From a broad view, everything is dandy in the US housing market. Recent trends however, should be ringing alarm bells.
Pending home sales drop 2.6% in August; top Realtors economist warns housing market 'stalled'
"August was another month of declining contract activity because of the one-two punch of limited listings and home prices rising far above incomes," said Lawrence Yun, chief economist for the Realtors in a release.
The truth is that most first time homebuyers simply cannot afford starter homes and are being priced out. The reason is very simple. After the 2007-2008 housing collapse, millions of single family homes were bought by investors and rented out. That is why there are 8 million more rented out homes than in 2007, according to the US Census. It is not the general population, with healthy incomes, that is buying these properties. They are billion dollar investment trusts, as well as local and foreign investors looking to park their cash. They are driving prices up, pushing prices beyond the reach of many.
"It sets up a situation in which the housing market looks largely healthy from a 50,000-foot view, but on the ground, the situation is much different, especially for younger, first-time buyers and/or buyers of more modest means"
- Svenja Gudell, chief economist at Zillow in a response to the latest home-price data.