Housing Prices are Surely Not Heading for a Crash

December 29, 2017

 

 

As home values continue to increase at levels greater than historic norms, some are concerned that we are heading for another crash like the one we experienced ten years ago. We recently explained that the lenient lending standards of the previous decade (which created false demand) no longer exist. But what about prices?

 

Are prices appreciating at the same rate that they were prior to the crash of 2006-2008? Let’s look at the numbers as reported by Freddie Mac:

 

 

The levels of appreciation we have experienced over the last four years aren’t anywhere near the levels that were reached in the four years prior to last decade’s crash.
 
We must also realize that, to a degree, the current run-up in prices is the market trying to catch up after a crash that dramatically dropped prices for five years.
 
 
 

Existing Home Sales Reach Highest Annual Pace in 11 Years
 
Some Highlights:
  • Existing home sales are currently at an annual pace of 5.81 million, the highest pace since December 2006.
  • The inventory of existing homes for sale has dropped year-over-year for the last 30 consecutive months and is now at a 3.4-month supply.
  • NAR’s Chief Economist Lawrence Yun had this to say: “Faster economic growth in recent quarters, the booming stock market and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end.”

 

 

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