Real Estate Growth Market Or Impending Bubble? How To Tell The Difference

Home prices took a nosedive during the Great Recession that started in 2008. Prices fell in all local markets, but much more in some than others. And afterwards some had a better recovery than others. Why? And, more important, could we have predicted that?

Job growth is part of the story, but not a very useful one because nobody can predict which markets will have more jobs in the future. Furthermore, how come San Francisco and Denver had the same job loss in the recession, but home prices fell 20 percent in the former and only 5 percent in the latter?

Something else is at work here and we can capture it by comparing real home prices with the “income” price — the price that balances with local income. It is what we at Local Market Monitor call the Equilibrium Home Price.


Category : Blog



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