A Tale of Two (types of) Cities | NAR: Research: Real Estate Insights: Chief Economist's Commentary
"A Tale of Two (types of) Cities"
NAR: Research: Real Estate Insights: Chief Economist's Commentary:
by David Lereah, Chief Economist
Well, the boom is over and most of our nation’s hot housing markets are cooling. Home sales are off 5 to 20 percent in some markets that were once setting annual sales records. But there have been no signs of bubbles bursting as of yet. Real estate activity began slowing about six months ago, and – perhaps with some fingers and toes crossed – our nation’s housing industry is managing a soft landing. And quite nicely, thank you. It is true, some of those “hot hot hot” markets are experiencing more of a cooling down than are others, but there is also a silver lining to that: some of America’s non-boom markets are showing signs of life.
During the real estate boom’s five-year run (2001 to 2005), about 65 of the 135 metropolitan areas on which the National Association of REALTORS® tracks price data experienced robust price appreciation. The households living in – and investors investing in – those 65 boom markets during those five years enjoyed substantial equity gains on their properties and no doubt engendered the envy of non-boom homeowners and investors. Indeed, to the dismay of the remaining 70 metro areas, the boom seemed to discriminate as it passed over them. But today, the housing coin has flipped – sales are softening in (former) boom cities and gaining momentum in non-boom cities. It appears the haves and the have-nots have reversed places.
What is driving that reversal of fortune? The answer is: affordability. Quite simply, affordable metros are in favor and unaffordable metros are experiencing a correction. Let’s look at both situations.
NAR: Research: Real Estate Insights: Chief Economist's Commentary:
by David Lereah, Chief Economist
Well, the boom is over and most of our nation’s hot housing markets are cooling. Home sales are off 5 to 20 percent in some markets that were once setting annual sales records. But there have been no signs of bubbles bursting as of yet. Real estate activity began slowing about six months ago, and – perhaps with some fingers and toes crossed – our nation’s housing industry is managing a soft landing. And quite nicely, thank you. It is true, some of those “hot hot hot” markets are experiencing more of a cooling down than are others, but there is also a silver lining to that: some of America’s non-boom markets are showing signs of life.
During the real estate boom’s five-year run (2001 to 2005), about 65 of the 135 metropolitan areas on which the National Association of REALTORS® tracks price data experienced robust price appreciation. The households living in – and investors investing in – those 65 boom markets during those five years enjoyed substantial equity gains on their properties and no doubt engendered the envy of non-boom homeowners and investors. Indeed, to the dismay of the remaining 70 metro areas, the boom seemed to discriminate as it passed over them. But today, the housing coin has flipped – sales are softening in (former) boom cities and gaining momentum in non-boom cities. It appears the haves and the have-nots have reversed places.
What is driving that reversal of fortune? The answer is: affordability. Quite simply, affordable metros are in favor and unaffordable metros are experiencing a correction. Let’s look at both situations.
posted by Patrick Leblanc at 10:03 AM
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