Prices Starting to Top Out

By Suzanne De Vita

Home prices are starting to top out, with appreciation decelerating as the market moves toward a peak, according to the Buy vs. Rent Index published by Florida Atlantic University (FAU) and Florida International University (FIU). 
 
"Housing markets are slowing, suggesting that we are nearing a peak in housing markets around the U.S.—but this is good news, as we are pulling back from the brink, unlike we did in 2007," says Ken Johnson, a creator of the Index from FAU's College of Business and an economist.
 
"Our data indicates that prices are above their 40-year trend, but not significantly so as they were in 2007," says Eli Beracha, a creator of the Index and associate professor at FIU's Hollo School of Real Estate. "Rather than a crash, I anticipate slower growth in prices accompanied by longer marketing times for sellers and increasing inventories, which should bring prices back in conjunction with their 40-year trend."
 
Formally the Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index, the gauge is a measure of 23 metropolitan areas: Atlanta, Boston, Chicago, Cincinnati, Cleveland, Dallas, Denver, Detroit, Honolulu, Houston, Kansas City, Los Angeles, Miami, Milwaukee, Minneapolis, New York, Philadelphia, Pittsburgh, Portland, San Diego, San Francisco, Seattle, and St. Louis. It is similar to the S&P CoreLogic Case-Shiller Indices—which encompass 20 metros (with some overlap)—but also includes factors like mortgage rates. 
 
Thirteen of the BH&J Index's markets are "moderately" to "slightly" in buy territory, indicating it is more advantageous financially to purchase, while 10 are in "moderately" to "slightly" rent territory.
 
The adjustment anticipated by FAU/FIU has been on many a radar. A forecast by HouseCanary projects that 41 of the largest 100 metros will experience a price slowdown this year. Analysts at CoreLogic are predicting an overall stabilization, as well, and economists at Zillow are expecting a "normal" tempering
 
What is causing the cooling? Along with a basic cycling of the market, other drivers include the as-yet-determined implications of the Tax Cuts and Jobs Act and increasing mortgage rates
 
Suzanne De Vita is RISMedia's online news editor. Email her your real estate news ideas at sdevita@rismedia.com.

Thanks for visiting my Blog site. If you would like to discuss this topic with me or get more information please contact me by calling 919-247-4667 or emailing me at Tim@TheTrianglesBroker.com. And you can always visit my personal real estate website for lots of additional information and to search for homes at www.TheTrianglesBroker.com or www.BuyAndSelllingTriangleHomes.com  McBrayer – The Triangles Broker.

Reprinted with permission from RISMedia. ©2018. All rights reserved.

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