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Around here (SoCal), it surely feels like yet another bubble. All the catalysts of growth are there - low interest rate, low unemployment, stock market highs...
Most of what I've read about housing is that it's pretty healthy. Starts for single family homes have been picking up relative to multi-family units and that's a good sign. The supply of single family homes for sale has been low and that's part of the reason for higher prices. Most, if not all, aren't underwater on their loans anymore and with the stock market high that should keep demand high. Sentiment among home builders is good and as they increase supply the price increases should moderate. And household debt levels, while at all time highs in dollar terms, are at low levels relative to income and/or net worth.
Nothing I've read suggests there's any sign of a bubble even if prices might not continue going up as quickly as they have been.
May be it is not the same everywhere. For example, in my zipcode, the previous high in median home price in 2006/2007 bubble was around $640k. Now it is $830k. I am not sure if household income has really increased that much from 2006/2007. I am also noticing the same kind of behavior before previous bubble: very quick sales, bidding from buyers, multiple houses bought for investment, ...
Those weren't really the drivers of the bubble, though, were they? Up-bidding and all that, hot market, too much money chasing too little stock. From my reading of history, recent and otherwise, it takes more than this. One of my kids just bought a half-house condo, outside Boston, insanely expensive, but, you know, what it's 'worth'.
As Kaspa observed, it's not just cost but affordability - how well incomes are tracking housing costs (combination of sale price and mortgage rate). Here's a slide show (dated April 2017) of the 13 least affordable counties in the country.
Slide 1: "Homes are less affordable now than they’ve been since the end of 2008, according to an analysis by ATTOM Data Solutions. ... 33.6% of average weekly wages were needed to buy a median-priced home. "
Slide 2: "Kings County, New York, better known as Brooklyn, topped the list. An average wage earner there would need 121.4% of their income to buy a median-priced [home]"
(For comparison, according to Reuters, in 2014, Kings County also topped the list, but only 98% of median income was needed then. Though the methodology may have been different.)
You can flip through the rest. Almost needless to say the counties are all in Calif, NYC, and Hawaii (Honolulu and Maui).
What is the (cor)relation b/w affordability and bubbleness? I guess the articles are saying they're the same, pretty much. I would have thought distinct.
What drove the past housing bubble was availability of credit to just about anyone resulting in a highly leveraged market that led to a housing crash. Not so this time around. Now it's an extremely low inventory of existing homes. Oddly those highly lereraged loans from the past that have survived ( legacy non agency RMBS ) have benefited from years of deleveraging and declining mortgage delinquencies and are the hottest sector in Bondland.
Comments
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/city-by-city-home-price-gains-and-losses-since-the-housing-bubble/
Nothing I've read suggests there's any sign of a bubble even if prices might not continue going up as quickly as they have been.
Up-bidding and all that, hot market, too much money chasing too little stock. From my reading of history, recent and otherwise, it takes more than this. One of my kids just bought a half-house condo, outside Boston, insanely expensive, but, you know, what it's 'worth'.
Slide 1: "Homes are less affordable now than they’ve been since the end of 2008, according to an analysis by ATTOM Data Solutions. ... 33.6% of average weekly wages were needed to buy a median-priced home. "
Slide 2: "Kings County, New York, better known as Brooklyn, topped the list. An average wage earner there would need 121.4% of their income to buy a median-priced [home]"
(For comparison, according to Reuters, in 2014, Kings County also topped the list, but only 98% of median income was needed then. Though the methodology may have been different.)
You can flip through the rest. Almost needless to say the counties are all in Calif, NYC, and Hawaii (Honolulu and Maui).