It’s clear that consumers are concerned about how quickly
home values are rising. Many people fear the speed of appreciation may lead to
a crash in prices later this year. In fact, Google reports that the search for
“When is the housing market going to crash?” has actually spiked 2450% over the
past month.
In addition, Jim Dalrymple II of Inman News notes:
“One of the most noteworthy things that came up in
Inman’s conversations with agents was that every single one said they’ve had
conversations with clients about whether or not the market is heading into a
bubble.”
To alleviate some of these concerns, let’s look at what
several financial analysts are saying about the current residential real estate
market. Within the last thirty days, four of the major financial services
giants came to the same conclusion: the housing market is strong, and price
appreciation will continue. Here are their statements on the issue:
Goldman Sachs’ Research Note on Housing:
“Strong demand for housing looks sustainable. Even before
the pandemic, demographic tailwinds and historically-low mortgage rates had
pushed demand to high levels. … consumer surveys indicate that household buying
intentions are now the highest in 20 years. … As a result, the model projects
double-digit price gains both this year and next.”
Joe Seydl, Senior Markets Economist, J.P.Morgan:
“Homebuyers—interest rates are still historically low,
though they are inching up. Housing prices have spiked during the last
six-to-nine months, but we don’t expect them to fall soon, and we believe they
are more likely to keep rising. If you are looking to purchase a new home,
conditions now may be better than 12 months hence.”
Morgan Stanley, Thoughts on the Market Podcast:
“Unlike 15 years ago, the euphoria in today’s home prices
comes down to the simple logic of supply and demand. And we at Morgan Stanley
conclude that this time the sector is on a sustainably, sturdy foundation . . .
. This robust demand and highly challenged supply, along with tight mortgage
lending standards, may continue to bode well for home prices. Higher interest
rates and post pandemic moves could likely slow the pace of appreciation, but
the upward trajectory remains very much on course.”
Merrill Lynch’s Capital Market Outlook:
“There are reasons to believe that this is likely to be
an unusually long and strong housing expansion. Demand is very strong because
the biggest demographic cohort in history is moving through the
household-formation and peak home-buying stages of its life cycle.
Coronavirus-related preference changes have also sharply boosted home buying
demand. At the same time, supply is unusually tight, with available homes for
sale at record-low levels. Double-digit price gains are rationing the supply.”
Bottom Line
If you’re concerned about making the decision to buy or sell
right now, let’s connect to discuss what’s happening in our local market.
Source: Real Estate with Keeping Current Matters
