US Housing Potential Bubble?
Biggest red flag is price growth outpacing job and income growth. Average American workers earn almost 10% less than a decade ago yet home prices are higher, attributed to paying larger portion of income for housing. Anything over 30 to 35% can render a homeowner house poor.
Factors driving demand reflect low inventory, investor irrational exuberance based on incorrect notion that rents can continue being adjusted upwards to compensate for paying higher purchase prices. Many markets were seeing multiple bids and above asking price trades. Markets were not being driven by traditional actual owner occupant buyers low inventory is also due to construction which virtually stopped for several years. Rent to own ratio (if you can buy for less than 15x annual rent you're better off buying) has favored buying in many markets for some time now.
The buyers and professionals I hear from are indicating surprise at high level prices in many markets again. Not unlike the bubble circa surprise many expressed.
The bigger issue now is the government shut down and debt ceiling. Anyone who does not have to buy or sell now is holding off. The reason is delays at the gses and fha. The department of agriculture is not approving any rural home loans at all and social security, Irs. Etc needed to process and approve loans are deadlocked, if that persists it can have a noticeable impact on demand and prices. Banks will also notice an impact in loan volume which could affect profits.