Rows of houses, someone's nest egg

Your House: Are Homes in Metro Portland/Clark County a Bubble Waiting to Pop? (Part One)

Housing Prices Nationally Now Above Previous Bubble Peak

Americans’ biggest investment just made up its losses from the correction of 2008: US housing.

In fact, home prices are at an all-time high and surpass levels of 2008.

Source: https://www.zillow.com/home-values/ Retrieved on June 28, 2018

 

Despite this recovery, Zillow.com estimates that 10.4%, or 1 of every 10 homes, in the US remains in negative equity.  (“Negative equity” is defined as the mortgage exceeding the estimated sales value of housing).  This number has stabilized after falling dramatically from a peak of 31.4% (nearly 3 in 10 homes) in 2012.

 

Source: https://www.zillow.com/research/q1-2017-negative-equity-15888/ Retrieved on March 14, 2018.

 

Portland Housing Is Even Hotter: Reason to Celebrate or Fear?

Additionally, home prices in the local Portland region are outperforming the nation.

Zillow.com estimates Portland as one of the 3 hottest markets in the US. Currently, Portland boasts the lowest levels of homes in positions of negative equity (4.2%).[1]

According to the US Federal Housing Finance Agency, home prices today well exceed the prior peak in 2007.  The graph below estimates that prices today are +26% above the prior peak achieved 10 years ago.

 

 

Source: https://fred.stlouisfed.org/series/ATNHPIUS38900Q Retrieved on June 28, 2018.

Clark County Housing: Should We Laugh or Cry?

Clark County homes have also enjoyed a strong recovery. Prices are nearly +10% above the prior peak price a decade ago.

 

Source: https://fred.stlouisfed.org/series/ATNHPIUS53011A Retrieved on June 28, 2018.

 

So, is this a rational development or a return to an irrational property bubble?

On the one hand, current low supplies of homes, low vacancies, and more renters might support further gains for housing.  However, risks such as a possibly weaker job market or a future spike in interest rates might put housing out of reach for many buyers.  That might cool the real estate market.

How did the market get to where it is today?  Can it last?

Should you consider precautions for your financial nest egg?

 

Schedule appointment

 

[1] https://www.zillow.com/research/q1-2017-negative-equity-15888/ Retrieved on March 14, 2018.

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