This will be a very brief post, as I’ve got a ton of work to do. But I had to put this up somewhere just to get some thoughts.
As you can see from the image above, we are now roughly at the same point ABOVE the height of the real estate bubble in Q1 of 2007 as that point was above Q1 of 2003. I know, I know this is in unadjusted dollars and as far as I know, this is not adjusted for inflation either.
But that is the St. Louis Federal Reserve’s FRED data for Median Sales Price of Houses Sold (including both new construction and existing home sales). I’m a little nervous about it.
- In Q1/2003, the median sale price in the U.S. was $186,000.
- In Q1/2007, the very height of the Bubble, the median sale price was $257,400. The difference between the two was $71,400 — meaning that the median house in the U.S. cost that much more in 2007 than it did in 2003.
- In Q1/2018, the median sale price was $328,000, or $70,600 more than it was in Q1/2007.
Once again, I realize that just because homes are overvalued doesn’t mean we’re in a bubble. Many an eminent economist has said so. For example, Lawrence Yun of NAR:
“Home prices are clearly rising too fast, they have outpaced people’s income growth for the past five years,” [Yun] said. “Is it a bubble in terms of potential to go down? The answer is no, because the fundamental supporting factors of today’s housing market versus what happened 10 years ago are drastically different.”
Drastically different or not, I’m just curious whether anyone else looks at the chart above and gets just a wee bit nervous.
Ok, back to work!