There’s no housing meltdown on the horizon
Media reports have increasingly focused on whether a major home sale slowdown, or maybe even a crash, is in the making. They're doing it, in part, because buyer demand has fallen in many hot housing markets, and some economists predict that total home sales will fall in 2018 compared to 2018.
But the possibility of a crash is unlikely, says Lawrence Yun, chief economist for the National Association of Realtors® (NAR).
Writing in Forbes magazine, Yun says that slowdowns in hot markets don't reflect weak buyer demand that could be an indicator of a true slowdown; they're caused by insufficient supply. When homes come on the market, especially in areas like Seattle and Denver that have strong job growth and little unemployment, they're typically snapped up.
In other positive signs, home price growth remains strong in markets across the country – about 5 percent on a nationwide basis so far this year – and there are no signs of the credit excesses that characterized the housing crisis 10 years ago.
"Lending standards today are still stringent, as evidenced by the higher-than-normal credit scores of those who are able to obtain a mortgage," Yun says. "That is why mortgage default and foreclosure rates are at historic lows."
In short, Yun says, today's housing problem stems from insufficient inventory. The problem is driving up home prices, hurting affordability and keeping sales from matching demand.
That is a serious problem and the answer is to encourage builders to increase supply, Yun says, but it is not a prelude to a crash.
Source: "No Housing Recession Over Horizon," Forbes.com (Aug. 2, 2018)
Information provided by Florida Realtors. Click here to see the original article.