Remember some years ago, in the wake of the Great Recession, when America was flush with houses available for a bargain price?
The price of houses continues to rise in markets all across the country, and, so much so, that prospective buyers are finding themselves priced out.
According to an article at CNBC.com, nearly half of the nation’s top 50 housing markets are considered “overvalued,” even as prices continue to move steadily upward.
“A strengthening economy, healthy consumer balance sheets and low mortgage interest rates are supporting the continued strong demand for residential real estate,” said Frank Martell, president and CEO of CoreLogic, in a statement quoted by CNBC.
“While demand and home price growth is in a sweet spot, a third of metropolitan markets are overvalued and this will become more of an issue if prices continue to rise next year as we anticipate,” he added.
According to the piece, Las Vegas, Denver, Los Angeles, Miami and the New York-New Jersey metropolitan area are all examples of overvalued markets, while Boston, San Francisco, and Chicago, as expensive as they are, are regarded as being at value. The culprit this time around behind home prices blowing up is a combination of great demand and limited inventory.
The “priced out” problem is actually a new one, in comparison to when home prices were overheating in the years leading up to the real estate collapse that hit toward the end of the previous decade. The reason is that while prices were obviously skyrocketing then, all sorts of clever mortgage programs still existed that allowed people to “afford” homes even as they couldn’t genuinely afford them.
Now, though, it’s different. And while underwriting standards – which were drastically tightened after the 2008-2009 recession – have loosened a bit in the last couple of years, they remain much tighter, overall, in comparison to where they were a decade or so ago.
By Robert G. Yetman, Jr. Editor At Large