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August 02, 2021 | Report
The swell in home prices does not suggest that the United States is reliving the 2005-07 housing bubble and burst that led to the 2008-09 Great Recession. Basic supply and demand factors—not speculation, predatory lending and/or bad underwriting practices—are at the root of the latest home price upswing. Moreover, a series of mortgage-market safeguards should prevent a hard landing when home prices recede.
Financially fit home buyers and mortgage-market guardrails should help prevent another full-blown housing crisis. Business executives should likely not fear an implosion of housing market activity, a surge in foreclosures, or financial market contagion that leads to another US or global recession.
US home prices have surged amid sky-high demand and scarce supply. Indeed, according to real estate brokerage Redfin, residences that remained on the market for about 44 days prepandemic were being snapped up in as little as 15 days as of mid-July. The pop in housing input costs (lumber and copper, for example) earlier this year also dampened attempts to increase inventory, further inflating home prices through spring.
Price spikes may be on the verge
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