According to the National Association of Realtors (NAR), existing-home sales slipped in June 2017 – minus 1.8 percent – as low supply kept homes selling at a near record pace – plus 0.7 percent YOY – but ultimately ended up muting overall activity. Lawrence Yun, NAR Chief Economist, said it is good news since “the demand for buying a home is as strong as it has been since before the (2008) Great Recession.”
Therefore, one wonders whether such a good market may reflect conditions for another potential real estate crisis as the US housing market seems at a top; for instances home prices in Dallas (Texas) are currently increasing 3% per quarter. Actually, analysts said, stricter criteria for lending prevent “loose lending” and make sellers prefer cash deals with buyers rather than the highest bid requiring lending on behalf of buyers.
The consequence is twofold: first, since cash is king, buyers use their available savings rather than taking a bigger debt burden in the long term; second, since borrowing money is more difficult, buyers can’t theoretically overextend their financial engagements. Although buying a home in the US is thus a bit more demanding from a financial viewpoint, it’s also a healthier evolution for both the lending and real estate sectors that should thwart a 2008-like systemic risk, realtors underlined.
However, with home prices often growing by a double digit percent each year, there is some concern that in some specific areas – especially in the fast-growing southwest – prices might be increasing too quickly.
The NAR pointed out that the “median existing-home price for all housing types in June was USD 263,800, up 6.5 percent from June 2016 (USD 247,600). June 2017’s median sales price surpassed May 2017 as the new peak and was the 64th straight month of year-over-year gains,” meaning 5 years and 3 months in a row.
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