The surge in home prices that’s affected almost every market in the country won’t last forever—it probably has only another year.
After that, will higher prices stay higher? In the long run, higher prices are dependent on income, which hasn’t surged anywhere.
Or will they crash as they did in the 2008 recession? And don’t forget, the war in Ukraine could overtake all forecasts, including this one.
Part of the answer lies in how high prices have risen, and part lies in how strongly new job growth will support demand for housing. Even though prices have boomed in most markets, few of them can sustain continued demand.
Here are 10 markets where home prices are sharply higher in the past year. They all are overpriced compared to local income, some more than others. In five of these markets, the number of jobs grew rapidly in the past six months; in the other five, job growth was much weaker.
The markets with weak job growth are very likely to see a decline in home values after next year. The boom will bust. Markets with strong growth are more likely to see home values hold up. The boom will just fizzle out.
Eventually, all markets get back to a balance of jobs, income, and home prices, but we’ll see some big differences in how long that takes.
Ingo Winzer is president of Local Market Monitor and has analyzed real estate markets for more than 30 years. The Investors Metro Analysis shows the opportunity and risk in 200 local real estate markets at www.LocalMarketMonitor.com, including the best rent range in all local ZIP codes. Winzer’s views on real estate markets are often quoted in the national press.
Previously, Winzer was a founder and executive vice president of First Research, an industry research company acquired by Dun and Bradstreet in 2007. He is a graduate of MIT and holds a master’s degree in finance from Boston University.
0 Comments