Recent Home Price Increases are Unsustainable

Unsustainable Home Prices
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Unsustainable Home Prices

Unsustainable Home Prices

There has been much to celebrate about the health of the U.S. housing market this year, and the headlines have been full of news about buoyant – or soaring, really – home prices.  Hundreds of thousands – millions, maybe – of home owners who were previously under water on their mortgages have been put back into an equity position. However, many are saying that recent home price increases are unsustainable.

There is a growing chorus of voices singing about a need for caution.  For example, Wells Fargo, which is the nation’s premier mortgage lender, recently published a research paper, Separating Fluff from the Fundamentals.  This paper was put out by the Wells Fargo Economics Group,   and the bottom line is, quote, “We remain skeptical of the sustainability of recent price gains.”

OC Housing News – always a good source for information on the housing market – expounds on the new report from Radar Logic with seven reasons why home price gains are not sustainable.  Among those reasons are the low inventory levels (limited supply, which is already rising), builder inactivity, “unorthodox demand” ad artificially low mortgage rates.  At the end of the article they provide a link to download the Radar Logic report.

And TechCrunch, of all places, is reporting that the Silicon Valley Real Estate market – the craziest in the U.S. – just got a little less crazy, noting that bidding wars are less intense as inventory levels and interest rates are rising.  While Silicon Valley is a unique market, it is the area leader – where Silicon Valley goes, so go the neighboring communities as well.

All of this may be music to your ears if you’re a buyer.  However, if you’re a homeowner who’s been waiting just a little bit longer to jump into the market – your time is probably up.  If you’re a seller and you’re about ready to get off the fence, contact use today and request a free, no-obligation home value estimate.

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