There is no housing bubble. But of course, you could be excused for thinking that there is if you live in the Boston suburbs. The downtown Boston real estate market here is distorted, with supply and demand out of whack.
Today, rising prices are a mixed blessing. In some parts of downtown Boston, everyday buyers who need a mortgage are getting priced out by all-cash buyers and investors looking to snap up properties at a reduced price, relative to what they hit during the peak.
This has led some market observers to say that we’re dealing with a housing bubble in the region. But that’s not really the story, though there are some micro-bubbles.
But if you look at the Case-Shiller home price index, it’s clear that, although prices have trended up steadily in Boston since the beginning of last year, the region isn’t seeing a price spike on the order of what’s happening in, for example, Phoenix, where prices have surged by double-digits.
The National Association of Realtors has pointed out that the inventory crisis will eventually ease, bringing supply and demand back into balance.
But before that happens, housing sales need to pick up. But it could take a while for that to develop, given that banks have been much stingier with loans since the financial crisis.