Home prices are rising three to four times faster than wages. In San Diego, the Median Sales Price was up 7.0% to $551,000 for Detached homes and 4.0% to $360,000 for Attached homes over March last year.
While skyrocketing prices have sparked some talk that the housing market could be approaching bubble territory, Lawrence Yun, chief economist for the National Association of REALTORS®, does not believe we are entering a New Housing Bubble in his latest column at Forbes.com.
“The suggestion of a new bubble is misplaced, because three major items are left out when looking at the current housing market trends.” Yun writes.
His three major items are;
1. Even though the credit conditions appear to be easing somewhat, the move is from overly stringent conditions to not-so overly stringent conditions. It is a far-fetched view to imply the current mortgage approval process in any way resembles the loosey-goosey, easy subprime mortgage access conditions of a decade ago.
2. Exceptionally low mortgage rates have permitted people to buy a home without overstretching their budget.
3. The limited supply of homes for sale is what mostly is behind the latest home-price increases, not housing frenzy fueled partly by easy subprime credit.
San Diego Association of Realtors also have optimistic views in the latest San Diego Real Estate market report.
“Negative housing headlines should be read with calm or skepticism, not alarm. National housing trends, like the steady rise in home prices and decline in inventory, should certainly be observed with care, but tracking wider economic conditions is also necessary. Home Buyers want to get into the market, but unlike the rising-price sales environment of ten years ago, people are not diving headlong into risky mortgages or uncomfortable situations. This carefulness should be celebrated, not feared.”
Mortgage rates continued to fall this week and dipped to new 2016 lows and the lowest rates since May 2013, according to a weekly survey of national mortgage rates by Freddie Mac.
Even though housing prices are rising above wages, our low mortgage rates have been a silver lining.
Comments (3)Subscribe to CommentsComment