Bubble

Buying today means buying high, say most homebuyers and owners

Buying today means buying high, say most homebuyers and owners

Earlier this week, a “rare bear” who caught national attention by accurately predicting the last housing crash in 2005 returned to the headlines. The famed money manager sounded the alarm that current housing "valuation extreme" looks a lot like it is 2005 all over. And he used the b-word, cautioning homebuyers are again in denial of a bubble just as they did before 2007. 

There are no doubt both many bear and bull economists right now, each with their own opinions on the subject. But, to the non-economist homebuyers, this is all just more conflicting noise that impacts their confidence and decision making.

MarketWatch - Why many Americans are worried about buying a home

MarketWatch - Why many Americans are worried about buying a home

As originally seen on MarketWatch

Our economy has come a long way since the 2007-09 recession: Wages are going up, unemployment sits at 4.4% (the lowest level since May 2007)—and we’re in the midst of the second-longest bull market ever.

What isn’t growing at an impressive pace? Americans’ confidence in the housing market.

Despite other positive economic indicators, rising home prices and uncertainty about the election left the ValueInsured Housing Confidence Index flat last summer. And while optimism briefly shot up postelection—particularly among millennials, according to the index—it’s dropped again: In March, the Fannie Mae Home Purchase Sentiment Index decreased 3.8% overall, with the percentage of Americans who think now’s a good time to buy falling 10%.

What are we so worried about?

Homebuyers’ confidence on the rise as some anticipate correction on overheated prices

Homebuyers’ confidence on the rise as some anticipate correction on overheated prices

Homebuyer sentiment has always been a very interesting, dynamic and often unpredictable factor in the housing market. Take home prices, for example. According to the recently released S&P/Case-Shiller U.S National Home Price Index, home prices in December 2016 continued a record-breaking streak, having risen to a 30-month high. Previous all-time highs were smashed in seven major cities, including Boston, Charlotte, Dallas, Denver, Portland, San Francisco and Seattle. By all account, inventory has been tight, and there is the looming threat of imminent interest rate hikes. You would think homebuyers would be deterred; some might even throw in their towels and decide to stay life-long renters.

However, homebuyer psychology is a funny thing....

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