According to Neil Irwin writing for the New York Times, the housing market in general, and home prices more specifically, seem to be stabilizing at last after nearly a decade of dramatic ups and downs. Buyers are no longer feeling the need to either put off buying for a better time or jump in immediately to get the best deals as the market becomes more regular over the long term.
“In contrast to the periods of irrational optimism and pessimism, the market is settling into a balance in which buyers are comfortable spending what they can afford given their income and savings, but aren’t willing (or able to persuade lenders) to stretch beyond that,” Irwin writes.
This normalization is comforting to real estate industry experts, who for a while feared another housing bubble due to the double-digit percentage-point growth rates in home prices in 2013 and 2014. This growth seems to have slowed to a reasonable rate at the beginning of 2015. During the 12-month period ending in March 2015, the S.&P. Case-Shiller national home price index rose by only 4.1 percent, keeping pace with the average increase in Americans’ incomes over the same period.
What’s more, prices are also now more in line with incomes. Fitch Ratings has calculated that housing in America is currently about 3 percent overvalued compared to other household expenses, which is a dramatic improvement from 2006, when it was 26 percent overvalued, and 2011, when it was 7 percent undervalued.
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