Another Housing Bubble Brewing On the Horizon

1 comment

The NY Fed has a great set of maps that show the dynamic return of the US housing market with home prices posting year over year double digit gains in many areas. Some experts are even saying that home prices in states like California, Florida and New York are rising so fast on an annualized basis that we could be re-entering housing bubble market territory. This after only 5 years of the worst housing crisis the country has seen. Even the government sponsored enterprises, Fannie Mae (FNMA) and Freddie Mac (FMCC), which securitize nearly 90% of new mortgages are benefiting from this housing boom as reflected in their common shares which have appreciated by over 4000% this year alone! Still the gains are not even with 1 in 4 home owners currently underwater on their mortgages.


Change in Home Prices

The green shading in the above graphics is reminiscent of levels seen in 2005/06, the peak of the last housing market cycle, with almost the same regions showing the largest increases. In fact in some markets today developers are using lottery systems to allocate houses to eager buyers. I know where I live in the North East, people are struggling to find homes and it seems that every half decent property is getting multiple bids above the asking price. Low interest rates and a limited supply of new home seems to be fueling this boom even more. A good time to be a home owner, a tough time for buyers and renters.

Image source : NY Fed

{ 1 comment… read it below or add one }

Jenny May 29

I live in Chicago and my home price is still 100K below the level I bought in in 2008. So much for Obama helping his home state. New York and California always get the most help.

Reply

Leave a Comment

Previous post:

Next post: