News & Blog

Housing Boom to Continue

Apr 20
Graphic depicting rising home prices.
With housing prices soaring over the past year, many wonder whether the housing market is back in a 2000s-type bubble, but the data suggests not.
According to a recent article written by Chief Economist Brian Wesbury and Deputy Chief Economist Robert Stein of First Trust, “At the peak of the bubble in 2005, [home values] were 21.4 times annual rent, or 33% above normal. Now, home prices are 17.8 times annual rent, about 11% above normal.” While in 2005, home prices were 1.94 times replacement cost, homes are now selling for 1.63 times replacement cost, only 2.5% above normal.
Based on this data, Wesbury and Stein state that they don’t believe housing is at risk as the recent price surge is “based on fundamentals and the housing market should continue to boom.”
Currently, the main problem for the market is the lack of homes. This is largely affected by the lower than expected number of new builds over the past 20 years. Other factors include the elevated price-to-rent ratio (due to the moratorium on evictions), and the number of people who have moved from places where renting is popular to places where home ownership is popular.
While home prices are up and appear somewhat expensive (relative to normal), “This is more about the unprecedented events of the past decade, not some problem with the market. With the Fed so easy, and the stock of housing constrained, prices will continue to rise. The housing boom will continue.”
To read the full article, click here.

At North Eastern Group Realty, we are prepared to assist our clients with their significant Fort Wayne real estate decisions. Our corporate commitment is to provide real knowledge, proven experience and professional, quality service. To search all Fort Wayne homes for sale or find a Fort Wayne REALTOR®, visit our website at NorthEasternGroup.com.

North Eastern Group Realty is Fort Wayne’s largest independent real estate company located at 10808 La Cabreah Lane, Fort Wayne, IN 46845.

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