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The ghosts of the 2007 US housing bubble have resurfaced again, and it's got analysts terrified.
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A flashback: In 2007-08, the U.S. housing boom of the 2000s finally burst its bubble with bad loans, market corrections and a ton of other unclaimed baggage (Citigroup or Bank of America would know).
Cut to 2022 and these are the trends:
🎈 Home prices increased by 34.4% over the last two years.
🎈 19.8% price jump in the last year, 4+ times more than the 4.6% historic annual average since 1987. It also exceeds the biggest such jump before the 2008 financial crisis.
🎈 Home prices are again de-linking from average household incomes. The 100 biggest housing markets are overpriced in relation to economic fundamentals. 44 are overpriced by 30% while 13 are overpriced by 50%.
🎈 Boise is the most overpriced market followed by Austin, Ogden, Utah, Las Vegas and Atlanta.
🎈 Economists are predicting a drop of 5-10% in home prices over the next year, once demand cools.
🎈 Eerily, in March 2007, 99 out of the 100 biggest markets were overpriced. 40 of them were overpriced by 30% while 19 were overpriced by 50%.
What Could Be Brewing
A burst bubble may be likely, going by the uncannily similar signs. Yet, economists feel that the backlash won’t be as severe. They point at lower speculation levels in the housing market this time, while also indicating that household finances are in better shape.
Amen to that.