Yes, it's definitely a bit early to be speculating about the chances of another housing bust so soon after the last one. In any case, a Journal article (link below) highlights the recent sharp rebound in housing prices that's in many ways being created by the same policies that created the housing boom and subsequent bust of the 2000's. Could we see another housing crash this decade? With government pushing many of the same policies that led to the first, the chances are looking good.
http://online.wsj.com/article/SB100014241278873247895045783846822924757…
no. Prices are too low.
The markets that are experiencing the highest levels of appreciation are also the markets that took the biggest hits, they are increasing dramatically YOY but need to maintain this growth in order to "catch up" to previous levels. You must remember that the institutional capital that is buying into the distressed single family market is betting on equity appreciation.
If a neighborhood with 300 homes, has 100 foreclosures, then the values for the entire area drop dramtically. By purchasing bulk portolfios and restoring all of these troubled assets in a tight time frame; the values will appreciate much faster than if Joe Smith the local entrepreuer was buying them one by one and flipping them.
I may be missing something but if the buyer can afford it and has the appropriate credit profile, why do high housing prices matter in regards to a potential bust?
I'd say between the artificially high demand caused by allowing everyone to get credit (because this worked well last time) and the artificially low supply caused by institutional investors buying up houses in the thousands... there is NO way we'll have another
Almost certainly. With the PEs aggressively scooping up distressed homes, they will likely look to resell these as soon as there is an indication that home prices are moderating (or potentially turning down). The 6-8% rental yields aren't enough for the PEs, they also need the price appreciation. My guess is they'll start puking these up onto the market as soon as they anticipate interest rates will start to rise. So let's say rates start tightening in '15 (wild guess), PEs will probably anticipate this in '14, and so we should see a ton of supply coming back on the market as early as next year.
This cycle is very different from previous housing cycles in that its not being driven at all by first-time buyers. Instead, its institutions and foreign nationals that are causing prices to spike. Millenials are still basically absent from the market -- recovery won't be sustainable unless they can step up.
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