http://nypost.com/2017/05/30/us-housing-prices-are-rising-twice-as-fast-as-wages/ "WASHINGTON — U.S. home prices climbed in March at the strongest rate in nearly three year as a dwindling supply of houses for sale is causing prices to significantly outpace income growth. The Standard & Poor’s CoreLogic Case-Shiller 20-city home price index released Tuesday rose 5.9 percent over the past 12 months ended in March, the most since July 2014. Home values are increasing at more than double the pace of average hourly earnings, making it more difficult for many people to afford to buy a home. “Over the last year, analysts suggested that one factor pushing prices higher was the unusually low inventory of homes for sale,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. “People are staying in their homes longer rather than selling and trading up. A steady job market has bulked up demand among many would-be buyers, but there are fewer properties on the market. Sales listings have plummeted 9 percent over the past year to 1.93 million, according to the National Association of Realtors. The shortage of homes to buy has caused prices to rise sharply in many metro areas. The largest annual gain was in Seattle, where prices have surged 12.3 percent. Portland, Oregon recorded a 9.2 percent increase, while Dallas prices rose 8.6 percent. Of the 20 cities in the index, the weakest gain was in New York City, an area where home prices are already high relative to median incomes. Home prices in New York City have risen 4.1 percent in the past year, still much higher than U.S. average hourly earnings that have increased 2.5 percent over the past 12 months, according to the Bureau of Labor Statistics."
Everyone keeps talking about supply and all that other bullshit. It's another fed created bubble, folks.
Fed been fighting deflation and they are winning on some fronts like housing and autos. Of course the high dollar items that require loans at ultra low rates. Auto loan companies starting to pullback cause too many defaults. Feds think they can raise rates and taper QE..it's a pipe dream and they know it. It did not work in Japan so why would it work here? Bond market telling the story. Look up and down your street where you live. Houses being renovated everywhere. Old houses being knocked down and new ones being built. Masses have new cars...some can afford, some not. The line about not enough inventory is complete BS. Media not going to report on any of this cause they don't want to freak out the public. Most public don't understand what is going on nor do they care cause it is feel good economy. Like Buffet said last time, when tide goes out we'll see who has been swimming naked. I am in the camp the forthcoming correction will produce lows lower than 2009. Yes, it will be mayhem and advisors will be telling clients "don't worry it always comes back".
Maybe house prices are a leading indicator for inflation? I've been an RE appraiser for 30 years and some of it is definitely due to low inventory, but there's is more going on imo. I think people are willing to take on a little more debt in anticipation of higher wages and an improving economy. And it's not just buyers. Owner's are taking on more debt and fixing up their houses too. Unless your head is buried in sand, we've had inflation in things for years. Now we are seeing the other shoe drop with higher wages. Don't hard assets, real estate and commodities usually do well in an inflationary environment?
As Mortgage Demand Cools and Competition Heats Up, More Lenders Are Planning to Ease Credit Standards http://www.fanniemae.com/portal/med...age-lender-sentiment-survey-q2-2017-6575.html
This time is is indeed different in comparison to financial crisis. Rates ultra low and fed balance sheet at -$4.5 trillion. They are trying to get in front of the next crisis to somewhat reload. I believe it is too late but what do I know. There only other option is to print another $4.5 trillion which will definitely cause things to spiral out of control. We should have taken our medicine back in 2009. We are just kicking can down the road. Once market loses confidence in central bankers, the game is over.