"Even if double-digit price appreciation were to continue in the former bubble metro areas, there is no reason to believe that new home price bubbles are forming." ~ David Stiff, CoreLogic Chief Economist
Minneapolis, Minnesota (PRWEB) June 02, 2013
CoreLogic Case-Shiller Home Price Indexes have been closely watched nationwide as home prices have plunged upward in seven out of every 10 metro areas in 2012 and talk of a housing bubble has resurfaced. In a pale comparison, 2011 home prices appreciated in less than one-in-five markets. Yet, CoreLogic believes that a new housing bubble is unlikely as market dynamic shifts on both supply and demand sides.
"It seems as if Minneapolis home buyers have more realistic expectations about housing market returns after having lived through our significant housing market volatility. If it is true that a housing bubble mentality is edging back into some local markets, houses are comparatively cheaper now than they were in 1997. We would have to see a longer run of double-digit appreciation before we would be near the price extremes experienced in of the bubble in 2006," comments Jenna Thuening, owner of Home Destination.
David Stiff, chief economist for CoreLogic commented, "We expect strong buying activity this spring will lead to stabilization of home prices in most lagging markets, resulting in rising home prices in nearly every metro area by the end of 2013."
The most noticeable year-over-year home appreciation jumps were recorded in many of the exact metro areas that were at the epicenter of the housing bubble and ensuing crash. CoreLogic data has recorded those metro areas as including Phoenix (24 percent), Miami (14 percent) and Las Vegas (13 percent). To further the point, price declines moderated in metro areas with sluggish housing recoveries, such as Long Island, N.Y. (4 percent), Virginia Beach, Va., (2 percent) and Philadelphia (1 percent).
Even with that, Stiff does not see the pendulum swinging so far as to cause another housing bubble. "Even if double-digit price appreciation were to continue in the former bubble metro areas, there is no reason to believe that new home price bubbles are forming. That’s because single-family homes in these markets are still very affordable, even after last year’s large price gains. Consider Phoenix, where home prices rose 27 percent since the market hit bottom in 2011, making it the strongest residential real estate market in the U.S. Yet, home prices there are still 45 percent below their 2006 peak."
Stiff summed up his comments by giving an overview of what aspects of the housing recovery in the remainder of 2013: "As all-cash home purchases and investor demand wane, it is not clear if demand from first-time and trade-up buyers will immediately fill the void, as mortgage lending standards are still very strict and many consumers remain risk-averse. If non-investor demand ramps up too slowly, then recent double-digit home price appreciation could decelerate suddenly or even turn negative for a few months."
Home Destination finds the following recent "Housing Bubble Talk" noteworthy:
- Yahoo Finance wrote on May 23 that "The Housing Market Gets Bubbly Again"
- Gawker announced on May 28 that "The Next Housing Bubble Is About To Pop All Over You."
- Bloomberg took a commanding story line on May 16 with an article titled "From Brooklyn to California, Housing Bubble Threat Grows".
- Fortune Finance posted "A housing bubble era loan makes a comeback, with a twist" on May 29th.
"Debt is often seen in bubbles, and loose lending was a key part of what led to the housing bust. As low housing inventory as pushed home prices up, the demand for new construction has helped many Twin Cities home builders to have a great Spring season," adds Thuening. Stock prices for home builders such as Ryland, KB Homes and DR Horton have rose in May by more than 25% so far this year. KB Home adjusted to more moderate levels on May 31, according to Yahoo Finance.
Home Destination helps Minneapolis real estate sellers who are ready to sell now and become a move-up or first-time buyers. For a professional residential Realtor with deep Twin Cities experience to guide through the exciting process of buying or selling, call Jenna Thuening at 612-396-7832.