Housing bubbles, involving unsustainable home price inflation, are again on the worry list. Are rising real estate prices a sign of recovery, or of impending doom? The jury is out.
Signs of a new bubble, based on the prices of homes compared with their underlying value, show up in California and Texas, according to economics and finance blogger Nin-Hai Tseng on CNN Money. But, she says, “joblessness has held back many would-be buyers. And while more borrowers are being approved for new mortgages, lending standards at banks remain tight.” Tseng cites economist Jed Kolko of the real estate site Trulia, who says that the overall housing market is still undervalued by about 7 percent. tinyurl.com/BubbleTseng
Read more from Kolko, who leads Trulia’s housing research, at the Trulia site. He has a more recent post than the one above that’s titled “At 54 percent back to normal, housing market still in a long, slow recovery.” tinyurl.com/BubbleKolko
Posing the question. As in many of the latest posts about housing, the issue of a possible new housing bubble is posed as a question here at the Exchange, a Yahoo Finance blog. Writer and economist Dean Baker explains that the overall picture in the U.S. housing market doesn’t indicate a new bubble but that in some markets — some of the same ones that led the last bubble, such as Phoenix and Las Vegas — are seeing alarming price increases. On the other hand, Baker says, “These markets were all badly beaten up in the crash with prices falling back to levels not seen since the mid-’90s. As a result, current prices in these markets are not obviously out of line with fundamentals.” tinyurl.com/BubbleExchange
It’s hype, or not. Don’t believe the hype, says Wall Street Journal blogger Phil Izzo. He cites analyst Dan Greenhaus at the institutional brokerage BTIG, who wrote last week: “Can home prices again be in a bubble and yet be 27 percent below their previous peak? Perhaps, but we don’t yet think so.” tinyurl.com/BubbleIzzo
Greenhaus is a CNBC contributor. Read his research commentary directly at the BTIG site. You’ll have to register for access, but it’s free. tinyurl.com/BubbleGreenhaus
Do your own math. For a deep dive on housing statistics, look to the U.S. Census Bureau, which offers this page as a jumping-off point for historical and current information about housing markets, financing and trends in buying vs. renting. The broad range of available information includes residential financing, housing vacancy and ownership statistics. Click on “Related Sites” for links to construction data, research from mortgage backers Fannie Mae and Freddie Mac, and other goodies. tinyurl.com/BubbleCensus
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