We had a hell of a housing bubble there for a while, but thanks to a disastrous 30%+ collapse from the peak, prices are now pretty much back to normal.
How do we know?
We look at the charts!
Bill McBride at Calculated Risk has updated some of his excellent housing charts with today’s latest Case-Shiller price information.
Here’s what they show.
First, nominal prices have basically returned to their long-term trend.
And so have “real” prices (after adjusting for inflation).
Most importantly, house prices are now trading at a reasonable (if still slightly elevated) level relative to their “fundamental”–the rent required to lease a similar space. As you can see in the final chart below, the national price-to-rent ratio is now back in line with the long-term trend.
Of course, house prices vary wildly by market, so don’t necessarily get duped into thinking that prices in YOUR hood are back to normal.
And if you are thinking of buying a house–and you plan to borrow through the nose to do it–you should probably get cracking. At the rate interest rates are rising, your future mortgage is going to get more expensive by the day.
(Of course, higher mortgage rates, in turn, will likely slow the rise of house prices, so maybe you’ll be fine…)
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