Why a housing market slump if the economy is booming?
NEW YORK – Nov. 21, 2018 – Economists note the relationship between home sales and the incomes of the people who live there – or want to live there – has come undone over the last six years.
Nationally, personal income per capita has risen 25 percent since the end of 2011, while the S&P/Case-Shiller national home price index is up 48 percent. Although demographics are favorable for housing demand as millennials enter the prime years for home buying, that won't help if prices are out of reach relative to incomes.
Moreover, lending standards have remained more rigorous than they were during the last housing boom, so it's been harder for people to stretch to buy a home.
Industry observers say sellers appear to be trying to cling to the spring 2018 prices that their neighbors received, while there aren't enough buyers in late 2018 willing or able to pay those prices.
Economists say a strong economy makes it more likely that this housing slump will end without a steep 2008-style downturn. But in the meantime, it could be a soft few months or even years of standoffs between buyers and sellers.
Source: New York Times (11/15/18) Irwin, Neil
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