The housing market has surged in the past two years. On average, home prices have risen 20% year over year most months, according to the S&P Case-Shiller real estate report. In some markets, particularly those where prices have risen by more, home prices will reset downward.
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A primary reason for the rise in home prices has been extremely low mortgage rates. These dropped below 3% for a 30-year fixed interest rate loan. Those days are over, however. Mortgages rates have risen above 5%, marking homes less affordable.
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Some medium-sized cities have had a huge influx of residents, at least when relative to their populations. People have relocated from expensive coastal cities like San Francisco and New York to cities like Boise and Nashville.
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Tens of thousands of people have been able to move to cities where they prefer to live because of the new “work from home” culture, driven by the COVID-19 pandemic’s shuttering of offices.
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While real estate prices may not be in a bubble in most cities, some have bubble characteristics. There is no better example than Boise. The FAU Real Estate Initiative recently named Boise the most overvalued market of the 100 considered by the study. The premium over what housing prices should be in Boise, according to the study, is 70%. If that is right, Boise is falling toward a huge drop in home prices.
Some Housing Markets Could Drop 50%
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
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