I heard someone use the word “bifurcate“ about a half dozen times in a speech recently and so I took it as a personal challenge to incorporate it into my vocabulary. This title was the first step in getting comfortable with using really big words to describe real estate markets with segments that are behaving differently.
In David Leonhardt’s Economix column: Can’t Sell Your Home? Maybe It’s Priced Too Low is a tongue in cheek title for an interesting market dynamic that is happening in metro areas across the country. (David didn’t use bifurcate, though)
Apparently, the upper end of the market is currently performing better than the balance, in terms of number of transactions and prices. Prices and number of sales are either rising or not falling as much as the remainder.
This is something we clearly saw in Manhattan in the recent quarter.
The article attributes this to three factors:
- Affluent families have realized more income gains and benefitted more from a rising stock market.
- The weak dollar has increased buying power from foreign buyers.
- Mortgage rates and problems have had more impact on the low and middle income buyers.
Although, I doubt this is an early forecast signal for an improving US housing market. But let me bifurcate my thoughts and get back to you.