![]() ![]() ![]() At some point, affordability becomes an issue. "In some markets, house prices rose over 40% in just two years. The inventory spikes in markets like Las Vegas suggest that may once again hold true. Historically speaking, when a housing cycle "rolls over," it's normally the significantly "overvalued" housing markets that are at the highest risk of home price corrections. Simply being overvalued relative to underlying economic fundamentals doesn't guarantee a home price correction. Meanwhile, Virginia Beach is "overvalued" by just 19%. According to Moody's Analytics, Boise and Austin are "overvalued" by 72% and 61%, respectively. The Pandemic Housing Boom has pushed home prices in markets like Austin and Boise far beyond what local incomes would historically support. ![]() We’re still under-supplied, but also still have an affordability problem for local buyers," Wrigley says. "If the market can slow new permits, and absorb the backlog of completions finishing now through spring, there is optimism the market will normalize. Wrigley, who up until June was a director of operations at a Boise homebuilder, remains hopeful that local builders can off-load a lot of this inventory before it becomes an issue. They’re making concessions and moving inventory," says Mac Wrigley, a senior operations manager at Boise-based Sekady Capital. Unlike 2008, many aren’t being caught as off guard this time. "We’re seeing builders pull back across the board. If buyers aren't found, those homes could put downward pressure on Boise home prices. One reason? There's a glut of new construction in Boise that will soon hit the market. That includes both John Burns Real Estate Consulting and Moody's Analytics. The swift inventory spike explains why there's no shortage of national research firms predicting that home prices are about to fall in Boise. ![]()
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