After picking up momentum over the last couple of years, there are some signs that the US housing market may be slowing.
The Washington Post reports:
The third installment of Freddie’s “Multi-Indicator Market Index” (or MiMi), which sizes up homebuying activity and other factors, found that only 10 states and the District of Columbia fall in the “stable” range, as do four of the 50 metro areas included in the index – San Antonio, New Orleans, Austin and Houston. The outlook for the rest of the housing market looks bleak. “Less than half of the housing markets MiMi covers are showing an improving trend, whereas at this time last year more than 90 percent of these same markets were headed in the right direction,” Frank Nothaft, Freddie’s chief economist, said in a statement.
Even in Manhattan, there are signs that housing prices may have run up too far, too fast.
Sale prices for previously owned units dropped 1.4 percent from March, the biggest decline since September 2010, after four consecutive monthly increases, according to a report today by real estate website StreetEasy.com. Condo prices are likely to be little changed through the spring, rising 0.1 in May, StreetEasy projected… “After a record-breaking finish to 2013 and beginning to 2014, we may have approached the upper price limit to where buyers are willing or able to meet sellers,” Alan Lightfeldt, a data analyst at New York-based StreetEasy, said in the report.
So how have home prices managed to run up so fast in many cities during the sluggish recovery, often past the point where locals can afford to buy?
The Dish points at the globalization of real estate:
The globalization of real estate upends some of our basic assumptions about housing prices. We expect them to reflect local fundamentals – above all, how much people earn. In a truly global market, that may not be the case. If there are enough rich people in China who want property in Vancouver, prices can float out of reach of the people who actually live and work there. So just because prices look out of whack doesn’t necessarily mean there’s a bubble. Instead, wealthy foreigners are rationally overpaying, in order to protect themselves against risk at home. And the possibility of losing a little money if prices subside won’t deter them, [urban planner Andy] Yan says, “If the choice is between losing 10 to 20 per cent in Vancouver versus potentially losing 100 percent in Beijing or Tehran, then people are still going to be buying in Vancouver.”
What happens next is anyone’s guess.
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