Is this the right formula for a housing bubble? | Katonah NY Real Estate
While the housing market is feeling some wobbles right now, leading economists say there is no cause for concern that, one, the market is in a bubble and, two, there is a chance of that bubble popping soon.
The reason for this conclusion is primary due to doubts that there is even a bubble in the first place.
More than 4 million residential property owners regained lost equity in 2013, primarily due to home price gains, but as a result, the market is starting to talk of a bubble, CoreLogic (CLGX) most recent MarketPulse report said.
However, rising home prices are not the only angle to look at the housing market.
“Because most homeowners use their income to pay for a home mortgage, there is an established relationship between income levels and home prices,” Mark Fleming, chief economist with CoreLogic, said.
“In the long run, home price growth cannot be sustained above income growth because housing would become unaffordable, demand would decline and home price growth would either slow or decline to realign with income levels,” he continued.
Bubble watching is as much art as it is a science because there is no definitive measure of fundamental value, Jed Kolko, chief economist for Trulia, said in its latest Bubble Watch report.
http://www.housingwire.com/articles/29419-is-this-the-right-formula-for-a-housing-bubble
The reason for this conclusion is primary due to doubts that there is even a bubble in the first place.
More than 4 million residential property owners regained lost equity in 2013, primarily due to home price gains, but as a result, the market is starting to talk of a bubble, CoreLogic (CLGX) most recent MarketPulse report said.
However, rising home prices are not the only angle to look at the housing market.
“Because most homeowners use their income to pay for a home mortgage, there is an established relationship between income levels and home prices,” Mark Fleming, chief economist with CoreLogic, said.
“In the long run, home price growth cannot be sustained above income growth because housing would become unaffordable, demand would decline and home price growth would either slow or decline to realign with income levels,” he continued.
Bubble watching is as much art as it is a science because there is no definitive measure of fundamental value, Jed Kolko, chief economist for Trulia, said in its latest Bubble Watch report.
http://www.housingwire.com/articles/29419-is-this-the-right-formula-for-a-housing-bubble
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