(TargetLiberty.org) – Contrary to expectations the U.S. housing market has managed to avoid an expected crash. However, the possibility of a large decline in the prices of properties could still be on the horizon according to a Pantheon Macroeconomics analyst note.
Kieran Clancy, a Pantheon economist stated that while many people believe that the housing market was hit its lowest and that it will soon be recovering, in reality, the market’s better performance this spring is an effect of large discounts and the fact that none of the old inventory is reselling. He argued that this is not what an actual housing market recovery would look like.
In the note, Clancy proceeds to express confusion about the recent reports of the housing market recovering. He added that home sales may have increased at the start of the year, but that is only because of the temporary dip in the mortgage rates. He then argued that the mortgage rates have climbed back up recently which means that the mortgage applications are going to fall soon.
He proceeded to state that there was only one true way for the housing market to recover, and that is if there is more affordability. However, ATTOM, a real estate analytics firm, wrote in a recent report that affordability has dropped since spring and that the median single-family house price has increased to $350,000. This means that from the first to the second quarter there was a 10 percent jump, marking one of the largest increases in the last decade.
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