What Do Rising U.S. Home Values Infer?
With the cost of housing up, jobs, economy flat no one is running out to buy a home. But what effect does that have on the rest of the U.S. economy?Chief economist at real estate firm Redfin, Nela Richardson said that rising prices on homes in a slow moving market is unsustainable without more inventory.
Freddie Mac said that 30-year rates were at a low 3.65%. Have home prices reached unattainable levels because of a soft economy with jobs insecure, and demand for homes rising and falling? Apparently that’s one problem.
Unstable Economy = Slow Spending
Another issue is that homes cost more than people in an unstable economy want to spend. Will that mean that the demand for rentals will increase or that people will no longer upgrade properties and instead stay in smaller homes?
Prices remain high in cities with high employment rates including San Francisco (Silicon Valley) and Denver and in Portland. Even Detroit improved according to Standard & Poor’s report for 20 cities.
The National Association of Realtors said existing home sales increased slightly to .04% after 2015 sales reached a 9-year high.
Trulia real estate firm’s chief economist Ralph McLaughlin is reported to have said recently that while homes are available and prices are rising that “the future is looking somewhat muted.”
World Economies Struggling
With financial problems in large nation economies like Russia, China and Brazil, it’s difficult to get a take on the effect that this nation’s job forecasts and unemployment rates will have. In Australia, conversely, home prices, listings have increased since February after slower than average growth in the last quarter.
Jobs Stable, Incomes Flat
United States unemployment may be at 4.9% but incomes have flattened and there are not increases to match the annual cost of living increases. What this means is that housing will not remain one way or the other but flexing with the ups and downs of personal and home incomes.
The drop of housing prices started with subprime crisis and was followed by a lull in commercial real estate assets. Chapter 11 bankruptcies in Florida remain low similar to national Chapter 11 filings which have stabilized.
January 2016 Florida Bankruptcy Filings
Florida foreclosures are down after an increase in November 2015. Bankruptcy Chapter 13 and Chapter 7 bankruptcies always rise in the new year and did so only at 3% in January compared to one year ago. Chapter 11 bankruptcy was also down from 2015.
