IRVINE, CA—The dynamic housing markets especially are cyclical in nature, which provides some good news for those who have been priced out of the housing market at the moment, ATTOM Data Solutions' SVP Daren Blomquist tells GlobeSt.com. As we recently reported, a report from the firm showed that 24% of US county housing markets were less affordable than their historic affordability averages in the third quarter, up from 22% of markets in the previous quarter and up from 19% of markets a year ago to the highest share since Q3 2009—when 47% of markets were less affordable than their historic affordability averages. We spoke exclusively with Blomquist about home affordability, the economy and the real estate market and the cyclical nature of them all.
GlobeSt.com: Is home affordability, like the economy and the real estate market, cyclical?
Blomquist: Yes, home affordability is cyclical in nature, particularly in the dynamic housing markets that are more cyclical in nature overall. This provides some good news for those who might be priced out of the housing market at the moment. What goes up does come down and vice versa.
GlobeSt.com: Will we begin to see the markets that were last to recover from the recession decline in affordability only to rise up again as the cycle comes around?
Blomquist: To a certain extent—but not all of the markets that were last to recover. This cycle is based on different fundamental drivers than the last cycle, so we are seeing a different set of markets get hot and less affordable, although there certainly is some overlap. I don't expect to see a market like Las Vegas, for example, fall to the level of low affordability it was at during the peak of the last cycle. It right now has an affordability index of 110 compared to an index of 54 in Q2 2006. On the other hand, a market like Denver County, which was not highly unaffordable during the last cycle, is almost back to its affordability levels of 2006, with an affordability index of 81 in Q3 2016 compared to an index of 79 in Q2 2006.
GlobeSt.com: What's the next expected trend to hit housing in markets like San Francisco that are improving in affordability?
Blomquist: For now, the trend appears to be a flat-lining of home prices and decreasing sales volume. Given the supply-demand balance in markets like San Francisco, that holding pattern may be sustainable for an extended period of time, but if there is a shock to the system (rapidly rising interest rates would be the most likely potential shock), we could see home prices falling not just flat-lining.
IRVINE, CA—The dynamic housing markets especially are cyclical in nature, which provides some good news for those who have been priced out of the housing market at the moment, ATTOM Data Solutions' SVP Daren Blomquist tells GlobeSt.com. As we recently reported, a report from the firm showed that 24% of US county housing markets were less affordable than their historic affordability averages in the third quarter, up from 22% of markets in the previous quarter and up from 19% of markets a year ago to the highest share since Q3 2009—when 47% of markets were less affordable than their historic affordability averages. We spoke exclusively with Blomquist about home affordability, the economy and the real estate market and the cyclical nature of them all.
GlobeSt.com: Is home affordability, like the economy and the real estate market, cyclical?
Blomquist: Yes, home affordability is cyclical in nature, particularly in the dynamic housing markets that are more cyclical in nature overall. This provides some good news for those who might be priced out of the housing market at the moment. What goes up does come down and vice versa.
GlobeSt.com: Will we begin to see the markets that were last to recover from the recession decline in affordability only to rise up again as the cycle comes around?
Blomquist: To a certain extent—but not all of the markets that were last to recover. This cycle is based on different fundamental drivers than the last cycle, so we are seeing a different set of markets get hot and less affordable, although there certainly is some overlap. I don't expect to see a market like Las Vegas, for example, fall to the level of low affordability it was at during the peak of the last cycle. It right now has an affordability index of 110 compared to an index of 54 in Q2 2006. On the other hand, a market like Denver County, which was not highly unaffordable during the last cycle, is almost back to its affordability levels of 2006, with an affordability index of 81 in Q3 2016 compared to an index of 79 in Q2 2006.
GlobeSt.com: What's the next expected trend to hit housing in markets like San Francisco that are improving in affordability?
Blomquist: For now, the trend appears to be a flat-lining of home prices and decreasing sales volume. Given the supply-demand balance in markets like San Francisco, that holding pattern may be sustainable for an extended period of time, but if there is a shock to the system (rapidly rising interest rates would be the most likely potential shock), we could see home prices falling not just flat-lining.
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