The housing market has gone through a lot in the past ten
years but more recently there has been another issue that was been coming up.
This issue has to do with the fact that 48% of the nations’ top housing markets
are considered “overvalued”. What overvalued means is that the prices are 10%
or higher than the long-term sustainable level. Which essentially means that
the housing market wouldn’t be able to stay on this track for very long because
it isn’t maintainable. The reason for this overvalue could in part be due to
the strengthening economy which increases consumer spending and creates a
strong request for real estate. Austin Texas in particualr has one of the highest amounts of "overvalued" homes in the nation. This high demand for real estate has created a
situation where there is very minimal availability which just continues to
skyrocket the prices. Another main issue is that consumers are finding it very
easy to sell their homes but then are have problems finding a home that fits their
needs and that is reasonable priced. I believe this will all change, if in the
next coming months the economy takes a turn for the worst. This would create
the opposite effect on the housing market and favor buyers. All in all I believe
that this “overvalued” housing market will not last very long and will shift in
the upcoming months.
Perhaps this is a problem that could be fixed with an increase in the supply of houses, increasing the supply would push down demand and would thus lead to a decrease in prices. There could be another housing bubble on the horizon, with interest rates so low and credit is becoming more easily available, house values can soar. If people expect that housing prices will continue to increase they become more eager to get into the housing market, resulting in increases in housing prices. Maybe creating a sustainable rental market could help, I know in some big cities like Austin it is hard to find a place to rent or buy, and if a place is found, as your post suggests, it is too damn expensive. So maybe a policy can be implemented to help with rental prices, not price floors or ceilings, but maybe through direct subsidy to the renter, maybe this could help with increasing housing prices.
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