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FAU Study Shows U.S. Housing marketplace Overheated

Markets Economy

FAU Study Shows U.S. Housing marketplace Overheated


National housing prices as one are slightly overheated and residential stock markets get each year minimal downward pressure for the interest on homeownership, according to a new study from faculty along at the Florida Atlantic University College of Business.

The study’s author, Ken Johnson, Ph.D., a proper estate economist with FAU’s College of economic, said the U.S. is nearing the peak of the current housing cycle, evidenced because property prices across the country are increasing but in a decreasing rate, meaning property appreciation is slowing.

The study, “Where Am i Now with Housing: A study,” investigates and compares the current status of U.S. housing at a national level the real key of housing for the peak in the last cycle in July 2006.

“All evidence is suggesting the national housing market is peaking,” Johnson said. “However, this time around originating from a national perspective things should end up quite differently.”

Based on scores with the Beracha, Hardin & Johnson Buy vs. Rent Index, which Johnson coauthors, and data in the S&P CoreLogic Case-Shiller 20 City Composite Home Price NSA Index, the investigation finds that housing price is currently 7.3 % above their long-term pricing trend, with minimal downward pressure for the sales of homeownership.

For comparison, for the peak within the last housing cycle, prices were 31 percent above their long-term pricing trend. Johnson’s BH&J Index was nearing a score of just one (optimum score) the summertime of 2006, indicating extreme downward pressure about the interest on owning. Today, that score stands at .039.

“It resembles we’re in for the rest of an exceptionally high tide, rather than a tsunami, as residential pries peak on this latest cycle,” Johnson said. “At the very least, we can expect flatter housing price growth. At worst, we could experience price declines slightly underneath the long-term pricing trend.”

Johnson’s studies is with different national composite of housing prices and estimates of the downward pressure about the interest on owning, and so the housing picture in many cities look vastly completely different from others. As an illustration, three metropolitan markets C Dallas, Denver and Houston C are common currently significantly above their long-term housing price trends, with superb scores for the BH&J Index.

“Could crumbling local housing markets establish a contagion problem that spreads into other markets in the united states?” Johnson asked. “That’s something we’ll ought to keep an eye on. Residential housing cycles are a fairly new phenomenon, which makes predicting a range during the coming housing slump quite hard.”


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