I don’t see a collapse on the horizon….., but I disagree that things will continue to grind higher indefinitely.
I see a correction coming. Say whatever you will about under agreement versus inventory, it’s still noticeably slower than last year. The difference is this year those pending homes had a lot less bidding wars, a lot more concessions, and are going for much closer to, or in many cases, below asking. Just as Redfin noted, Boston bidding wars all but disappeared. Conditions are perfect for housing and things should be better. The reason they aren’t is prices are too high, demand was pulled forward.
If the deceleration continues, or if rates rise, or if unemployment rises, any one of those chips fall, prices will retract a little. I see inflation adjusted 2015 prices as a real possibility in the event of a mild recession.
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