Even bystanders to the housing market have been whispering fears they hope no one overhears, “Are we in another bubble?” “How much higher can the prices possibly go?” “Is the housing market going to collapse…again?” Joe Melendez, chief executive officer of down payment insurer ValueInsured, recently answered, “No,” “Not much,” and “No.” But, there is some equivocation in his stance. “Certain areas of the country, metro markets in particular, may be approaching a bubble…Just look at 2007 low home prices in Washington State and look at its low home prices today. There’s been an incredible increase.”
Does equivocation warrant a sigh of relief? It depends.
ValueInsured just published its monthly survey that suggests many homeowners believe the housing market is overvalued and that prices are not sustainable. 58% of homeowners, the first time this percentage has ever been higher than 50%, think that a price correction is coming within the next two years. This 58% is a 12% increase from last month’s ValueInsured survey. Obviously homeowners are more aware of and more sensitive to the market’s price movements and more aware of affordability/non-affordability issues than ever before.
This is where Melendez’s equivocation shows up in the ValueInsured survey. Homeowners in states seeing significant jumps in population density, (Washington, Florida, New York, California), are believing that now is a good time to sell.
Will people not buy if they think the market is close to or at its peak? Will people be less happy when they do buy?
According to Melendez, people still want to own. And, over the long haul of an average ownership tenure of 9 years, home ownership is still the way to go, particularly with rent pricers escalating as quickly as, if not more than, home prices.
A major caveat, according to Melendez, is that potential owners, particularly Millennials, want to be more and better educated about home ownership and its inherent risks. Remember, Millennials are recession babies and highly conservative fiscally. They want their piece of the American dream as represented by owning a house but they’re concerned about home values holding. Seems that their not the only ones questioning what to do these days.