Well, well, well… Who would expect this from the National Association of Realtors?
Back in the days of the last housing bubble, David Lereah was chief economist for the National Association of Realtors. He was so confident that prices would rise forever, he wrote Why the Real Estate Boom Will Not Bust – And How You Can Profit from It. His replacement, Lawrence Yun, doesn’t seem quite so happy about steep price rises. He said yesterday:
[I]f home sales hold at the [current] level or even a 5 to 6-month supply, price increases are guaranteed. We don’t want to see rapid appreciation in prices faster than income.
Why the concern for “rapid appreciation in prices faster than income”? Because housing, unlike other assets, cannot stray too far from income. [Unless, of course, wonky financing makes it possible.] When prices rise beyond the reach of buyers, homes don’t sell and experience downward pressure on prices. The exception is when a speculative bubble occurs. When that happens, you get a “housing bubble” or “rapid appreciation in prices faster than income“.
Might it be that Yun sees a new bubble in the making?[Thanks L!]