U.S. Housing Market Decline?

[Paul Rojas]

I came across this article today and I would like to get your thoughts on it. As I’m sure most of you are aware, the housing market has been recovering since the financial crisis in 2008. Since then, there has been a steady increase in home values. This past year due to COVID-19, there has been a significant increase in real estate sales. Many real estate experts believe the market will continue to increase with no apparent slowdown in the near future. Mark Zandi from CNN Business wrote this article saying otherwise. In his article, he provided reasons why he believes there are signs that the housing demand is set to decline. Here are the key highlights from his article:

• * Zandi believes that surging prices with homes being overvalued is set to hurt the housing market.
• * Home building has been too slow to meet the demand of the market. This is causing Homes to be bought over the asking price.
• * The new remote work option being used nationally has also allowed people to move to different locations without the need to live in major cities. This allowed buyers with bigger pockets to overpay for homes in smaller income based areas.
• * The house price increase is also due to the all time low fixed mortgage rates.
• * Government actions to forestall distressed home sales will begin to fade when the economy returns to full health.

He makes some interesting points in his article, but I’m not sure I fully agree. There is still a lot of liquidity in the market and investor purchasing power seems to be strong as well. What do you all think about this? Is the U.S. housing market headed for a decline? https://www.cnn.com/2021/06/29/perspectives/housing-market-pandemic-economy/index.html