MINT HILL, NC – Recently, there has been quite a bit of talk about the global housing market heating up. It’s not long just the Mint Hill real estate market or even the U.S. market, but the entire world.
Oxford Economics looked at around 121 years of housing data and confirmed, the global market is on fire right now. They found that in some advanced economies, home prices may be overvalued by about 10%. It’s the biggest boom since 1900.
The 2006 Housing Boom
In 2006, there was a boom period with home prices about 13% to 15% overvalued. Of course, we all know what came just two years later. Strong price appreciation is likely driven by low-interest rates, right now, but it could also be driven by the shift in the wealth of populations.
Just like 2006, some are now worried about a price correction in the near future. This could cause big issues for the housing market. The longer the boom continues, the more likely there is a risk of a larger reversal, according to some experts.
While not all markets across the globe are as risky as others, they are almost all booming. The riskiest markets right now include Canada, France, the Netherlands, Germany, and Sweden.
Less Worrisome Due to Lower Housing Debt/Leverage
The booms of the 1920s, 1980s, and 2000s, all came with rapid credit growth, along with rapid home price increases. Today’s boom is a bit less worrisome due to the growth in mortgage credit remaining pretty subdued. However, this has started to pick up a bit more recently.
Currently, the home price appreciation isn’t looking like there will be a surprising reversal. In fact, it’s a bit opposite. The median existing home price in the U.S. hit $363,300 in June. This is the highest level since January of 1999.
For the most part, home prices are not in danger of declining right now due to the tight inventory. However, the pace of appreciation will likely slow down some before the end of the year.
As more construction and new listings come onto the market, it might cool off a bit. There are some experts that believe this will start to happen in 2022. Right now, the global housing market is booming. Keeping a close eye on it matters, but a huge turn may not be coming.
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