In today’s WSJ article Whats behind the boom, the author explores what issues are important to consider in the housing boom.

Almost everyone agrees that prices can’t keep rising this fast much longer. The debate now is whether the boom will lead to a soft landing, with gentler price increases, or to a long, painful bust, in which prices fall considerably in some places before buyers regain confidence.

However the current boom ends, longer-term forces are reshaping the housing industry. Here is a look at some of them.

  • Geographic limitations on available property
  • A higher proportion of income now spent on housing
  • Housing sizes have increased, but the trend of moving to smaller units in urban areas is gaining
  • Lenders have pushed more risky loans
  • Housing has fueled consumer spending but has also increased debt
  • Foreigners keep buying our debt, keeping mortgage rates low
  • Anti-trust pressure on NAR, discount brokers trying to make in-roads
  • The bigger home builders got bigger, gaining market share
  • Second home and investor properties are gaining in popularity

Some interesting trends on affordability and personal income:

Source: WSJ

Comments are closed.