectural Digest.

Plus, I'm the only one on the block who hasn't suffered property crime. Protective camouflage, haha!

I am so glad I am not a young person starting out.

[Raftergirl]

23. Houses are not staying on the market even a day

in my town and I’m in a suburb of Albany NY. It’s been like this since the pandemic. There is very little undeveloped land left in my town and because of our excellent school district a house in my town is very much in demand. If I put my house on the market tomorrow it would be sold before the afternoon. But, I’m not going anywhere, we’ve completely remodeled the house into the perfect home for us, our mortgage is dirt cheap and we can age in place as it’s a ranch.

Kid just bought a pied a terre (460 sq Ft 1 bedroom) in Boston last weekend - sight unseen. Asking price was $349k but he paid over ask. He just bought a townhome in Salem last year, which has appreciated significantly since then, and he paid over ask on that one, too.

He is only 28 but makes very good money and able to put down 20% on both places. He planned to pay off his townhouse mortgage in 5 years but is ahead of schedule.

I’m sure eventually he will rent both out, but for now that is several years away.

I did tell him to buy his next place on the Cape so I have somewhere to go in the summer. 😉