The City of Mesa Brags About Highest YOY Increases in Home Values. . .Is this "The Great Re-Shuffling" ??

Sounds familiar like Déjà Vu all over again - right around THE GREAT RECESSION... is there anything different we can call it?

 

"The last time the U.S. saw such skyrocketing home prices, the ensuing crash brought down the global economy. Most industry analysts say the current boom is not a “bubble” akin to that frenzy of more than a decade ago, which led to the financial crisis.Sure, the pandemic shut down basically everything. But the housing market? It’s kept on chugging along. In fact, prices are soaring.

Soaring home prices are starting to alarm policymakers

POLITICO |                        

The last time the U.S. saw such skyrocketing home prices, the ensuing crash brought down the global economy.

The current pace of home price appreciation is unsustainable, industry analysts say.The booming housing market helped stave off economic collapse in 2020. But soaring prices are starting to worry policymakers, who fear the market could lock a generation of would-be buyers out of homeownership.

Home prices in January — typically a slow month for the market — were up 14 percent over the same month the previous year, while sales jumped 24 percent, despite an unemployment rate that was almost twice as high. Demand for existing homes is so strong that the average residence is on the market for just three weeks, and inventory is at a record low after seeing its steepest drop last year since the data was first tracked in 1999.

It all threatens to freeze broad swaths of the population out of the market, leaving millions of Americans in a less secure financial position, widening the racial wealth gap and forcing millennials, already lagging previous generations in building wealth and forming families, to fall even further behind.

. . .

At first blush, market activity appears reminiscent of the boom before the 2008 credit crisis. Mortgage balances grew by $182 billion in the fourth quarter of 2020, the biggest quarterly uptick since 2007, according to the Federal Reserve’s latest report on household debt. More mortgages were originated in the fourth quarter of last year than in any single quarter since the Fed started tracking it in 2000, surpassing the previous high from 2003.

But the loans being made today are much stronger than they were then: 71 percent of originations in the fourth quarter of 2020 went to borrowers with credit scores above 760, considered a very strong number, compared with 31 percent of mortgages going to such creditworthy borrowers in the third quarter of 2003.

Strict regulations enacted after the crisis are partially responsible for the change. . .

Most analysts expect home prices to continue to increase this year, even as gradually rising mortgage rates temper demand a little bit. But it could be years before the supply of housing can meet demand. In the meantime, millions of people will find themselves priced out.

“One wonders what is the end game, how does this play out given the heated market conditions of too many buyers, multiple offers?” Yun said. “As prices simply outpace people’s income by a large margin, people won’t qualify to get a mortgage.”